RoyaLand Co Ltd F-1/A, filed Apr 26, 2024
RoyaLand Co Ltd. (RLNDF)
As submitted to the Securities and Exchange Commission on April 26, 2024
Registration No. 333-273097
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 5 to
FORM
F-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
THE ROYALAND COMPANY LTD.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s Name into English)
| Bermuda | 7372 | Not Applicable | ||
| (State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Clarendon House, 2 Church Street
Hamilton, Pembroke, HM11
Bermuda
+1 441 295 1422
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
(800) 221-0102
(Names, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Louis A. Bevilacqua, Esq.
Bevilacqua PLLC
1050 Connecticut Avenue, NW, Suite 500
Washington, DC 20036
(202) 869-0888
Approximate date of commencement of proposed sale to public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 7(a)(2)(B) of the Securities Act. ☐
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED APRIL 26, 2024
PRELIMINARY PROSPECTUS
The RoyaLand Company Ltd.
4,765,000 Class B Common Shares
This prospectus relates to the resale of up to 4,765,000 class B common shares, par value $0.0002 per share, or the Class B Common Shares, of The RoyaLand Company Ltd. that may be sold from time to time by the selling shareholders named in this prospectus, which includes:
| ● | 3,515,000 Class B Common Shares held by the selling shareholders; and |
| ● | 1,250,000 Class B Common Shares issuable upon the exercise of warrants issued to the selling shareholders. |
We will not receive any proceeds from the sales of outstanding Class B Common Shares by the selling shareholders.
There is currently no public market for our shares. We intend to apply to quote our Class B Common Shares on the OTCQB market tier of OTC Markets Group, Inc., or OTCQB, following the effectiveness of the registration statement of which this prospectus forms a part. There is no assurance that our Class B Common Shares will become eligible for trading on OTCQB or any other quotation service or, if quoted, that an active market for our Class B Common Shares will develop.
We have two classes of authorized common shares, class A common shares of par value $0.0002 each, or the Class A Common Shares, and Class B Common Shares. The rights of the holders of Class A Common Shares and Class B Common Shares are identical, except with respect to voting and conversion. Each Class A Common Share is entitled to twenty votes and is convertible into one Class B Common Share. Each Class B Common Share is entitled to one vote.
As of the date of this prospectus, Emanuele Filiberto di Savoia, our Chief Executive Officer and a member of our board of directors, held approximately 62.4% of the voting power of our outstanding share capital and therefore is our controlling shareholder.
We are an “emerging growth company,” as that term is used in the Jumpstart Our Business Startups Act of 2012, and as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See “Prospectus Summary—Implications of Being an Emerging Growth Company.”
We are a “foreign private issuer” as defined under the U.S. federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for this and future filings. See “Prospectus Summary—Implications of Being a Foreign Private Issuer.”
The selling shareholders may offer and sell the Class B Common Shares being offered by this prospectus from time to time in public or private transactions, or both. These sales will occur at a fixed price of $1.00 per share until our Class B Common Shares are quoted on the OTCQB or OTCQX marketplace, or listed on a national securities exchange. Thereafter, these sales will occur at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing market prices, or at negotiated prices. The selling shareholders may sell shares to or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling shareholders, the purchasers of the shares, or both. Any participating broker-dealers and any selling shareholders who are affiliates of broker-dealers may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, and any commissions or discounts given to any such broker-dealer or affiliates of a broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act of 1933, as amended. The selling shareholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their Class B Common Shares. See “Plan of Distribution” for a more complete description of the ways in which the shares may be sold.
Investing in our securities involves a high degree of risk. Before buying any shares, you should carefully read the discussion of the material risks of investing in our securities under the heading “Risk Factors” beginning on page 14 of this prospectus.
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2024
TABLE OF CONTENTS
You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We have not authorized anyone to provide you with different information. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus, or any free writing prospectus, as the case may be, or any sale of Class B Common Shares.
We are incorporated under the laws of Bermuda. Under the rules of the U.S. Securities and Exchange Commission (the “SEC”), we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended. See “Prospectus Summary—Implications of Being a Foreign Private Issuer.”
For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Class B Common Shares and the distribution of this prospectus outside the United States.
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NOTES ON PROSPECTUS PRESENTATION
We are responsible for the information contained in this prospectus. Certain market data and other statistical information contained in this prospectus are based on information from independent industry organizations, publications, surveys and forecasts. Some market data and statistical information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of the independent sources listed above, our internal research and our knowledge of the video game industry. While we believe such information is reliable, we have not independently verified any third-party information and our internal data has not been verified by any independent source.
For the avoidance of doubt, any offer of securities (within the meaning of the Prospectus Regulation (EU) 2017/1129 (the “Prospectus Regulation”)) contained in this prospectus is addressed to less than 150 natural or legal persons per member state of the European Union and accordingly, there is no legal obligation or requirement to publish this prospectus in the European Union in accordance with the provisions of the Prospectus Regulation.
We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks and trade names or products in this prospectus is not intended to, and does not imply a relationship with, or endorsement or sponsorship by us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the ®, TM or SM symbols, but the omission of such references is not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable owner of these trademarks, service marks and trade names.
Throughout this prospectus, we refer to the following terms:
| ● | “TheRoyal.Land” is the name of our mobile-first massively multiplayer online role-playing game which will have the characters classes of “Queen,” “King,” “Duke,” “Duchess,” “Count,” “Countess,” “Marquis,” “Marquise,” “Baron,” “Baroness,” “Knight,” “Dame,” “Solider,” “Squire,” “Artisan,” “Farmer,” and “Prisoner” within the Realm and which are further defined under “Business – The Royal.Land Characters.” |
| ● | “MMORPG” means massively multiplayer online role-playing game. |
| ● | “myRoyal.World” is the name of our immersive, fantasy-based royalty-themed experience, both online, through TheRoyal.Land and our social media sites, and offline. |
| ● | “Realm” refers to the world of TheRoyal.Land. |
| ● | “Royal Families” refers to the royal families and families with legal, hereditary or historically based claims to royal positions in Italy, Russia, Albania, France, Bulgaria, Yugoslavia, Lesotho, and Mecklenburg. |
| ● | “Ten Lands” or “Lands” are the ten regions within the Realm. |
| ● | “Divine Artifacts” are artifacts in the form of amazon, desert, earth, fire, forest, hybrid, ice, ocean, sky or underground that are derived from Queen Saël Demidea and exist within the Realm. |
| ● | “Test of the Forge” or “Test” is the test that those seeking royal status must pass by plunging a Divine Artifact in the “Forge,” a fiery hearth fueled by eternal flames that exists within the Realm. |
| ● | “Royal Court” is the entourage of the Queen and King comprised of the nobility within the Realm. |
| ● | “$Royal” is the currency used within the Realm. |
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This summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our Class B Common Shares. You should carefully read the entire prospectus, including the risks associated with an investment in our company discussed in the “Risk Factors” section of this prospectus, before making an investment decision. Some of the statements in this prospectus are forward-looking statements. See the section titled “Cautionary Statement Regarding Forward-Looking Statements.”
In this prospectus, unless the context indicates otherwise, “we,” “us,” “our,” “our company,” “the Company,” “RoyaLand,” and similar references refer to The RoyaLand Company Ltd., an exempted company incorporated in Bermuda with limited liability, and its consolidated subsidiaries.
Our Company
Overview
RoyaLand is a Bermuda holding company focused on creating an online and offline immersive, fantasy-based royalty-themed experience called myRoyal.World, primarily centered around a mobile-first massively multiplayer online role-playing game, or MMORPG, called TheRoyal.Land. We are actively focused on developing what we believe to be a novel, interactive and immersive game based on a player-empowered design. We plan to build proprietary digital avatars and provide opportunities to players to earn in-game reward currency, build virtual land, and own their online assets while enhancing all of these features with what we consider to be premium incremental in-game content.
We are developing TheRoyal.Land and myRoyal.World in collaboration with our founder, the Monaco-based grandson of the last King of Italy, Emanuele Filiberto di Savoia, who claims the titles of His Royal Highness, Prince of Venice, and Prince of Piedmont and is also referred to in this prospectus as the hereditary “Prince of Italy.” In addition, with the support of and affiliation with seven other royal families and families with legal, hereditary or historically based claims to royal positions in Russia, Albania, France, Bulgaria, Yugoslavia, Lesotho, and Mecklenburg collectively referred to as the Royal Families, TheRoyal.Land is intended to deliver this unique past-meets-future entertainment experience.
We believe that TheRoyal.Land will introduce the first historically inspired monarchy-based MMORPG, founded by the Prince of Italy and reinforced by the Royal Families.
Our objective is to connect and engage with players from around the world through royalty-themed entertainment by becoming a worldwide leader in the development, publishing, and distribution of high-quality interactive entertainment content and services, as well as related media, that deliver engaging entertainment experiences to our network of connected players on a year-round basis. Players, in their selected roles, will represent every part of TheRoyal.Land society. From the Artisans that guide the skilled trades of old to the Knights and Squires that guard the Realm. From Prisoner to Prince, each role will hold specific purposes, abilities, skills, chances for advancement, and adventures.
To that end, we expect to capitalize on the expanding video games market, with worldwide revenue expected to grow to approximately $282.3 billion in 2024 according to Statista, and the increased interest in the world of royalty to expand our brand and our products worldwide (Statista, Video Games – Worldwide, November 2023).
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We are currently in the development phase for TheRoyal.Land and myRoyal.World. On June 30, 2023, we entered into a project agreement with Neosperience S.p.A., or Neosperience, pursuant to which Neosperience will design and develop TheRoyal.Land using its proprietary technology. The first phase of the project agreement has already commenced. Neosperience plans to use its models to create complex and dynamic in-game environments and realistic and emotive characters and to assist with dynamically adjusting the difficulty level and game balance in real time based on player behavior and performance to keep the game challenging yet rewarding. For example, Neosperience’s technology is designed to imbue non-player characters, or NPCs, with various behaviors, which we believe makes them seem more lifelike and responsive thereby enhancing player immersion and creating a more engaging gameplay experience. Additionally, Neosperience intends to use advanced modeling and rendering techniques to create realistic player characters and NPCs that dynamically interact utilizing a full range of human-like emotions, reactions and movements giving them a depth of character which we believe is rarely seen in video games.
As of the date of this prospectus, the expected cost to ready the game for beta version release is approximately $500,000 to $1 million. The pre-production playable beta version of TheRoyal.Land is expected to be released within 2024. Unforeseen delays in product development, turnover of resources and lack of capital may impact our delivery timeline. In addition, we have secured the domains, TheRoyaLand.online and TheRoyaLand.io, on which we expect to host TheRoyal.Land, and have finished website development for TheRoyal.Land. We are also in the early stages of discussions with media companies to develop myRoyal.World media assets for various streaming platforms. We plan to add additional internal resources to ensure the quality and timely delivery of TheRoyal.Land and myRoyal.World’s assets and experiences.
Our Historical Performance
The Company’s independent registered public accounting firm has expressed substantial doubt as to the Company’s ability to continue as a going concern. While we had cash of $254,688 and $134,543 (including cash in escrow) as of December 31, 2023 and June 30, 2023, respectively, we have incurred net losses since our inception and had accumulated deficits of $1,810,088 as of December 31, 2023 and $1,071,997 as of June 30, 2023. We estimate we will be able to conduct our planned operations using currently available capital resources, including resources received from our recent private placements, for the next eight months. However, in order to meet our growth expectations, we will need to raise funds beyond our current working capital balance in order to finance future development of TheRoyal.Land and myRoyal.World and meet any debt obligations until such time as future profitable revenues are achieved. We will seek to fund our operations through public offerings, private equity offerings, debt financings, and government or other third-party funding. However, the Company may not be able to raise adequate funds for capital expenditures, working capital and other cash requirements from capital markets on acceptable terms, or at all. Advances from an officer or shareholder may likewise be unavailable. The Company’s failure to raise capital as and when needed and generate significantly higher revenues than operating expenses to achieve profitability would impact its going concern status and would have a negative impact on its financial condition and its ability to pursue its business strategy and continue as a going concern. For further discussion, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Going Concern”.
Our Market Opportunity and Business Model
We believe that royal families and their societies remain of great interest to the public, as reflected in popular series with royalty-related themes such as “Downton Abbey” and “The Crown.” In our view, the passing in September 2022 of Her Majesty Queen Elizabeth II of England and the transition to her son, King Charles III, has also brought heightened attention and relevance to the royalty market. Additionally, we believe TheRoyal.Land is at the nexus of several expanding markets in the video games market, with worldwide revenue expected to grow to approximately $282.3 billion in 2024.
Through TheRoyal.Land, we are seeking to build a strong, established franchise through compelling content and expanding our community to reach as many consumers as possible by offering our content on multiple platforms, particularly mobile, the largest and fastest growing platform, and delivering compelling experiences across multiple business models (e.g., premium, free-to-play, subscription-based). We plan to derive revenue through business-to-consumer and business-to-business opportunities:
| ● | Consumers. We plan to derive revenue from selling premium accessories, such as unique skins, weapons, and tools, and access to more quests, missions, and areas within TheRoyal.Land, and from sales to players of plots of virtual land, buildings, and other structures in TheRoyal.Land, which is designed to replicate real-world venues and other related locations portrayed in TheRoyal.Land. |
| ● | Businesses. We plan to derive revenue from working with other businesses to extend their brands inside TheRoyal.Land by offering in-game advertising and virtual land purchases, and we expect to develop further collaborative relationships with them. |
Through myRoyal.World, we are seeking to partner with the Royal Families to jointly promote a royal experience by creating television shows and movies in collaboration with streaming platforms, offering TheRoyal.Land themed merchandise, and selling tickets to TheRoyal.Land based events.
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Our Competitive Strengths
We believe that the following competitive strengths contribute to our success and differentiate us from our competitors:
| ● | Unique video game experience. We intend to provide authentic and unique royalty-based digital and physical products and experiences, including TheRoyal.Land, an MMORPG with experiences and fun game mechanics that immerse the player at any game stage, whether they are just starting or have already logged hundreds of hours of gameplay. TheRoyal.Land is being planned by the Royal Families to be an immersive, strategic, role-playing action game within a historically based setting. |
| ● | Solid community. A game without a community has no future, which is why we are endeavoring to develop a stable game community and video game that connects game creators and game players. We believe an enthusiastic community will constantly improve the gaming experience. We envision the game creators and developers interacting with the players to continuously receive feedback so we can offer players a game that better meets our founders’ goals and the expectations of the players. We plan to enable players to communicate with each other, help each other, form coalitions, and elect the Queen or King for the game’s upcoming months/seasons. |
| ● | Actual ownership. We plan to enable a player to be the owner of their avatar representing their digital identity utilizing traditional in-game purchase methods customary for MMORPGs. |
Our Growth Strategies
The key elements of our strategy to expand our business include the following:
| ● | Utilizing the brands of the Royal Families. We plan to capitalize on the brand rights relating to the legacies of the Royal Families mentioned above, including any currently held royal titles, followers, and brands, by enabling them to transition to the virtual worlds we intend to create together. |
| ● | Developing unique, player-owned, and tradeable avatars. We plan to create engaging, attractive, functional, and, ultimately, purchasable and tradable avatars for TheRoyal.Land for our players and community. |
Our Risks and Challenges
Our prospects should be considered in light of the risks, uncertainties, expenses, and difficulties frequently encountered by similar companies. Our ability to realize our business objectives and execute our strategies is subject to risks and uncertainties, including, among others, the following:
| ● | Our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern in its report. |
| ● | We have a limited operating history, which may make it difficult to evaluate our business and prospects. |
| ● | We had a concentration of credit risk because we derived our revenue from a limited number of customers. |
| ● | If we do not consistently deliver popular, high-quality content in a timely manner, our business may be negatively impacted. |
| ● | If we do not attract, retain, and motivate skilled personnel, we will be unable to effectively conduct our business. |
| ● | We source our services from a limited number of service suppliers. If we lose one or more of the service suppliers, our operation may be disrupted, and our results of operations may be adversely and materially impacted. |
| ● | If we fail to properly manage our anticipated growth, our business could suffer. |
| ● | If we are unable to maintain, train and build an effective international sales and marketing infrastructure, we will not be able to commercialize and grow our brand, products and services successfully. |
| ● | Attracting, managing and retaining our talent is critical to our success. |
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| ● | Our industry is intensely competitive. We may not deliver a successful and engaging game, or customers may prefer our competitors’ products over our own. |
| ● | If demand for our products and services does not develop as expected our projected revenues and profits will be affected. |
| ● | Our company may not be able to create and maintain a competitive advantage, given the rapid technological and other competitive changes affecting all markets nationally and worldwide. Our company’s success will depend on our ability to keep pace with any such changes. |
| ● | Due to our reliance on third party platforms, platform providers are frequently able to influence our products and costs. |
| ● | Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our customer base will be impaired and our business and operating results will be harmed. |
| ● | We may have difficulty scaling and adapting our existing IT infrastructure to accommodate a larger customer base, technology advances or customer requirements. |
| ● | We use open source software in connection with our planned game and services, which may pose particular risks to our proprietary software, products, and services in a manner that could have a negative impact on our business. |
| ● | We rely on tools and technologies owned by third parties. |
| ● | We may experience disruption to our servers or our software which could cause us to lose customers. |
| ● | A failure or breach of our security systems or infrastructure as a result of cyberattacks could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses. |
| ● | The COVID-19 pandemic may cause a material adverse effect on our business. |
| ● | Changes to taxation or the interpretation or application of tax laws could have an adverse impact on our results of operations and financial condition. |
In addition, we face other risks and uncertainties that may materially affect our business prospects, financial condition, and results of operations. You should consider the risks discussed in “Risk Factors” and elsewhere in this prospectus before investing in our common shares.
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Implications of Being an Emerging Growth Company
Upon the completion of this offering, we will qualify as an “emerging growth company” under the Jumpstart Our Business Act of 2012, as amended, or the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least $1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which could occur if the market value of our Class B Common Shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Implications of Being a Foreign Private Issuer
Once the registration statement of which this prospectus is a part is declared effective by the U.S. Securities and Exchange Commission, or the SEC, we will become subject to the information reporting requirements of the Exchange Act that are applicable to “foreign private issuers,” and under those requirements we will file certain reports with the SEC. As a foreign private issuer, we will not be subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We also will have four months after the end of each fiscal year to file our annual reports with the SEC and we will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. We also present our financial statements pursuant to International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, instead of pursuant to U.S. generally accepted accounting principles. Furthermore, our officers, directors and principal shareholders will be exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we will also not be subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act.
See “Management – Foreign Private Issuer Exemption” for more information. These exemptions and leniencies will reduce the frequency and scope of information and protections available to you in comparison to those applicable to U.S. domestic reporting companies.
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Dual Class Structure
Under our bye-laws, we are authorized to issue two classes of common shares, Class A Common Shares and Class B Common Shares, and any number of classes of preference shares. Class A Common Shares are entitled to twenty votes per share on proposals requiring or requesting shareholder approval, and Class B Common Shares are entitled to one vote on any such matter. Class A Common Shares may be voluntarily converted into Class B Common Shares on a one-to-one basis. A transfer of Class A Common Shares will result in their automatic conversion into Class B Common Shares upon such transfer, except that the transfer of Class A Common Shares to another holder of Class A Common Shares will not result in such automatic conversion. Class B Common Shares are not convertible. Other than as to voting and conversion rights, Class A Common Shares and Class B Common Shares have the same rights and preferences and rank equally.
The selling shareholders named in this prospectus are offering Class B Common Shares. Emanuele Filiberto di Savoia, our founder, Chief Executive Officer and a member of our board of directors, owns 6,000,000 of our outstanding Class A Common Shares, which amounts to 120,000,000 votes. As of the date of this prospectus, there are 9,400,000 Class A Common Shares outstanding representing voting power of 188,000,000 votes, 4,475,000 Class B Common Shares outstanding representing voting power of 4,475,000 votes, and no preference shares outstanding. As a result, out of a total of 13,875,000 outstanding common shares representing total voting power of 192,475,000 votes, Mr. di Savoia controls approximately 62.4% of the voting power as of the date of this prospectus. This concentrated control may limit or preclude the ability of others to influence corporate matters including significant business decisions for the foreseeable future.
Our Corporate History and Structure
We were incorporated under the laws of Bermuda as The RoyaLand Company Ltd., an exempted company with limited liability, on October 18, 2022. On January 28, 2022, RoyaLand Company, a Nevada corporation, or RoyaLand Company, was formed, and subsequently conducted private placements of shares of Class B Common Stock, $0.001 par value per share, or the Class B Common Stock. On November 28, 2022, we acquired RoyaLand Company in a share exchange transaction in which its shareholders became our shareholders and RoyaLand Company became our wholly-owned subsidiary. OAPLT, a French joint stock company (société par actions simplifiée), or OAPLT, was formed on November 24, 2017. On November 29, 2022, OAPLT was acquired by us from its shareholders and became our wholly-owned subsidiary.
Our corporate address and registered office are located at c/o Conyers Corporate Services (Bermuda) Limited, Clarendon House, 2 Church Street, Hamilton, Pembroke, HM11, Bermuda. The phone number of our registered office is +1 441 295 1422.
Our agent for service of process in the United States is Cogency Global Inc.,122 East 42nd Street, 18th Floor, New York, NY 10168, (800) 221-0102.
Our website can be found at www.theroyaland.net. The information contained on our websites is not a part of this prospectus, nor is such content incorporated by reference herein, and should not be relied upon in determining whether to make an investment in our common shares.
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The Offering
| Class B Common Shares offered by the selling shareholders: | This prospectus relates to 4,765,000 Class B Common Shares that may be sold from time to time by the selling shareholders named in this prospectus, which includes:
● 3,515,000 Class B Common Shares held by the selling shareholders; and
● 1,250,000 Class B Common Shares issuable upon the exercise of warrants issued to the selling shareholders. | |
| Shares outstanding(1): | 9,400,000 Class A Common Shares and 4,475,000 Class B Common Shares. | |
| Use of proceeds: | We will not receive any proceeds from the sales of outstanding Class B Common Shares by the selling shareholders. | |
| Risk factors: | Investing in our Class B Common Shares involves a high degree of risk. As an investor, you should be able to bear a complete loss of your investment. You should carefully consider the information set forth in the “Risk Factors” section beginning on page 14 before deciding to invest in our Class B Common Shares. | |
| Trading market: | We intend to apply to quote our Class B Common Shares on OTCQB. There is no assurance that we will be successful at having our shares quoted. |
| (1) | The number of common shares outstanding immediately following this offering is based on 9,400,000 Class A Common Shares and 4,475,000 Class B Common Shares outstanding as of the date of this prospectus and excludes: |
| ● | 1,825,000 Class B Common Shares that are reserved for issuance under The RoyaLand Company Ltd. 2023 Equity Incentive Plan, or the 2023 Plan; |
| ● | 1,250,000 Class B Common Shares issuable upon exercise of outstanding warrants issued to private placement investors at an exercise price of $1.00 per share; and |
| ● | 113,750 Class B Common Shares issuable upon exercise of placement agent’s warrants |
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Summary Consolidated Financial Information
The following summary historical financial information should be read in conjunction with our consolidated financial statements and related notes included elsewhere in the prospectus and the information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.
Our summary financial data for the years ended June 30, 2023 and 2022 is derived from our audited consolidated financial statements included elsewhere in this prospectus. Our summary financial data for the six months ended December 31, 2023 and 2022 are derived from our unaudited financial statements included elsewhere in this prospectus.
All financial statements included in this prospectus are prepared and presented in accordance with IFRS. Our historical results for any period are not necessarily indicative of our future performance.
| The RoyaLand Company Ltd. Period from November 29, 2022 to June 30, | RoyaLand Nevada Period from July 1, 2022 to November 28, | OAPLT Period from July 1, 2022 to November 28, | Pro Forma Combined Year Ended June 30, 2023 (Unaudited) | |||||||||||||||||
| Statements of Operations Data | 2023 (Successor) | 2022 (Successor) | 2022 (Predecessor) | Amount | % of Revenue | |||||||||||||||
| Revenue | - | - | 4,869 | 4,869 | 100 | % | ||||||||||||||
| Cost of revenue | - | - | - | - | - | |||||||||||||||
| Impairment of goodwill | 149,369 | - | - | 149,369 | 3,068 | % | ||||||||||||||
| General and administrative expenses | 500,368 | 253,126 | 7,144 | 760,638 | 15,622 | % | ||||||||||||||
| Operating loss | (649,737 | ) | (253,126 | ) | (2,275 | ) | (905,138 | ) | (18,589 | )% | ||||||||||
| Other income (expense) | 1,986 | (37 | ) | 1,948 | 40 | % | ||||||||||||||
| Loss before income taxes | (647,751 | ) | (253,126 | ) | (2,312 | ) | (903,190 | ) | (18,549 | )% | ||||||||||
| Provision for income taxes | - | - | - | - | - | |||||||||||||||
| Net loss | (647,751 | ) | (253,126 | ) | (2,312 | ) | (903,190 | ) | (18,549 | )% | ||||||||||
| OAPLT Year Ended June 30, | RoyaLand Nevada Period from January 28, 2022 (Inception) to June 30, | Pro Forma Combined Year Ended June 30, 2022 (Unaudited) | ||||||||||||||
| Statements of Operations Data | 2022 (Predecessor) | 2022 (Successor) | Amount | % of Revenue | ||||||||||||
| Revenue | 29,925 | - | 29,925 | 100 | % | |||||||||||
| Cost of revenue | - | - | - | - | ||||||||||||
| General and administrative expenses | 63,514 | 171,120 | 234,634 | 784 | % | |||||||||||
| Operating loss | (33,589 | ) | (171,120 | ) | (204,709 | ) | (684 | )% | ||||||||
| Other income (expense) | 4,080 | - | 4,080 | 14 | % | |||||||||||
| Loss before income taxes | (29,509 | ) | (171,120 | ) | (200,629 | ) | (670 | )% | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net loss | (29,509 | ) | (171,120 | ) | (200,629 | ) | (670 | )% | ||||||||
| Balance Sheet Data | As of June 30, 2023 (Successor) | As of June 30, 2022 (Predecessor) | |||||
| Cash (including cash in escrow) | $ | 134,543 | $ | 5,544 | |||
| Current assets | 192,233 | 9,315 | |||||
| Total assets | 192,233 | 9,315 | |||||
| Shareholders’ equity (deficit) | 16,277 | (14,237 | ) | ||||
| Current liabilities | 175,956 | 23,552 | |||||
| Total liabilities | 175,956 | 23,552 | |||||
| Total liabilities and shareholders’ deficit | $ | 192,233 | $ | 9,315 | |||
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The following table sets forth key components of the unaudited interim consolidated results of operations of The RoyaLand Company Ltd., or the successor company, and of OAPLT, or the predecessor company, for the six months ended December 31, 2023 and 2022.
| 2023 | 2022 | |||||||||||||||||||||||
| Statements of Operations Data | The
RoyaLand | % of Revenue | The RoyaLand Company Ltd. November 29, 2022 to December 31, 2022 (Successor) | % of Revenue | OAPLT July 1, 2022 to November 28, 2022 (Predecessor) | % of Revenue | ||||||||||||||||||
| Revenue | - | N/A | - | N/A | $ | 4,869 | 100 | % | ||||||||||||||||
| Cost of revenue | - | N/A | - | N/A | - | - | % | |||||||||||||||||
| Impairment of goodwill | - | N/A | $ | 149,369 | N/A | - | - | % | ||||||||||||||||
| General and administrative expenses | $ | 738,091 | N/A | 20,520 | N/A | 7,144 | 147 | % | ||||||||||||||||
| Operating loss | (738,091 | ) | N/A | (169,889 | ) | N/A | (2,275 | ) | (47 | )% | ||||||||||||||
| Other income (expense) | - | N/A | - | N/A | (37 | ) | - | % | ||||||||||||||||
| Loss before income taxes | (738,091 | ) | N/A | (169,889 | ) | N/A | (2,312 | ) | (47 | )% | ||||||||||||||
| Provision for income taxes | - | N/A | - | N/A | - | - | % | |||||||||||||||||
| Net loss | $ | (738,091 | ) | N/A | $ | (169,889 | ) | N/A | $ | (2,312 | ) | (47 | )% | |||||||||||
| Balance Sheet Data | December 31, 2023 | December 31, 2022 | ||||||
| Cash | $ | 254,688 | $ | 50,843 | ||||
| Current assets | 335,910 | 108,953 | ||||||
| Total assets | 335,910 | 108,953 | ||||||
| Shareholders’ deficit | (6,582 | ) | (56,678 | ) | ||||
| Current liabilities | 342,492 | 165,631 | ||||||
| Total liabilities | 342,492 | 165,631 | ||||||
| Total liabilities and shareholders’ deficit | $ | 335,910 | $ | 108,953 | ||||
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Summary of Risk Factors
An investment in our securities involves a high degree of risk. You should carefully consider the risks summarized below. These risks are discussed more fully in the “Risk Factors” section immediately following this Prospectus Summary. These risks include, but are not limited to, the following:
Risks Related to Our Business and Industry
| ● | Our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern in its report. |
| ● | We have a limited operating history, which may make it difficult to evaluate our business and prospects. |
| ● | We had a concentration of credit risk because we derived our revenue from a limited number of customers. |
| ● | If we do not consistently deliver popular, high-quality content in a timely manner, our business may be negatively impacted. |
| ● | If we do not attract, retain, and motivate skilled personnel, we will be unable to effectively conduct our business. |
| ● | If we fail to properly manage our anticipated growth, our business could suffer. |
| ● | If we are unable to maintain, train and build an effective international sales and marketing infrastructure, we will not be able to commercialize and grow our brand, products and services successfully. |
| ● | Attracting, managing and retaining our talent is critical to our success. |
| ● | Our industry is intensely competitive. We may not deliver a successful and engaging game, or customers may prefer our competitors’ products over our own. |
| ● | If demand for our products and services does not develop as expected our projected revenues and profits will be affected. |
| ● | We will be subject to risk associated with the development of new products or services based on a new and unproved market. |
| ● | Our company may not be able to create and maintain a competitive advantage, given the rapid technological and other competitive changes affecting all markets nationally and worldwide. Our company’s success will depend on our ability to keep pace with any such changes. |
| ● | Due to our reliance on third party platforms, platform providers are frequently able to influence our products and costs. |
| ● | Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our customer base will be impaired and our business and operating results will be harmed. |
| ● | We may have difficulty scaling and adapting our existing IT infrastructure to accommodate a larger customer base, technology advances or customer requirements. |
| ● | We use open source software in connection with our planned game and services, which may pose particular risks to our proprietary software, products, and services in a manner that could have a negative impact on our business. |
| ● | We rely on tools and technologies owned by third parties. |
| ● | If the Company fails to develop or protect its intellectual property adequately, the Company’s business could suffer. |
| ● | The Company’s products, services or processes could be subject to claims of infringement of the intellectual property of others. |
| ● | We may experience disruption to our servers or our software which could cause us to lose customers. |
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| ● | A failure or breach of our security systems or infrastructure as a result of cyberattacks could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses. |
| ● | We are subject to the risks and uncertainties of conducting business outside the U.S. |
| ● | Our results of operations or reputation may be harmed as a result of objectionable consumer or other third-party created content. |
| ● | Exchange rate fluctuations could negatively affect our financial condition. |
| ● | The COVID-19 pandemic may cause a material adverse effect on our business. |
| ● | Because purchases of our products and services are discretionary spending, if general economic conditions decline, demand for our products and services could decline. |
| ● | Industry and other market data used in this prospectus or in periodic reports that we may file in the future with the SEC, including those undertaken by us or our engaged consultants, may not prove to be representative of current and future market conditions or future results. |
Risks Related to Government Regulation and Being a Public Company
| ● | We are subject to data privacy governmental regulations, which can change, and any failure to comply with these regulations may have a material negative effect on our business and results of operations. |
| ● | Our business, products, and distribution will be subject to increasing regulation in key territories. If we do not successfully respond to these regulations, our business could be negatively impacted. |
| ● | Our business depends on our customers’ continued and unimpeded access to the Internet and the development and maintenance of Internet infrastructure. Internet access providers may be able to block, degrade or charge for access to certain of our services, which could lead to additional expenses and the loss of customers. |
| ● | Our business could be affected by new governmental regulations regarding the Internet. |
| ● | We operate in non-U.S. markets and are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, as well as anti-corruption laws and regulations in other countries. Violations of these laws and regulations could have a material adverse effect on our business, financial condition and results of operations. |
| ● | The requirements of being a public company may strain our resources. |
| ● | Our internal controls over financial reporting currently may not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal controls over financial reporting in accordance with Section 404 could impair our ability to produce timely and accurate financial statements or comply with applicable regulations and have a material adverse effect on our business. |
| ● | We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices. |
| ● | Our management team has limited experience managing a public company. |
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Risks Related to Ownership of Our Class B Common Shares
| ● | Our dual class voting structure has the effect of concentrating the voting control to holders of our Class A Common Shares, which will limit or preclude your ability to influence corporate matters, and your interests may conflict with the interests of these shareholders. It may also adversely affect the trading market for our Class B Common Shares due to exclusion from certain stock market indices. |
| ● | There has been no prior public market for our Class B Common Shares and an active and liquid market may fail to develop, which could harm the market price of our Class B Common Shares. |
| ● | A significant portion of our Class B Common Shares may be sold into the public market in the near future, which could cause the market price of our Class B Common Shares to drop significantly, even if our business is doing well. |
| ● | Future issuances of our Class B Common Shares or securities convertible into, or exercisable or exchangeable for, our Class B Common Shares, or the trading of outstanding common shares, could cause the market price of our Class B Common Shares to decline and would result in the dilution of your holdings. |
| ● | Future issuances of debt securities, which would rank senior to our Class B Common Shares upon our bankruptcy or liquidation, and future issuances of preference shares, which could rank senior to our Class B Common Shares for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our Class B Common Shares. |
| ● | Our operating results and share price may be volatile, and the market price of our Class B Common Shares after this offering may drop below the price you pay. |
| ● | If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business or our market, if they adversely change their recommendations regarding our Class B Common Shares, or if our operating results do not meet their expectations or any financial guidance we may provide, the trading price or trading volume of our Class B Common Shares could decline. |
| ● | We have never paid cash dividends on our securities and do not intend to pay dividends for the foreseeable future. |
| ● | Changes to taxation or the interpretation or application of tax laws could have an adverse impact on our results of operations and financial condition. |
| ● | If a United States person is treated as owning at least 10% of any class of our common shares, such holder may be subject to adverse U.S. federal income tax consequences. |
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| ● | We are a Bermuda company, and it may be difficult for you to enforce judgments against us or certain of our directors or officers. |
| ● | Our bye-laws restrict shareholders from bringing legal action against our officers and directors. |
| ● | We have provisions in our bye-laws that may discourage a change of control. |
| ● | Legislation enacted in Bermuda as to economic substance may affect our operations. |
| ● | We may need or be required to have employees in Bermuda but may not be able to obtain the required work permits under Bermuda law. |
| ● | We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies. |
| ● | We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses. |
| ● | There is a risk that we will be a passive foreign investment company for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors in our shares. |
| ● | We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies,” and our shareholders could receive less information than they might expect to receive from more mature public companies. |
| ● | Certain of our major shareholders may have interests that are different from the interests of our other shareholders. |
| ● | If our Class B Common Shares become subject to the penny stock rules, it would become more difficult to trade our shares. |
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An investment in our Class B Common Shares involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this prospectus, before purchasing our Class B Common Shares. We have listed below (not necessarily in order of importance or probability of occurrence) what we believe to be the most significant risk factors applicable to us, but they do not constitute all of the risks that may be applicable to us. Any of the following factors could harm our business, financial condition, results of operations or prospects, and could result in a partial or complete loss of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section titled “Cautionary Statement Regarding Forward-Looking Statements”.
Risks Related to Our Business and Industry
Our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern in its report.
We had minimal cash and cash equivalents as of December 31, 2023 and June 30, 2023, and had a net loss for the six months ended December 31, 2023 and the year ended June 30, 2023. While we had cash of $254,688 and $134,543 (including cash in escrow) as of December 31, 2023 and June 30, 2023, respectively, we have incurred net losses since our inception and had accumulated deficits of $1,810,088 as of December 31, 2023 and $1,071,997 as of June 30, 2023. We will seek to fund our operations through revenue generated from our products, services, bank borrowings and private placements and equity financing arrangements. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would impact our going concern status and would have a negative impact on our financial condition and our ability to pursue our business strategy and continue as a going concern. Management’s plans to address this need for capital through this offering and through private placement offerings are discussed elsewhere in this prospectus. We cannot assure you that our plans to raise sufficient capital will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this prospectus do not include any adjustments that might result from our inability to consummate this offering or our inability to continue as a going concern.
We have a limited operating history, which may make it difficult to evaluate our business and prospects.
We are an early, startup stage entity with little operating history. We only have nominal cash as of the date of commencement of this offering. The revenue and income potential of our business and market are unproven. Our limited operating history makes an evaluation of our company and its prospects difficult and highly speculative. There can be no assurances that: (a) we will be able to develop products or services on a timely and cost effective basis; (b) we will be able to generate any increase in revenues; (c) we will have adequate financing or resources to continue operating our business and to provide services to customers; (d) we will earn a profit; (e) we can raise sufficient capital to support operations by attaining profitability; or (f) we can satisfy future liabilities.
We had a concentration of credit risk because we derived our revenue from a limited number of customers.
For the year ended June 30, 2022, five of our customers accounted for 94.1% of our revenue with one customer accounting for 30.2% of our revenue. For the year ended June 30, 2023, our revenue, all of which was recorded by OAPLT, was accounted for by two customers with one of the customers accounting for 62.5%. In order to minimize the credit risk, our management has created a team responsible for the determination of credit limits and credit approvals for our customers. We cannot assure you that we will not see concentration of accounts receivable from a small number of customers in the future. In such case, if any of these customers defaults on its payment obligations to us, we will not be able to recover the related accounts receivable, and our business, financial condition and results of operations may be materially and adversely affected.
If we do not consistently deliver popular, high-quality content in a timely manner, our business may be negatively impacted.
Consumer preferences for video games are usually cyclical and difficult to predict. Even the most successful games can lose consumer audiences over time, and remaining popular is increasingly dependent on the games being refreshed with new content or other enhancements. In order to remain competitive and maximize the chances that consumers select our planned game as opposed to the various entertainment options available to them and with which we compete, we must continuously develop related products or new content for, or other enhancements to, our planned game. These products or enhancements may not be well-received by consumers, even if well-reviewed and of high quality.
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Additionally, consumer expectations regarding the quality, performance, and integrity of our products and services are high. Consumers may be critical of our brands, game, services, and/or business practices for a wide variety of reasons, and such negative reactions may not be foreseeable or within our control to manage effectively. For example, if we fail to create fun, fair, and safe playing environments, consumers may engage less with our games. All of this may negatively impact our business.
Our planned game and related services are expected to be complex software programs. We have quality controls in place to detect defects, “bugs,” or other errors in our products and services before they are released. Nonetheless, these quality controls are subject to human error, overriding, and resource or technical constraints. As such, these quality controls and preventative measures may not be effective, and at times have not been successful, in detecting all defects, bugs, or errors in our products and services before they have been released into the marketplace. Our planned game is expected to have online features that will be frequently updated, increasing the risk that a game may contain errors. If any of these issues occur, consumers may stop playing the game and may be less likely to return to the game as often in the future, which may negatively impact our business. If our game or services do not function as consumers expect, whether because they fail to function as advertised or otherwise, or if our online features fail to consistently satisfy ongoing game stability expectations, which we may not be able to consistently satisfy, our sales may suffer.
Negative reactions to our products and services may not be foreseeable. We also may not effectively manage or respond to these negative perceptions for reasons within or outside of our control. We expect to continue to expend resources to address concerns with our products and services. Negative perceptions could arise despite our efforts, though, and may result in loss of engagement with our products and services, increased scrutiny from government bodies and consumer groups, and/or litigation, any of which could negatively impact our business.
Further, delays in product releases or disruptions following the commercial release of one or more new products have negatively impacted, and could in the future negatively impact, our business and reputation and could cause our results of operations to be materially different from expectations. Our ability to meet development schedules depends on numerous factors, some of which are outside of our control, including our ability to attract and retain qualified personnel, the time-intensive nature of creative processes, the coordination of large and often dispersed development teams, the complexity of our products and the platforms for which they are developed, and third-party approvals. If we fail to release our products in a timely manner, or if we are unable to continue to extend the life of our planned game by adding features and functionality that will encourage continued engagement with the game, our business may be negatively impacted.
Additionally, the amount of lead time and cost involved in the development of high-quality products is increasing, and the longer the lead time involved in developing a product and the greater the allocation of financial resources to such product, the more critical it is that we accurately predict consumer demand for such product. If our future products do not achieve expected consumer acceptance or generate sufficient revenues upon introduction, we may not be able to recover the substantial up-front development and marketing costs associated with those products.
If we do not attract, retain, and motivate skilled personnel, we will be unable to effectively conduct our business.
Our success depends significantly on our ability to identify, attract, hire, retain, motivate, and utilize the abilities of qualified personnel which includes both our direct employees and talent from other employers such as consultants, agencies, and external developers. This particularly pertains to personnel with the specialized skills needed to create and deliver high-quality, well-received content upon which our business will be substantially dependent, as well as to ensure business continuity in areas such as risk management, information security, human resources, and compliance. Our industry is generally characterized by a high level of employee mobility, competitive compensation programs, and aggressive recruiting among competitors for employees with technical, marketing, sales, engineering, product development, creative, and/or management skills, all of which is magnified for us because of our leading position within the industry. If we are unable to attract additional qualified personnel or retain and utilize the services of key personnel, we can expect this would adversely affect our business.
We are dependent on the continued services and performance of our senior management and other key officers, the loss of any of whom could adversely affect our business, operating results and financial condition.
Our future performance depends on the continued services and contributions of our senior management and other key officers, including: Emanuele Filiberto di Savoia, our Chief Executive Officer; Bryan Elbez, our Chief Financial Officer; Jean-Claude Sindres, our Chief Strategy and Creative Officer; Soheil Raissi, our Chief Technology Officer; and Daniel Joseph McClory, our Executive Chairman. Without these key executives and officers, we may not have the ability to execute on our business plans and to identify and pursue new opportunities and products. The loss of services of senior management or other key officers could significantly delay or prevent the achievement of our development and strategic objectives. The loss of the services of our senior management or other key officers for any reason could adversely affect our business, financial condition and operating results. We do not presently maintain any key man life insurance policies.
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If we fail to properly manage our anticipated growth, our business could suffer.
The planned growth of our commercial operations may place a significant strain on our management and on our operational and financial resources and systems. To manage growth effectively, we will need to maintain a system of management controls, and attract and retain qualified personnel, as well as develop, train and manage management-level and other employees. Failure to manage our growth effectively could cause us to over-invest or under-invest in infrastructure, and result in losses or weaknesses in our infrastructure, which could have a material adverse effect on our business, results of operations, financial condition and cash flow. Any failure by us to manage our growth effectively could have a negative effect on our ability to achieve our development and commercialization goals and strategies.
If we are unable to maintain, train and build an effective international sales and marketing infrastructure, we will not be able to commercialize and grow our brand, products and services successfully.
As we grow, we may not be able to secure sales personnel or organizations that are adequate in number or expertise to successfully market and sell our brand, products and services on a global scale. If we are unable to expand our sales and marketing capability, train our sales force effectively or provide any other capabilities necessary to commercialize internationally, we will need to contract with third parties to market and sell our products and services. If we are unable to establish and maintain compliant and adequate sales and marketing capabilities, we may not be able to increase our revenue, may generate increased expenses, and may not continue to be profitable.
Attracting, managing and retaining our talent is critical to our success.
Our business depends on our ability to attract, train, motivate and retain executive, technical, creative, marketing and other personnel that are essential to the development, marketing and support of our products and services. The market for highly skilled workers and leaders in our industry is extremely competitive and has recently intensified further due to industry trends. If we cannot successfully recruit, train, motivate and retain qualified employees, develop and maintain a diverse, equitable, inclusive and safe work environment, or replace key employees following their departure, our reputation and brand may be negatively impacted and our ability to develop and manage our business will be impaired.
Our industry is intensely competitive. We may not deliver a successful and engaging game, or customers may prefer our competitors’ products over our own.
Competition in the gaming industry is intense. Many new products will be introduced, but we anticipate that only a relatively small number of products will drive significant engagement and account for a significant portion of total revenue. If we do not develop consistent high-quality, well-received and engaging products that are of interest to players, the lack of interest will adversely affect our business objectives.
Our competitors include very large corporations with significantly greater financial, marketing, and product development resources than we have – and increasingly include technology companies entering, or expanding their investment in, interactive entertainment. Our larger competitors may be able to leverage their greater financial, technical, personnel, and other resources to provide larger budgets for development and marketing and make higher offers to licensors and developers for commercially desirable properties, as well as adopt more aggressive pricing policies to develop more commercially successful video game products than we do. The proliferation of companies developing for mobile platforms creates similar risks.
Competitors may develop content that imitates or competes with our planned game, potentially reducing our sales or our ability to charge the same prices we have expect to charge for our game and related services. These competing products may take a larger share of consumer spending than anticipated, which could cause product sales to fall below expectations. If we do not continue to develop consistently high-quality and well-received new content for or enhancements to our game, if our marketing fails to resonate with our consumers, or if consumers lose interest in our game, our revenues and profit margins could decline. Further, a failure by us to develop a high-quality product, or our development of a product that is otherwise not well-received, could potentially result in additional expenditures to respond to consumer demands, harm our reputation, and increase the likelihood that our future products will not be well-received. As we expect to focus on one game product, The RoyaLand, the increased importance of add-on content to our business amplifies these risks, as add-on content for poorly-received games typically generates lower-than-expected sales. The increased demand for consistent new content releases for, and enhancements to, our products also requires a greater allocation of financial resources to those products.
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If demand for our products and services does not develop as expected our projected revenues and profits will be affected.
Our future profits are influenced by many factors, including economics, technology advancements, world events and changing customer preferences. We believe that the markets for our products and services will continue to grow and that we will be successful in marketing our products and services in these markets. If our expectations as to the size of these markets and our ability to sell our products and services in this market are not correct, our revenue may not materialize, and our business will be adversely affected.
We will be subject to risk associated with the development of new products or services based on a new and unproved market.
Our business objectives contemplate ongoing development of new processes, products, services and applications. There can be no assurance that we will have sufficient funds available to fund any of these projects or that the projects will be completed on time or within budget. It is likely that certain, if not many, of the aspects of the business objectives will not proceed as contemplated.
Because our business is also based on new technologies, we are subject to risks of failure that are particular to new technologies, including the possibility that:
| ● | our new approach will not result in any products or services that gain market acceptance; |
| ● | our products or services could be restricted; |
| ● | proprietary rights of third parties may preclude us from marketing our new products and services; or |
| ● | third parties may market superior or more cost-effective products or services. |
As a result, our activities may not result in a commercially viable product or service, which would harm our sales, revenue and financial condition.
Our company may not be able to create and maintain a competitive advantage, given the rapid technological and other competitive changes affecting all markets nationally and worldwide. Our company’s success will depend on our ability to keep pace with any such changes.
The potential markets for our products and services, including software-driven products and services, are characterized by rapidly changing technology, evolving industry standards, frequent enhancements to existing services, the introduction of new services and products, and changing customer demands. Our products and services may require continual improvement in order to satisfy the demand by our customers for new features and capabilities. Our company’s success could depend on our ability to respond to changing standards and technologies on a timely and cost-effective basis, to introduce new products and services and to add new features and enhancements that keep pace with technological and market developments. In addition, any failure by us to anticipate or respond adequately to changes in technology and customer preferences could have a material adverse effect on its financial condition, operating results and cash flow.
For example, we are investing in a PC and mobile game as the basis for our business model. Successfully monetizing PC and mobile games is difficult and requires that we deliver valuable and entertaining player experiences that engage a significant number of players. The success of our game depends, in part, on unpredictable and volatile factors beyond our control including consumer preferences, competing games, new PC or mobile platforms and the availability of other entertainment experiences. Additionally, the development of new services and products and the enhancement of existing services and products entail significant technical risks. There can be no assurance that we will be successful in (i) developing, maintaining and improving one or more products; (ii) effectively using new technologies; (iii) adapting its services and products to emerging industry standards; or (iv) developing, introducing and marketing service and product enhancements or new services and products.
Furthermore, there can be no assurance that we will not experience difficulties that could delay or prevent the successful development, introduction or marketing of these services and products, or that its new service and product enhancements will adequately satisfy the requirements of the marketplace and achieve market acceptance. Our reputation and brand could also be adversely affected. If our company is unable, for technical or other reasons, to develop and introduce new services and products or enhancements of existing services and products in a timely manner in response to changing market conditions or customer requirements, or if new services and products do not achieve market acceptance, our business, results of operations or financial condition could be materially and adversely affected.
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Due to our reliance on third-party platforms, platform providers are frequently able to influence our products and costs.
We expect to eventually derive significant revenues from distribution on third-party mobile and web platforms, such as the Apple App Store, the Google Play Store, Decentraland, Otherside, and The Sandbox, which will also be our direct competitors, and in some cases the exclusive means through which our content reaches gamers on those platforms. These platforms will also serve as significant online distribution platforms for, and/or provide other services critical for the operation of, our planned game. If these platforms deny access to our games, modify their current discovery mechanisms, communication channels available to developers, operating systems, terms of service, or other policies (including fees), our business could be negatively impacted. Additionally, if these platform providers change how they label a game’s business model, such as free-to-play, change how they apply content ratings to a game, or change how the personal information of consumers is made available to developers, our business could be negatively impacted. These platform providers or their services may be unavailable or may not function as intended or may experience issues with their in-app purchasing functionality. As has sometimes happened in the past, if any of these events occurs on a prolonged, or even short-term, basis or other similar issues arise that impact players’ ability to access our planned game, access social features, or make purchases, it may result in lost revenues and otherwise negatively impact our business.
Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our customer base will be impaired and our business and operating results will be harmed.
We believe that the development of our brand identity will be critical to the success of our business. Maintaining and enhancing our brand may require us to make substantial investments, and these investments may not be successful. If we fail to establish and promote the brand, or if it incurs excessive expenses in this effort, our business, operating results and financial condition will be materially and adversely affected.
We may have difficulty scaling and adapting our existing IT infrastructure to accommodate a larger customer base, technology advances or customer requirements.
In the future, advances in technology, increases in traffic, and new customer requirements may require us to change our IT infrastructure, expand our IT infrastructure or replace our IT infrastructure entirely. Scaling and adapting our IT infrastructure are likely to be complex and require additional technical expertise. If we are required to make any changes to our IT infrastructure, we may incur substantial costs and experience delays or interruptions in our service. These delays or interruptions may cause customers to become dissatisfied with our service and move to competing service providers. Our failure to accommodate increased traffic, increased costs, inefficiencies or failures to adapt to new technologies or customer requirements and the associated adjustments to our IT infrastructure could harm our business, financial condition and results of operations.
We use open source software in connection with our planned game and services, which may pose particular risks to our proprietary software, products, and services in a manner that could have a negative impact on our business.
We use open source software in connection with the game and services that we intend to offer. Some open source software licenses require users who distribute open source software as part of their software to publicly disclose all or part of the source code to such software or make available any derivative works of the open source code on unfavorable terms or at no cost. The terms of various open source licenses have not been interpreted by courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our use of the open source software. Were it determined that our use was not in compliance with a particular license, we may be required to release our proprietary source code, pay damages for breach of contract, re-engineer our games or products, discontinue distribution in the event re-engineering cannot be accomplished on a timely basis, or take other remedial action that may divert resources away from our game development efforts, any of which could negatively impact our business. Additionally, the shared nature of open source software may increase the ability of cyber-attackers to discover and exploit vulnerabilities, which may increase the likelihood of a data breach, ransomware, network interruption, or other type of cyber-attack against us or against third parties who may use open source software, such as our platform partners or key vendors, any of which could negatively impact our business.
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We rely on tools and technologies owned by third parties.
In developing our games, we often use tools and technologies owned by third parties. If entities that own the tools and technologies we use are acquired by our competitors we may lose access to such resources. Further, the third-party tools and technologies we use might be “sunsetted” or modified in such a way that would require us to engineer a workaround. Such events could cause delays in our production schedule, and we may incur time and cost as we acquire or develop alternative assets.
If the Company fails to develop or protect its intellectual property adequately, the Company’s business could suffer.
The Company has attempted, and may attempt, to develop certain intellectual property of its own, but cannot assure that it will be able to obtain exclusive rights in trade secrets, patents, trademark registrations and copyright registrations. At this time, the Company is unsure of what types of intellectual property might be developed. The cost of developing, applying for and obtaining such enforceable rights is expensive. Even after such enforceable rights are obtained, there are significant costs for maintaining and enforcing them. The Company may lack the resources to put in place exclusive protection and enforcement efforts. Also, certain of the Company’s service offerings draw from publicly available technology in the marketplace. The Company’s failure to obtain or maintain adequate protection of its intellectual property rights for any reason could have a material adverse effect on its business, financial condition and results of operations.
If the Company were to develop intellectual property, the Company may seek to enforce its intellectual property rights on others through litigation. The Company’s claims, even if meritorious, may be found invalid or inapplicable to a party the Company believes infringes or has misappropriated its intellectual property rights. In addition, litigation can:
| ● | be expensive and time-consuming to prosecute or defend; |
| ● | result in a finding that the Company does not have certain intellectual property rights or that such rights lack sufficient scope or strength; |
| ● | divert management’s attention and resources; or |
| ● | require the Company to license its intellectual property. |
The Company may rely on trademarks or service marks to establish a market identity for its products or services. To maintain the value of the Company’s trademarks or service marks, the Company might have to file lawsuits against third parties to prevent them from using marks confusingly similar to or dilutive of the Company’s registered or unregistered trademarks or service marks. The Company also might not obtain registrations for its pending or future trademark or service marks applications and might have to defend its registered trademarks or service marks and pending applications from challenge by third parties. Enforcing or defending the Company’s registered and unregistered trademarks or service marks might result in significant litigation costs and damages, including the inability to continue using certain marks.
The laws of foreign countries in which the Company may contemplate doing business in the future may not recognize intellectual property rights or protect them to the same extent as do the laws of the United States or the European Union. Adverse determinations in a judicial or administrative proceeding could prevent the Company from offering or providing its products or services or prevent the Company from stopping others from offering or providing competing services, and thereby have a material adverse effect on the Company’s business, financial condition, and results of operations.
The Company’s products, services or processes could be subject to claims of infringement of the intellectual property of others.
Claims that the Company’s products, services, business methods, or processes infringe upon the proprietary rights of others may not be asserted until after commencement of commercial sales of its offerings. Significant litigation regarding intellectual property rights exists in the Company’s industry. Third parties may make claims of infringement against the Company in connection with the use of its technology. Any claims, even those without merit, could:
| ● | be expensive and time consuming to defend; |
| ● | cause the Company to cease making, licensing, or using services that incorporate the challenged intellectual property; |
| ● | divert management’s attention and resources; or |
| ● | require the Company to enter into royalty or licensing agreements in order to obtain the right to use a necessary feature of any proposed mobile app or other product or service. |
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The Company cannot be certain of the outcome of any litigation. Any royalty or licensing agreement, if required, may not be available to the Company on acceptable terms or at all. The Company’s failure to obtain the necessary licenses or other rights could prevent the development or distribution of the Company’s products and services and, therefore, could have a material adverse effect on the Company’s business.
We may experience disruption to our servers or our software, which could cause us to lose customers.
Our ability to successfully create, manage and deliver our products and services will depend in large part on the capacity, reliability and security of our networking hardware, software and telecommunications infrastructure. Failures of our network infrastructure could result in unanticipated expenses to address such failures and could prevent our customers from effectively utilizing our products or services, which could prevent us from retaining and attracting customers. We currently have a limited disaster recovery plan in place. Our system will be susceptible to natural and man-made disasters, including global pandemics, war, terrorism, earthquakes, fires, floods, power loss and vandalism. Further, telecommunications failures, computer viruses, electronic break-ins or other similar disruptive problems could adversely affect the operation of our systems. Such a disruption could cause us to lose customers and possibly subject our company to litigation, any of which could have a material adverse effect on our business. Our insurance policies may not adequately compensate us for any losses that may occur due to any damages or interruptions in our systems. Accordingly, we could incur capital expenditures in the event of unanticipated damage. In addition, our customers will depend on Internet service providers, or ISPs, for access to our website, and our PC and mobile game. In the past, ISPs, websites and mobile apps and games have experienced significant system failures and could, in the future, experience outages, delays and other difficulties due to system failures unrelated to our systems. These problems could harm our business by preventing our customers from effectively utilizing our services.
A failure or breach of our security systems or infrastructure as a result of cyberattacks could disrupt our business, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs and cause losses.
Information security risks for technology companies have significantly increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties. These threats may derive from fraud or malice on the part of our employees or third parties or may result from human error or accidental technological failure. These threats include cyberattacks, such as computer viruses, malicious code, phishing attacks or information security breaches.
Our operations will, in part, rely on the secure processing, transmission and storage of confidential proprietary and other information in our computer systems and networks. Our customers will rely on our digital technologies, computer, email and messaging systems, software and networks to conduct their operations or to utilize our products or services. In addition, to access our products and services, our customers will use personal smartphones, tablet computers and other mobile devices that may be beyond our control.
If a cyberattack or other information security breach occurs, it could lead to security breaches of the networks, systems or devices that our customers use to access our products and services which could result in the unauthorized disclosure, release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information (including account data information) or data security compromises. Such events could also cause service interruptions, malfunctions or other failures in the physical infrastructure or operations systems that will support our business and customers, as well as the operations of our customers or other third parties. Any actual attacks could lead to damage to our reputation with our customers and other parties and the market, additional costs to our company (such as repairing systems, adding new personnel or protection technologies or compliance costs), regulatory penalties, financial losses to both us and our customers and partners and the loss of customers and business opportunities. If such attacks are not detected immediately, their effect could be compounded.
Although we will attempt to mitigate these risks, there can be no assurance that we will be immune to these risks and not suffer losses in the future.
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We are subject to the risks and uncertainties of conducting business outside the U.S.
We expect to conduct business throughout the world and may derive a substantial amount of our revenues and profits from international trade, particularly from Europe and Asia. We expect that non-U.S. sales will account for all of our total revenues and profits and, moreover, that sales in emerging markets in Asia and elsewhere will be an important part of our international sales. As such, we are, and may be increasingly, subject to risks inherent in foreign trade generally, as well as risks inherent in doing business in non-U.S. markets, including increased tariffs and duties, compliance with economic sanctions, fluctuations in currency exchange rates, shipping delays, increases in transportation costs, international political, regulatory and economic developments, unexpected changes to laws, regulatory requirements, and enforcement on us and our platform partners and differing local business practices, all of which may impact profit margins or make it more difficult, if not impossible, for us to conduct business in foreign markets.
A deterioration in relations with any country in which we have significant operations or sales, or the implementation of government regulations in such a country, could result in the adoption or expansion of trade restrictions, including economic sanctions or absolute prohibitions, that could have a negative impact on our business. For instance, to operate in China, all games must have regulatory approval. A decision by the Chinese government to revoke its approval for our planned game or to decline to approve any product we desire to sell in China in the future could have a negative impact on our business, as could delays in the approval process. Additionally, legislation may be implemented in China that may require modifications to our products and our business model to satisfy regulatory requirements, such as Chinese regulations that limit the number of hours per week children under the age of 18 can play video games. The future implementation of similar or new laws or regulations in China or any other country in which we have operations or sales may restrict or prohibit the sale of our products or may require engineering modifications to our products and our business model that are not cost-effective, if even feasible at all, or could degrade the consumer experience to the point where consumers cease to purchase such products. Changes in Chinese game approval procedures in 2018 have resulted in reduced rates of approval for games and unclear approval timeframes, making it uncertain as to if and when new products will be approved for release in China. Further, the continued enforcement of regulations relating to mobile and other games with an online element in China could have a negative impact on our business in China.
The laws of some countries either do not protect our products, brands, and intellectual property to the same extent as the laws of the U.S. or are inconsistently enforced. Legal protection of our rights may be ineffective in countries with weaker intellectual property enforcement mechanisms.
In addition, cultural differences may affect consumer preferences and limit the international popularity of games that might be popular in Europe or other western markets or require us to modify the content of the games or the method by which we charge our customers for the games to be successful. If we do not correctly assess consumer preferences in the countries in which we sell our products, it could negatively impact our business.
We are also subject to risks that our operations outside the U.S. could be conducted by our employees, contractors, third-party partners, representatives, or agents in ways that violate the Bermuda Anti-Bribery Act or other similar anti-bribery laws, as well as the Bermuda Proceeds of Crime Act or other similar financial crime laws. While we have policies, procedures, and training for our employees, intended to secure compliance with these laws, our employees, contractors, third-party partners, representatives, or agents may take actions that violate our policies. Moreover, it may be more difficult to oversee the conduct of any such persons who are not our employees, potentially exposing us to greater risk from their actions.
Our results of operations or reputation may be harmed as a result of objectionable consumer- or other third-party-created content.
Our planned games will support collaborative online features that allow consumers to communicate with one another and post narrative comments, in real time, that are visible to other consumers. Additionally, our game will allow consumers to create and share “user-generated content” that is visible to other consumers. From time to time, objectionable and offensive consumer content may be distributed within our game through these features or to gaming websites or other sites or forums with online chat features or that otherwise allow consumers to post comments. Although we expect to expend resources to promote positive play, our efforts may not be successful due to scale, limitations of existing technologies, or other factors. We may be subject to lawsuits, governmental regulation or restrictions, and consumer backlash (including decreased sales and harmed reputation), as a result of consumers posting offensive content.
Additionally, we expect to generate revenue through offering advertising within our game. The content of in-game advertisements may be created and delivered by third-party advertisers without our pre-approval, and, as such, objectionable content may be published in our games. This objectionable third-party-created content may expose us to regulatory action or claims related to content, or otherwise negatively impact our business. We may also be subject to consumer backlash from comments made in response to postings we make on social media sites such as Facebook, YouTube, and X.
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Exchange rate fluctuations could negatively affect our financial condition.
We operate and plan to sell products globally, and, as a result, we expect to generate a significant portion of our revenues and incur a significant portion of our expenses in currencies other than our functional currency, the U.S. dollar, including the euro and, to a lesser extent, various other currencies. We are particularly exposed to fluctuations in the exchange rate of the U.S. dollar to the euro as a result of our French subsidiary and expected sales in the European market. Our subsidiary’s assets and liabilities are converted based on the exchange rate on the balance sheet date, and income statement items are converted based on the average exchange rate during the relevant financial period. Exchange rates have seen significant fluctuation in recent years, and significant increases in the value of the U.S. dollar relative to such currencies could have a material adverse effect on our reported financial results. As a result, any fluctuations in currency exchange rates could have a negative effect on our business, financial condition and results of operations.
The COVID-19 pandemic may cause a material adverse effect on our business.
The COVID-19 pandemic continues to rapidly evolve. At this time, there continues to be significant volatility and uncertainty relating to the full extent to which the COVID-19 pandemic and the various responses to it will impact our business, operations and financial results. The global deterioration in economic conditions, which may have an adverse impact on discretionary consumer spending or investing, could also impact our business and demand for our services. For instance, consumer spending and investing may be negatively impacted by general macroeconomic conditions, including a rise in unemployment, and decreased consumer confidence resulting from the pandemic. Changing consumer and investor behaviors as a result of the pandemic may also have a material impact on our revenue.
The spread of COVID-19 has also adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The pandemic has resulted, and may continue to result, in a significant disruption of global financial markets, which may reduce our ability to access capital in the future and could negatively affect our liquidity. As a result of a resurgence in COVID-19, such as the Omicron variant, our business could be subject to additional governmental regulations, including updated COVID-19 protocols, which could have a material impact on our business.
If the COVID-19 pandemic does not continue to slow and the spread of COVID-19 is not contained, our business operations could be delayed or interrupted. We expect that government and health authorities may announce new or extend existing restrictions, which could require us to make further adjustments to our operations in order to comply with any such restrictions. We may also experience limitations in employee resources. In addition, our operations could be disrupted if any of our employees were suspected of having COVID-19, which could require quarantine of some or all such employees or closure of our facilities for disinfection. The duration of any business disruption cannot be reasonably estimated at this time but may materially affect our ability to operate our business and result in additional costs.
The extent to which the pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this prospectus, including the effectiveness of vaccines and other treatments for COVID-19, and other new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic and capital markets environment, and future developments in the global supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.
Because purchases of our products and services are discretionary spending, if general economic conditions decline, demand for our products and services could decline.
Purchases of our planned products and services involve discretionary spending on the part of consumers. Consumers are generally more willing to make discretionary purchases, including purchases of products and services like ours, during periods in which favorable economic conditions prevail. As a result, our planned products and services are sensitive to general economic conditions and economic cycles. A reduction or shift in domestic or international consumer spending could result in an increase in our selling and promotional expenses, in an effort to offset that reduction, and could negatively impact our business.
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Industry and other market data used in this prospectus or in periodic reports that we may file in the future with the SEC, including those undertaken by us or our engaged consultants, may not prove to be representative of current and future market conditions or future results.
This prospectus includes or refers to, and periodic reports that we may in the future file with the SEC may include or refer to, statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties and surveys and studies that we undertook ourselves regarding the market potential for our current products. Although we believe that such information has been obtained from reliable sources, the sources of such data have not guaranteed the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data. The results of this data represent various methodologies, assumptions, research, analysis, projections, estimates, composition of respondent pool, presentation of data and adjustments, each of which may ultimately prove to be incorrect, and cause actual results and market viability to differ materially from those presented in any such report or other materials.
Risks Related to Government Regulation and Being a Public Company
We are subject to data privacy governmental regulations, which can change, and any failure to comply with these regulations may have a material negative effect on our business and results of operations.
We are subject to substantial governmental regulations affecting our business. These include, but are not limited to, data privacy and protection laws, regulations, policies and contractual obligations that apply to the collection, transmission, storage, processing and use of personal information or personal data, which, among other things, impose certain requirements relating to the privacy and security of personal information. The variety of laws and regulations governing data privacy and protection, and the use of the Internet as a commercial medium are rapidly evolving, extensive, and complex, and may include provisions and obligations that are inconsistent with one another or uncertain in their scope or application.
In the ordinary course of our business, we might collect and store in our internal and external data centers, cloud services and networks sensitive data, including our proprietary business information and that of our customers, suppliers and business collaborators, as well as personal information of our customers and employees. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. The number and sophistication of attempted attacks and intrusions that companies have experienced from third parties has increased over the past few years. Despite our security measures, it is impossible for us to eliminate this risk.
A number of U.S. states have enacted data privacy and security laws and regulations that govern the collection, use, disclosure, transfer, storage, disposal, and protection of personal information, such as social security numbers, financial information and other sensitive personal information. For example, all 50 states and several U.S. territories now have data breach laws that require timely notification to affected individuals, and at times regulators, credit reporting agencies and other bodies, if a company has experienced the unauthorized access or acquisition of certain personal information. Other state laws, such as the California Consumer Privacy Act, as amended, or the CCPA, among other things, contain disclosure obligations for businesses that collect personal information about residents in their state and affords those individuals new rights relating to their personal information that may affect our ability to collect and/or use personal information. The California Privacy Rights Act, which expands upon the consumer data use restrictions, penalties and enforcement provisions under the CCPA, and Virginia’s Consumer Data Protection Act, another comprehensive data privacy law, will become effective January 1, 2023. The Colorado Privacy Act and Connecticut’s An Act Concerning Personal Data Privacy and Online Monitoring, which are also comprehensive consumer privacy laws, will become effective July 1, 2023. The Utah Consumer Privacy Act, regarding business handling of consumers’ personal data, becomes effective December 31, 2023. In addition, several other states and the federal government have considered or are considering privacy laws like the CCPA. Although we do not intend to carry out any substantial business activities in the United States or to become subject to these laws, we must continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
Outside of the U.S., data protection laws, including the EU General Data Protection Regulation, or the GDPR, also might apply to some of our operations or business collaborators. Legal requirements in these countries relating to the collection, storage, processing and transfer of personal data/information continue to evolve. The GDPR imposes, among other things, data protection requirements that include strict obligations and restrictions on the ability to collect, analyze and transfer EU personal data/information, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations (including possible fines for certain violations of up to the greater of 20 million euros or 4% of total company revenue). Other governmental authorities around the world have enacted or are considering similar types of legislative and regulatory proposals concerning data protection.
New and evolving regulations and compliance standards for cybersecurity, data protection, privacy, and internal IT controls are often created in response to a major cyberattack and will increasingly impact organizations like our company. Regulatory and policy-driven obligations may occur unexpectedly and require our company to divert substantial resources to meet expensive and time-consuming compliance measures. The interpretation and enforcement of the laws and regulations described above are uncertain and subject to change and may require substantial costs to monitor and implement and maintain adequate compliance programs. Failure to comply with U.S. and international data protection laws and regulations could result in government enforcement actions (which could include substantial civil and/or criminal penalties), private litigation and/or adverse publicity and could negatively affect our operating results and business.
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The fear of non-compliance, failed audits, and material findings may compel us to spend more to ensure we are in compliance, which may result in costly, one-off implementations to mitigate potential fines or reputational damage. The high costs associated with failing to meet regulatory requirements, combined with the risk of fallout from security breaches, has elevated this topic from IT staff up to the executive and board level. We may therefore spend additional time and money ensuring we will meet possible or unforeseeable future data protection regulations.
Our business, products, and distribution will be subject to increasing regulation in key territories. If we do not successfully respond to these regulations, our business could be negatively impacted.
The video game industry continues to evolve, and new and innovative business opportunities are often subject to new attempts at regulation. As such, legislation is continually being introduced, and litigation and regulatory enforcement actions are taking place, that may affect the way in which we, and other industry participants, may offer content and features, and distribute and advertise our products. These laws, regulations, and investigations are related to protection of minors, gambling, screen time, business models, consumer privacy, cybersecurity, data protection, accessibility, advertising, taxation, payments, intellectual property, distribution, and antitrust, among others.
For example, many foreign countries have laws that permit governmental entities to restrict or prohibit marketing or distribution of interactive entertainment software products because of the content therein. In addition, certain jurisdictions have laws that restrict or prohibit marketing or distribution of interactive entertainment software products with random digital item mechanics, which we expect our planned game to include, or subject such products to additional regulation and oversight, such as reporting to regulators, mandatory disclosure to consumers of item drop rates, and higher age ratings for products that contain such mechanics.
Further, the growth and development of electronic commerce, virtual items, and currency may prompt calls for more stringent consumer protection laws that may impose additional burdens or limitations on operations of companies such as ours conducting business through the Internet and mobile devices, including related to screen time. Also, existing laws or new laws regarding the marketing of in-app purchases, regulation of currency, banking institutions, unclaimed property, and money laundering may be interpreted to cover virtual currency or goods. Additionally, laws may limit or prevent the auto-renewal of contracts and subscriptions. Further, the European Commission has recently imposed a large antitrust fine on a number of other game publishers who had been geoblocking certain EU countries. In addition, in 2019 the World Health Organization included “gaming disorder” in the 11th Revision of the International Classification of Diseases (ICD-11), leading some countries to consider legislation and policies aimed at addressing this issue. Moreover, the public dialogue concerning interactive entertainment may have an adverse impact on our reputation and consumers’ willingness to purchase our products.
The adoption and enforcement of legislation that restricts the marketing, content, business model, or sales of our products in countries in which we do business may harm the sales of our products, as the products we are able to offer to our customers and the size of the potential audience for our products may be limited. We may be required to modify certain product development processes or products or alter our marketing strategies to comply with regulations, which could be costly or delay the release of our products. In addition, the laws and regulations affecting our products vary by territory and may be inconsistent with one another, imposing conflicting or uncertain restrictions. Failure to comply with any applicable legislation may also result in government-imposed fines or other penalties, as well as harm to our reputation.
Our business depends on our customers’ continued and unimpeded access to the Internet and the development and maintenance of Internet infrastructure. Internet access providers may be able to block, degrade or charge for access to certain of our services, which could lead to additional expenses and the loss of customers.
Our services depend on the ability of our customers to access the Internet. Currently, this access is provided by companies having significant market power in the broadband and Internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies and government-owned service providers. Some of these providers have the ability to take measures including legal actions that could degrade, disrupt or increase the cost of user access to certain of our services by restricting or prohibiting the use of their infrastructure to support our services, charging increased fees to our users, or regulating online speech. Such interference could result in a loss of existing users, advertisers and goodwill, could result in increased costs and could impair our ability to attract new users, thereby harming our revenue and growth. Moreover, the adoption of any laws or regulations adversely affecting the growth, popularity or use of the Internet, including laws impacting Internet neutrality, could decrease the demand for our services and increase our operating costs. The legislative and regulatory landscape regarding the regulation of the Internet and, in particular, Internet neutrality, in the U.S. is subject to uncertainty.
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To the extent any laws, regulations or rulings permit Internet service providers to charge some users higher rates than others for the delivery of their content, Internet service providers could attempt to use such laws, regulations or rulings to impose higher fees or deliver our content with less speed, reliability or otherwise on a non-neutral basis as compared to other market participants, and our business could be adversely impacted. Internationally, government regulation concerning the Internet, and in particular, network neutrality, may be developing or non-existent. Within such a regulatory environment, we could experience discriminatory or anticompetitive practices impeding both our and our customers’ domestic and international growth, increasing our costs or adversely affecting our business. Additional changes in the legislative and regulatory landscape regarding Internet neutrality, or otherwise regarding the regulation of the Internet, could harm our business, operating results and financial condition.
Our business could be affected by new governmental regulations regarding the Internet.
To date, government regulations have not materially restricted use of the Internet in most parts of the world. However, the legal and regulatory environment relating to the Internet is uncertain, and governments may impose regulation in the future. New laws may be passed, courts may issue decisions affecting the Internet, existing but previously inapplicable or unenforced laws may be deemed to apply to the Internet or regulatory agencies may begin to more rigorously enforce such formerly unenforced laws, or existing legal safe harbors may be narrowed, both by U.S. federal or state governments and by governments of foreign jurisdictions. The adoption of any new laws or regulations, or the narrowing of any safe harbors, could hinder growth in the use of the Internet and online services generally, and decrease acceptance of the Internet and online services as a means of communications, e-commerce and advertising. In addition, such changes in laws could increase our costs of doing business or prevent us from delivering our products and services over the Internet or in specific jurisdictions, which could harm our business and our results of operations.
We operate in non-U.S. markets and are subject to the U.S. Foreign Corrupt Practices Act, or the FCPA, as well as anti-corruption laws and regulations in other countries. Violations of these laws and regulations could have a material adverse effect on our business, financial condition and results of operations.
We may be or become subject to various United States and non-U.S. anti-corruption laws, or Anti-Corruption Laws, including the FCPA and the Bermuda Bribery Act 2016 in Bermuda. These laws generally prohibit companies and their intermediaries from engaging in bribery or making other improper payments of cash (or anything else of value) to government officials and other persons in order to obtain or retain business. Our business operations also must be conducted in compliance with applicable economic sanctions laws and regulations, or Trade Controls, including rules administered by the United States Department of the Treasury’s Office of Foreign Assets Control, the United States Department of State, the United States Department of Commerce, the United Nations Security Council and other relevant authorities.
We strive to conduct our business activities in compliance with applicable Anti-Corruption Laws and Trade Controls, and we are not aware of issues of historical noncompliance. However, we cannot guarantee full compliance currently or in the future. Violations of Anti-Corruption Laws or Trade Controls, or even allegations of such violations, could result in civil or criminal penalties, as well as adversely affect our business, financial condition and results of operations. Further, changes to the applicable laws and regulations, and/or significant business growth, may result in the need for increased compliance-related resources and costs.
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or the FDIC, as receiver. Similarly, on March 12, 2023, Signature Bank Corp., or Signature, and Silvergate Capital Corp. were each swept into receivership. Additionally, on March 19, 2023, Credit Suisse collapsed and was bought by UBS. Although a statement by the Department of the Treasury, the Federal Reserve and the FDIC indicated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB, Signature or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder. Although we are not a borrower under or party to any material letter of credit or any other such instruments with SVB, Signature or any other financial institution currently in receivership, if we enter into any such instruments and any of our lenders or counterparties to such instruments were to be placed into receivership, we may be unable to access such funds. In addition, if any of our partners, suppliers or other parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. In this regard, counterparties to credit agreements and arrangements with these financial institutions, and third parties such as beneficiaries of letters of credit (among others), may experience direct impacts from the closure of these financial institutions and uncertainty remains over liquidity concerns in the broader financial services industry. Similar impacts have occurred in the past, such as during the 2008-2010 financial crisis.
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Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Although the U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed the capacity of such program.
Our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, any financial institutions with which we enter into credit agreements or arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.
The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations. These risks include, but may not be limited to, the following:
| ● | delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets; |
| ● | inability to enter into credit facilities or other working capital resources; |
| ● | potential or actual breach of contractual obligations that require us to maintain letters of credit or other credit support arrangements; or |
| ● | termination of cash management arrangements and/or delays in accessing or actual loss of funds subject to cash management arrangements. |
In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses or other obligations, financial or otherwise, result in breaches of our financial and/or contractual obligations, or result in violations of federal or state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations.
Any further deterioration in the macroeconomic economy or financial services industry could lead to losses or defaults by our partners, vendors or suppliers, which in turn, could have a material adverse effect on our current and/or projected business operations and results of operations and financial condition. For example, a partner may fail to make payments when due, default under their agreements with us, become insolvent or declare bankruptcy, or a supplier may determine that it will no longer deal with us as a customer. In addition, a vendor or supplier could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on us, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution. The bankruptcy or insolvency of any partner, vendor or supplier, or the failure of any partner to make payments when due, or any breach or default by a partner, vendor or supplier, or the loss of any significant supplier relationships, could cause us to suffer material losses and may have a material adverse impact on our business.
The requirements of being a public company may strain our resources.
As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the OTCQB standards, if we are quoted on OTCQB. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources. Management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results.
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The Exchange Act requires that we file annual and other material reports with respect to our businesses, financial condition, and results of operations. In addition, we must establish the corporate infrastructure necessary for operating a public company, which may divert our management’s attention from implementing our growth strategy, which could delay or slow the implementation of our business strategies, and in turn, negatively impact our financial condition and results of operations.
Our internal controls over financial reporting currently may not meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal controls over financial reporting in accordance with Section 404 could impair our ability to produce timely and accurate financial statements or comply with applicable regulations and have a material adverse effect on our business.
As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that will require us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements, and harm our operating results. In addition, we will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report on Form 20-F following the completion of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation through the implementation of new internal controls and procedures and hiring accounting or internal audit staff. Testing and maintaining internal controls may divert management’s attention from other matters that are important to our business. If we are not able to complete our initial assessment of our internal controls and otherwise implement the requirements of Section 404 in a timely manner or with adequate compliance, we may not be able to certify as to the adequacy of our internal controls over financial reporting.
Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby be required to restate our financial statements or otherwise be subject to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock exchange listing rules, which may result in a breach of the covenants under future financing arrangements. If we fail to meet our public reporting obligations, investors could lose confidence in us and the reliability of our financial statements, which could have a negative effect on the trading price of our Class B Common Shares. Confidence in the reliability of our financial statements also could suffer if we report a material weakness in our internal controls over financial reporting. This could materially adversely affect us and lead to a decline in the market price of our Class B Common Shares.
We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.
As a public company, we will incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and other applicable securities rules and regulations impose various requirements on public companies, including the establishment and maintenance of effective disclosure and financial controls and corporate governance practices. We expect that we will need to hire additional accounting, finance and other personnel in connection with our becoming, and our efforts to comply with the requirements of being, a public company, and our management and other personnel will need to devote a substantial amount of time towards maintaining compliance with these requirements. These requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that the rules and regulations applicable to us as a public company may make it more difficult and more expensive for us to obtain director and officer liability insurance, which could make it more difficult for us to attract and retain qualified members of our board. We are currently evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
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Our management team has limited experience managing a public company.
Most members of our management team have limited experience managing a publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could harm our business, financial condition and results of operations.
Risks Related to Ownership of Our Class B Common Shares
Our dual class voting structure has the effect of concentrating the voting control to holders of our Class A Common Shares, which will limit or preclude your ability to influence corporate matters, and your interests may conflict with the interests of these shareholders. It may also adversely affect the trading market for our Class B Common Shares due to exclusion from certain stock market indices.
We adopted a dual class voting structure such that our common shares consist of Class A Common Shares and Class B Common Shares, and we are authorized to issue any number of classes of preference shares. Class A Common Shares are entitled to twenty votes per share on proposals requiring or requesting shareholder approval, and Class B Common Shares are entitled to one vote on any such matter. Class A Common Shares may be voluntarily converted into Class B Common Shares. A transfer of Class A Common Shares will result in their automatic conversion into Class B Common Shares upon such transfer, except that the transfer of Class A Common Shares to another holder of Class A Common Shares will not result in such automatic conversion. A transfer of Class A Common Shares from one holder of Class A Common Shares to another holder of Class A Common Shares may have the effect of further concentrating control or permitting the transfer of control of the company to such holder. Class B Common Shares are not convertible.
In this offering, the selling shareholders are offering Class B Common Shares. Emanuele Filiberto di Savoia, our Chief Executive Officer and a member of our board of directors, owns 6,000,000 of our outstanding Class A Common Shares, which amounts to 120,000,000 votes. As of the date of this prospectus, there are 9,400,000 Class A Common Shares outstanding representing voting power of 188,000,000 votes, 4,475,000 Class B Common Shares outstanding representing voting power of 4,475,000 votes, and no preference shares outstanding. As a result, out of a total of 13,875,000 outstanding common shares representing total voting power of 192,475,000 votes, Mr. di Savoia controls approximately 62.4% of the voting power as of the date of this prospectus. Mr. di Savoia will have the ability to control the outcome of most matters requiring shareholder approval, including:
| ● | the election of our board and, through our board, decision-making with respect to our business direction and policies, including the appointment and removal of our officers; |
| ● | mergers, de-mergers and other significant corporate transactions; |
| ● | changes to our constitution; and |
| ● | our capital structure. |
This voting control and influence may discourage transactions involving a change of control of our company, including transactions in which you, as a holder of our Class B Common Shares, might otherwise receive a premium for your shares.
S&P Dow Jones and FTSE Russell have implemented changes to their eligibility criteria for inclusion of shares of public companies on certain indices to partially or fully exclude companies with multiple classes of shares from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our common shares may prevent the inclusion of the Class B Common Shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for our Class B Common Shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of the Class B Common Shares.
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There has been no prior public market for our Class B Common Shares and an active and liquid market may fail to develop, which could harm the market price of our Class B Common Shares.
Prior to this offering, there has been no public market for our Class B Common Shares. We intend to apply to quote our Class B Common Shares on OTCQB following this offering. Although we anticipate our Class B Common Shares being approved to quote on OTCQB, an active trading market for our Class B Common Shares may never develop or be sustained following this offering. In the absence of an active trading market for our Class B Common Shares, investors may not be able to sell their Class B Common Shares at or above the price they paid or at the time that they would like to sell. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or assets by using our shares as consideration.
A significant portion of our Class B Common Shares may be sold into the public market in the near future, which could cause the market price of our Class B Common Shares to drop significantly, even if our business is doing well.
Future sales of our Class B Common Shares in the public market after this offering and the availability of Class B Common Shares for future sale could adversely affect the market price of our Class B Common Shares prevailing from time to time. Certain of our Class B Common Shares currently outstanding will not be available for sale shortly after this offering due to contractual restrictions on transfers of our Class B Common Shares under certain lock-up agreements. Upon the expiration of these lock-up agreements, Class B Common Shares will be eligible for sale 180 days after the date our Class B Common Shares are listed on a national securities exchange, provided that Class B Common Shares held by our affiliates will remain subject to volume, manner of sale, and other resale limitations set forth in Rule 144 under the Securities Act, or Rule 144. Additionally, these lock-up agreements may be waived at any time. Furthermore, under our bye-laws, we will be authorized to issue up to 430,000,000 Class B Common Shares, of which 5,725,000 shares will be outstanding following this offering. Sales of substantial numbers of Class B Common Shares, or the perception that these sales could occur, could adversely affect prevailing market prices for our Class B Common Shares and could impair our future ability to raise equity capital.
In addition, the Class B Common Shares subject to our 2023 Plan and the Class B Common Shares reserved for future delivery under the 2023 Plan will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. Following this offering, we intend to file one or more registration statements on Form S-8 with the SEC, covering our Class B Common Shares available for future issuance under the Plan. Upon effectiveness of such registration statements, any Class B Common Shares subsequently issued under such Plan will be eligible for sale in the public market, except to the extent that they are restricted by any lock-up agreements and subject to compliance with Rule 144 in the case of our affiliates. Sales of a large number of the Class B Common Shares issued under the Plan in the public market could have an adverse effect on the market price of our Class B Common Shares. If these additional Class B Common Shares are sold, or if it is perceived that they will be sold in the public market, the trading price of our Class B Common Shares could decline substantially.
Future issuances of our Class B Common Shares or securities convertible into, or exercisable or exchangeable for, our Class B Common Shares, or the trading of outstanding common shares, could cause the market price of our Class B Common Shares to decline and would result in the dilution of your holdings.
Future issuances of our Class B Common Shares or securities convertible into, or exercisable or exchangeable for, our Class B Common Shares, or the trading of outstanding common shares, could cause the market price of our Class B Common Shares to decline. We cannot predict the effect, if any, of future issuances of our securities on the price of our Class B Common Shares. In all events, future issuances of our common shares would result in the dilution of your holdings. In addition, the perception that new issuances of our securities could occur, or the perception that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our Class B Common Shares.
Future issuances of debt securities, which would rank senior to our Class B Common Shares upon our bankruptcy or liquidation, and future issuances of preference shares, which could rank senior to our Class B Common Shares for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our Class B Common Shares.
In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our Class B Common Shares. Moreover, if we issue preference shares, the holders of such preference shares could be entitled to preferences over holders of Class B Common Shares in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preference shares in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of any such future offerings or borrowings. Holders of our Class B Common Shares must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our Class B Common Shares.
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Our operating results and share price may be volatile, and the market price of our Class B Common Shares after this offering may drop below the price you pay.
Our operating results are likely to fluctuate in the future as a public company. In addition, securities markets worldwide have experienced, and are likely to continue to experience, significant price and volume fluctuations. This market volatility, as well as general economic, market, or political conditions, could subject the market price of our shares to wide price fluctuations regardless of our operating performance. You may not be able to resell your shares at or above the price you paid or at all. Our operating results and the trading price of our Class B Common Shares may fluctuate in response to various factors, including:
| ● | market conditions in the broader stock market; |
| ● | actual or anticipated fluctuations in our financial and operating results; |
| ● | introduction of new products or services by us or our competitors; |
| ● | issuance of new or changed securities analysts’ reports or recommendations; |
| ● | changes in debt ratings; |
| ● | results of operations that vary from expectations of securities analysts and investors; |
| ● | guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance; |
| ● | strategic actions by us or our competitors; |
| ● | announcement by us, our competitors, or our vendors of significant contracts or acquisitions; |
| ● | sales, or anticipated sales, of large blocks of our Class B Common Shares; |
| ● | additions or departures of key personnel; |
| ● | regulatory, legal, or political developments; |
| ● | public response to press releases or other public announcements by us or third parties, including our filings with the SEC; |
| ● | litigation and governmental investigations; |
| ● | changing economic conditions; |
| ● | changes in accounting principles; and |
| ● | other events or factors, including those from natural disasters, pandemics, wars, acts of terrorism, or responses to these events. |
These and other factors, many of which are beyond our control, may cause our operating results and the market price and demand for our Class B Common Shares to fluctuate substantially. While we believe that operating results for any particular period are not necessarily a meaningful indication of future results, fluctuations in our operating results could limit or prevent investors from readily selling their shares and may otherwise negatively affect the market price and liquidity of our shares. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes brought securities class action litigation against the company that issued the stock. If any of our shareholders brought a lawsuit against us, we could incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business, which could significantly harm our profitability and reputation.
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If securities or industry analysts either do not publish research about us or publish inaccurate or unfavorable research about us, our business or our market, if they adversely change their recommendations regarding our Class B Common Shares, or if our operating results do not meet their expectations or any financial guidance we may provide, the trading price or trading volume of our Class B Common Shares could decline.
The trading market for our Class B Common Shares will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over independent analysts. If we obtain independent securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our Class B Common Shares, changes their opinion of our Class B Common Shares or publishes inaccurate or unfavorable research about our business, our share price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Class B Common Shares could decrease and we could lose visibility in the financial markets, which could cause our Class B Common Shares and trading volume to decline. In addition, we may be expected to provide various measures of financial guidance, and, if we do not meet any financial guidance that we may provide to the public, if we do not meet expectations of securities analysts or investors, or if our guidance is misunderstood by securities analysts or investors, the trading price of our Class B Common Shares could decline significantly. Our operating results may fluctuate significantly from period to period as a result of changes in a variety of factors affecting us or our industry, many of which are difficult to predict. As a result, we may experience challenges in forecasting our operating results for future periods.
We have never paid cash dividends on our securities and do not intend to pay dividends for the foreseeable future.
We have paid no cash dividends on any class of our common shares to date, and we do not anticipate paying cash dividends in the near term. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common shares. Accordingly, investors must be prepared to rely on sales of their Class B Common Shares after price appreciation to earn an investment return, which may never occur. Investors seeking cash dividends should not purchase our Class B Common Shares. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board deems relevant.
Changes to taxation or the interpretation or application of tax laws could have an adverse impact on our results of operations and financial condition.
Our business is subject to various taxes in different jurisdictions (mainly France), which include, among others, the French corporate income tax (“IS”), local economic contribution tax (“CET”), value added tax (“VAT”), excise duty, registration tax and other indirect taxes. We are exposed to the risk that our overall tax burden may increase in the future.
Changes in tax laws or regulations, or in the position of the relevant French and non-French authorities regarding the application, administration or interpretation of these laws or regulations, particularly if applied retroactively, could have a material adverse effect on our business, results of operations and financial condition. These changes include the introduction of a global minimum tax at a rate of 15% under the Two-Pillar Solution to Address the Tax Challenges of the Digitalisation of the Economy, agreed upon by over 130 jurisdictions under the Organisation for Economic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting and to be implemented as from January 1, 2024.
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In addition, tax laws are complex and subject to subjective valuations and interpretive decisions, and we periodically may be subject to tax audits aimed at assessing our compliance with direct and indirect taxes. The tax authorities may not agree with our interpretations of, or the positions we have taken or intend to take on, tax laws applicable to our ordinary activities and extraordinary transactions. In case of challenges by the tax authorities to our interpretations, we could face long tax proceedings that could result in the payment of additional tax and penalties, with potential material adverse effects on our business, results of operations and financial condition.
If a United States person is treated as owning at least 10% of any class of our common shares, such holder may be subject to adverse U.S. federal income tax consequences.
If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of any class of our common shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any). Our group includes one or more U.S. subsidiaries, and, as a result, certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations, regardless of whether we are treated as a controlled foreign corporation (although recent regulations significantly limit the application of these rules). A U.S. shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, regardless of whether the controlled foreign corporation makes any distributions. Failure to comply with these reporting obligations may subject U.S. shareholders to significant monetary penalties and may prevent the statute of limitations with respect to their U.S. federal income tax return for the year for which reporting was due from starting. An individual who is a U.S. shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a U.S. shareholder that is a U.S. corporation. We cannot provide any assurances that we will assist investors in determining whether any of our non-U.S. subsidiaries are treated as a controlled foreign corporation or whether such investor is treated as a U.S. shareholder with respect to any of such controlled foreign corporations or furnish to any U.S. shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. U.S. investors should consult their advisors regarding the potential application of these rules to an investment in our Class B Common Shares.
We are a Bermuda company, and it may be difficult for you to enforce judgments against us or certain of our directors or officers.
We are a Bermuda exempted company. As a result, the rights of holders of our common shares will be governed by Bermuda law and our memorandum of association and bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in other jurisdictions. Many of our directors are not residents of the United States, and a substantial portion of our assets are located outside the United States. As a result, it may be difficult for investors to effect service of process on those persons in the United States or to enforce in the United States judgments obtained in U.S. courts against us or those persons based on the civil liability provisions of the U.S. securities laws. It is doubtful whether courts in Bermuda will enforce judgments obtained in other jurisdictions, including the United States, against us or our directors or officers under the securities laws of those jurisdictions or entertain actions in Bermuda against us or our directors or officers under the securities laws of other jurisdictions.
With respect to any complaint asserting a cause of action arising under the Securities Act, the Exchange Act, or the rules and regulations promulgated thereunder, we note, however, that Section 22 of the Securities Act provides jurisdiction for U.S. federal courts over offenses and violations under the Securities Act or the rules and regulations thereunder and generally provides concurrent jurisdiction for U.S. federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, and Section 27 of the Exchange Act creates exclusive U.S. federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Our bye-laws restrict shareholders from bringing legal action against our officers and directors.
Our bye-laws contain a broad waiver by our shareholders of any claim or right of action, both individually and on our behalf, against any of our officers or directors. The waiver applies to any action taken by an officer or director, or the failure of an officer or director to take any action, in the performance of his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or director. This waiver limits the right of shareholders to assert claims against our officers and directors unless the act or failure to act involves fraud or dishonesty.
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With respect to any complaint asserting a cause of action arising under the Securities Act, the Exchange Act, or the rules and regulations promulgated thereunder, we note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act provides jurisdiction for federal courts over offenses and violations under the Securities Act or the rules and regulations thereunder and generally provides concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, and Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. In addition, section 14 of the Securities Act and section 29(a) of the Exchange provide that any “condition, stipulation, or provision” waiving compliance with any provision of either act is void.
The provisions of our bye-laws described above will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.
We have provisions in our bye-laws that may discourage a change of control.
Our bye-laws contain provisions that could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions include, among others:
| ● | restrictions on the time period in which directors may be nominated; |
| ● | the prohibition of cumulative voting in the election of directors, which prevents a shareholder from casting all the votes to which the shareholder is entitled on a single director; |
| ● | the requirement for shareholders wishing to propose a person for election as a director (other than persons proposed by our board of directors) to give advance written notice of nominations for the election of directors; |
| ● | directors only to be removed for cause; and |
| ● | our board of directors to determine the powers, preferences and rights of our preference shares and to issue the preference shares without shareholder approval. |
These provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many shareholders. As a result, shareholders may be limited in their ability to obtain a premium for their shares. See “Description of Share Capital and Bye-Laws.”
Legislation enacted in Bermuda as to economic substance may affect our operations.
Pursuant to the Economic Substance Act 2018 (as amended) of Bermuda (the “ES Act”) that came into force on January 1, 2019, a registered entity other than an entity which is resident for tax purposes in certain jurisdictions outside Bermuda (“non-resident entity”) that carries on as a business any one or more of the “relevant activities” referred to in the ES Act must comply with economic substance requirements. The ES Act may require in-scope Bermuda entities which are engaged in such “relevant activities” to be directed and managed in Bermuda, have an adequate level of qualified employees in Bermuda, incur an adequate level of annual expenditure in Bermuda, maintain physical offices and premises in Bermuda or perform core income-generating activities in Bermuda. The list of “relevant activities” includes carrying on any one or more of: banking, insurance, fund management, financing, leasing, headquarters, shipping, distribution and service centre, intellectual property and holding entities.
Based on the ES Act as currently understood, for so long as our company is a non-resident entity, it is not required to satisfy any such economic substance requirements other than providing the Bermuda Registrar of Companies annually information on the jurisdiction in which it claims to be resident for tax purposes together with sufficient evidence to support that tax residence. Although it is presently anticipated that the ES Act will have little material impact on our company or its operations, as the legislation is new and remains subject to further clarification and interpretation, it is not currently possible to ascertain the precise impact of the ES Act on our company.
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We may need or be required to have employees in Bermuda but may not be able to obtain the required work permits under Bermuda law.
Under Bermuda law, non-Bermudians (other than spouses of Bermudians, holders of Permanent Residents’ Certificates and holders of Working Residents’ Certificates) may not engage in any gainful occupation in Bermuda without a valid government work permit. A work permit may be granted or renewed upon showing that, after proper public advertisement, no Bermudian, spouse of a Bermudian, or holder of a Permanent Resident’s or Working Resident’s Certificate who meets the minimum standards reasonably required by the employer has applied for the job. A work permit is issued with an expiry date (up to five years) and no assurances can be given that any work permit will be issued or, if issued, renewed upon the expiration of the relevant term. Although we currently have no employees in Bermuda, in the future our success may depend in part on the service of key employees in Bermuda, including if the Bermudian authorities were to find that the ES Act (described above) applies to our business. Should we not be able to recruit suitable Bermudian employees, or obtain work permits for prospective non-Bermudian employees, we may not be able to use their services, which could have a material adverse effect on our business, financial condition and results of operations.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
| ● | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; |
| ● | the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; |
| ● | the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and |
| ● | the selective disclosure rules by issuers of material nonpublic information under Regulation FD. |
Upon the completion of this offering, we will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis as press releases and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. In the future, we would lose our foreign private issuer status if we fail to meet the requirements necessary to maintain our foreign private issuer status as of the relevant determination date. For example, if more than 50% of our securities are held by U.S. residents and more than 50% of either our directors or executive officers are residents or citizens of the United States, we could lose our foreign private issuer status.
The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than costs we may incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. We would be required under current SEC rules to prepare our financial statements in accordance with U.S. GAAP, rather than IFRS. Such conversion of our financial statements to U.S. GAAP would involve significant time and cost, and we would still be required to prepare financial statements in accordance with IFRS as required by Bermudian law. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers such as the ones described above and exemptions from procedural requirements related to the solicitation of proxies.
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There is a risk that we will be a passive foreign investment company for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors in our shares.
In general, a non-U.S. corporation is a passive foreign investment company, or PFIC, for any taxable year in which (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non-U.S. corporation that owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, rents, royalties and certain gains. Cash is a passive asset for these purposes.
Based on the expected composition of our income and assets and the value of our assets, including goodwill, which is based on the expected price of the shares in this offering, we do not expect to be a PFIC for our current taxable year. However, the proper application of the PFIC rules to a company with a business such as ours is not entirely clear. Because we will hold a substantial amount of cash following this offering, and because our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets from time to time (which may be determined, in part, by reference to the market price of our shares, which could be volatile), there can be no assurance that we will not be a PFIC for our current taxable year or any future taxable year.
If we were a PFIC for any taxable year during which a U.S. investor holds shares, certain adverse U.S. federal income tax consequences could apply to such U.S. investor. See “Material United States and Bermuda Income Tax Considerations—U.S. Federal Income Taxation Considerations—Passive Foreign Investment Company Consequences” for additional information.
We will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies,” and our shareholders could receive less information than they might expect to receive from more mature public companies.
Upon the completion of this offering, we will qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act, or JOBS Act. As a result, we will be permitted to, and intend to, rely on provisions providing for certain exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of an emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least $1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our common shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Because we will be subject to ongoing public reporting requirements that are less rigorous than Exchange Act rules for companies that are not emerging growth companies, our shareholders could receive less information than they might expect to receive from more mature public companies. We cannot predict if investors will find our common shares less attractive if we elect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our common shares.
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Certain of our major shareholders may have interests that are different from the interests of our other shareholders.
Certain of our major shareholders may have interests that are different from, or are in addition to, the interests of our other shareholders. In particular, Emanuele Filiberto di Savoia, our Chief Executive Officer and a member of our board of directors, may be deemed to beneficially own approximately 61.9% of the total voting power of our issued and outstanding shares after this offering, Daniel Joseph McClory, our Executive Chairman and a member of our board of directors, may be deemed to beneficially own approximately 25.8% of the total voting power of our issued and outstanding shares after this offering, and Jean-Claude Sindres, our Chief Strategy and Creative Officer, may be deemed to beneficially own approximately 9.3% of the total voting power of our issued and outstanding shares after this offering. There may be real or apparent conflicts of interest with respect to matters affecting such shareholders and their affiliates whose interests in some circumstances may be adverse to our interests.
For so long as such shareholders continue to own a significant percentage of the voting power of our common shares, they will be able to significantly influence the composition of our board of directors and the approval of actions requiring shareholder approval through their voting power. Accordingly, for such period of time, they will have significant influence with respect to our management, business plans and policies, including the appointment and removal of our officers. In particular, for so long as such shareholders continue to own a significant percentage of the voting power of our common shares, they may be able to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your Class B Common Shares as part of a sale of our company and ultimately might affect the market price of our Class B Common Shares.
If our Class B Common Shares become subject to the penny stock rules, it would become more difficult to trade our shares.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on a national securities exchange and if the price of our Class B Common Shares is less than $5.00, our Class B Common Shares could be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Class B Common Shares, and therefore shareholders may have difficulty selling their shares.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. The forward-looking statements are contained principally in, but not limited to, the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
| ● | our goals and strategies; |
| ● | our future business development, financial condition and results of operations; |
| ● | our projected revenues, profits, earnings and other estimated financial information; |
| ● | our ability to secure additional funding necessary for the expansion of our business; |
| ● | the growth of and competition trends in our industry; |
| ● | our expectations regarding the popularity, demand for, and market acceptance of, our products and of our game; |
| ● | our ability to maintain strong relationships with our customers, clients and service suppliers; |
| ● | our ability and third parties’ abilities to protect intellectual property rights; |
| ● | our expectation regarding the use of proceeds from this offering; |
| ● | fluctuations in general economic and business conditions in the markets in which we operate; and |
| ● | relevant government policies and regulations relating to our industry. |
In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the heading “Risk Factors” and elsewhere in this prospectus. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus forms a part with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
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We will not receive any proceeds from the sale of Class B Common Shares by the selling shareholders.
The selling shareholders will pay any underwriting discounts and commissions and expenses incurred by them for brokerage, accounting, tax or legal services or any other expenses incurred by them in disposing of the shares. We will bear all other costs, fees and expenses incurred in effecting the registration of the shares covered by this prospectus, including, without limitation, all registration and filing fees and fees and expenses of our counsel and our accountants.
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We have never declared or paid cash dividends on our common shares. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends in the near future. We may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant, and will be subject to compliance with applicable laws. Under Bermuda law, a company may not declare or pay a dividend if there are reasonable grounds to believe that: (i) the company is, or would after the payment be, unable to pay its liabilities as they become due, or (ii) the realizable value of its assets would thereby be less than its liabilities. Under our bye-laws, each Class A Common Share and Class B Common Share will be entitled to dividends, pari passu, if, as and when dividends are declared by our board of directors, subject to any preferred dividend right of the holders of any preference shares. See also “Risk Factors—Risks Related to This Offering and Ownership of Our Class B Common Shares— We have never paid cash dividends on our securities and do not intend to pay dividends for the foreseeable future.”
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this prospectus. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”
The unaudited consolidated financial statements for the six months ended December 31, 2023 and 2022, and the audited consolidated financial statements for the years ended June 30, 2023 and 2022 are prepared pursuant to IFRS. As permitted by the rules of the SEC for foreign private issuers, we do not reconcile our financial statements to U.S. generally accepted accounting principles.
Overview
RoyaLand is a Bermuda holding company focused on creating an online and offline immersive, fantasy-based royalty-themed experience called myRoyal.World, primarily centered around a mobile-first massively multiplayer online role-playing game, or MMORPG, called TheRoyal.Land. We are actively focused on developing what we believe to be a novel, interactive and immersive game based on a player-empowered design. We plan to build proprietary digital avatars and provide opportunities to players to earn in-game reward currency, build virtual land, and own their online assets while enhancing all of these features with what we consider to be premium incremental in-game content.
We are developing TheRoyal.Land and myRoyal.World in collaboration with our founder, the Monaco-based grandson of the last King of Italy, Emanuele Filiberto di Savoia, who claims the titles of His Royal Highness, Prince of Venice, and Prince of Piedmont and is also referred to in this prospectus as the hereditary “Prince of Italy.” In addition, with the support of and affiliation with seven other royal families and families with legal, hereditary or historically based claims to royal positions in Russia, Albania, France, Bulgaria, Yugoslavia, Lesotho, and Mecklenburg collectively referred to as the Royal Families, TheRoyal.Land is intended to deliver this unique past-meets-future entertainment experience.
We believe that TheRoyal.Land will introduce the first historically inspired monarchy-based MMORPG, founded by the Prince of Italy and reinforced by the Royal Families.
Our objective is to connect and engage with players from around the world through royalty-themed entertainment by becoming a worldwide leader in the development, publishing, and distribution of high-quality interactive entertainment content and services, as well as related media, that deliver engaging entertainment experiences to our network of connected players on a year-round basis. Players, in their selected roles, will represent every part of TheRoyal.Land society. From the Artisans that guide the skilled trades of old to the Knights and Squires that guard the Realm. From Prisoner to Prince, each role will hold specific purposes, abilities, skills, chances for advancement, and adventures.
To that end, we expect to capitalize on the expanding video games market, with worldwide revenue expected to grow to approximately $282.3 billion in 2024 according to Statista, and the increased interest in the world of royalty, to expand our brand and our products worldwide (Statista, Video Games – Worldwide, November 2023).
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We are currently in the development phase for TheRoyal.Land and myRoyal.World. On June 30, 2023, we entered into a project agreement with Neosperience S.p.A., or Neosperience, pursuant to which Neosperience will design and develop TheRoyal.Land using its proprietary technology. The first phase of the project agreement has already commenced. Neosperience plans to use its models to create complex and dynamic in-game environments and realistic and emotive characters and to assist with dynamically adjusting the difficulty level and game balance in real time based on player behavior and performance to keep the game challenging yet rewarding. For example, Neosperience’s technology is designed to imbue non-player characters, or NPCs, with various behaviors, which we believe makes them seem more lifelike and responsive thereby enhancing player immersion and creating a more engaging gameplay experience. Additionally, Neosperience intends to use advanced modeling and rendering techniques to create realistic player characters and NPCs that dynamically interact utilizing a full range of human-like emotions, reactions and movements giving them a depth of character which we believe is rarely seen in video games.
As of the date of this prospectus, the expected cost to ready the game for beta version release is approximately $500,000 to $1 million. The pre-production playable beta version of TheRoyal.Land is expected to be released within 2024. Unforeseen delays in product development, turnover of resources and lack of capital may impact our delivery timeline. In addition, we have secured the domains, TheRoyaLand.online and TheRoyaLand.io, on which we expect to host TheRoyal.Land, and have finished website development for TheRoyal.Land. We are also in the early stages of discussions with media companies to develop myRoyal.World media assets for various streaming platforms. We plan to add additional internal resources to ensure the quality and timely delivery of TheRoyal.Land and myRoyal.World’s assets and experiences.
As we launch our initial products over the next twelve months, our revenue will depend on our ability to successfully assemble an engaged community around TheRoyal.Land, who we believe will become long-term players of our mobile and online games. We expect that our future revenues will depend on our ability to monetize the game-playing environment of TheRoyal.Land, as well as potential ancillary products, services, and events.
Our Historical Performance
The Company’s independent registered public accounting firm has expressed substantial doubt as to the Company’s ability to continue as a going concern. While we had cash of $254,688 and $134,543 (including cash in escrow) as of December 31, 2023 and June 30, 2023, respectively, we have incurred net losses since our inception and had accumulated deficits of $1,810,088 as of December 31, 2023 and $1,071,997 as of June 30, 2023. We estimate we will be able to conduct our planned operations using currently available capital resources, including resources received from our March 2024 and April 2024 private placements, for the next eight months. However, in order to meet our growth expectations, we will need to raise funds beyond our current working capital balance in order to finance future development of TheRoyal.Land and myRoyal.World and meet any debt obligations until such time as future profitable revenues are achieved. We will seek to fund our operations through public offerings, including this offering, private equity offerings, debt financings, and government or other third-party funding. However, the Company may not be able to raise adequate funds for capital expenditures, working capital and other cash requirements from capital markets on acceptable terms, or at all. Advances from an officer or shareholder may likewise be unavailable. The Company’s failure to raise capital as and when needed and generate significantly higher revenues than operating expenses to achieve profitability would impact its going concern status and would have a negative impact on its financial condition and its ability to pursue its business strategy and continue as a going concern. For further discussion, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Going Concern”.
Recent Developments
Private Placements
On March 8, 2024, April 17, 2024, and April 24, 2024, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 300,000 Class B Common Shares at $1.00 per share for a total of $300,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead Securities, LLC, or Boustead, acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $21,000, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $3,000, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 21,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
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Impact of COVID-19 Pandemic
In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. To date, there have been a large number of temporary business closures, quarantines and a general reduction in consumer activity around the world.
The spread of the virus in many countries continues to adversely impact global economic activity and has contributed to significant volatility and negative pressure in financial markets and supply chains. The pandemic has had, and could have a significantly greater, material adverse effect on the Italian economy as a whole, as well as the local economy where we conduct our operations. The pandemic has resulted, and may continue to result for an extended period, in significant disruption of global financial markets, which may reduce our ability to access capital in the future, which could negatively affect our liquidity.
If the COVID-19 pandemic does not continue to slow and the spread of COVID-19 is not contained, our business operations, could be further delayed or interrupted. We expect that government and health authorities may announce new or extend existing restrictions, which could require us to make further adjustments to our operations in order to comply with any such restrictions. We may also experience limitations in employee resources. In addition, our operations could be disrupted if any of our employees were suspected of having COVID-19, which could require quarantine of some or all such employees or closure of our facilities for disinfection. The duration of any business disruption cannot be reasonably estimated at this time but may materially affect our ability to operate our business and result in additional costs.
The extent to which the pandemic may impact our results will depend on future developments, which are highly uncertain and cannot be predicted as of the date of this prospectus, including the effectiveness of vaccines and other treatments for COVID-19, and other new information that may emerge concerning the severity of the pandemic and steps taken to contain the pandemic or treat its impact, among others. Nevertheless, the pandemic and the current financial, economic and capital markets environment, and future developments in the global supply chain and other areas present material uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows. See also “Risk Factors” for more information.
Principal Factors Affecting Our Financial Performance
Our operating results are primarily affected by the following factors:
| ● | our ability to acquire and retain new customers and users; |
| ● | our ability to offer competitive pricing; |
| ● | our ability to broaden product or service offerings; |
| ● | industry demand and competition; |
| ● | our ability to leverage technology and use and develop efficient processes; |
| ● | our ability to attract and retain talented employees and contractors; and |
| ● | market conditions and our market position. |
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Emerging Growth Company
Upon the completion of this offering, we will qualify as an “emerging growth company” under the JOBS Act. As a result, we will be permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least $1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date on which we have, during the preceding three year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our Common shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Results of Operations
Comparison of Years Ended June 30, 2023 and 2022
The financial statements presented in this filing include the consolidated financial statements of the Company and the separate financial statements of OAPLT, a predecessor company, which was acquired on November 29, 2022. The consolidated financial statements presented in this filing are expressed in U.S. dollars which is our functional currency.
The following table sets forth key components of the consolidated results of operations of The RoyaLand Company Ltd. (“Successor”) and of OAPLT (“Predecessor”), for the period from November 29, 2022 to June 30, 2023 (Successor), the period from July 1, 2022 to November 28, 2022 (Predecessor), and for the year ended June 30, 2022 (Predecessor).
| Statements of Operations Data | Period from November 29, 2022 to June 30, 2023 (Successor) | %
of Revenue | Period from July 1, 2022 to November 28, 2022 (Predecessor) | % of Revenue | Year Ended June 30, 2022 (Predecessor) | % of Revenue | ||||||||||||||||||
| Revenue | $ | - | N/A | $ | 4,869 | 100 | % | $ | 29,925 | 100 | % | |||||||||||||
| Cost of revenue | - | N/A | - | - | % | - | - | % | ||||||||||||||||
| Impairment of goodwill | 149,369 | N/A | - | - | % | - | - | % | ||||||||||||||||
| General and administrative expenses | 500,368 | N/A | 7,144 | 147 | % | 63,514 | 212 | % | ||||||||||||||||
| Operating loss | (649,737 | ) | N/A | (2,275 | ) | (47 | )% | (33,589 | ) | (112 | )% | |||||||||||||
| Other income (expense) | 1,986 | N/A | (37 | ) | - | % | 4,080 | 14 | % | |||||||||||||||
| Loss before income taxes | (647,751 | ) | N/A | (2,312 | ) | (47 | )% | (29,509 | ) | (99 | )% | |||||||||||||
| Provision for income taxes | - | N/A | - | - | % | - | - | % | ||||||||||||||||
| Net loss | $ | (647,751 | ) | N/A | $ | (2,312 | ) | (47 | )% | $ | (29,509 | ) | (99 | )% | ||||||||||
While the above table reflects amounts reported in our accompanying consolidated financial statements, we believe that a review of operating results which combine entire amounts for the Successor and Predecessor companies is more useful in discussing our overall operating performance amounts when comparing the years ended June 30, 2023 and 2022.
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The following tables reflect unaudited pro forma combined results for the years ended June 30, 2023 and 2022, both in U.S. dollars and as a percentage of revenue.
| Statements of Operations Data | The RoyaLand Company Ltd. Period from November 29, 2022 to June 30, 2023 (Successor) | RoyaLand Nevada Period from July 1, 2022 to November 28, 2022 (Successor) | OAPLT Period from July 1, 2022 to November 28, 2022 (Predecessor) | Pro Forma Combined Year Ended June 30, 2023 (Unaudited) | ||||||||||||||||
| Amount | %
of Revenue | |||||||||||||||||||
| Revenue | - | - | 4,869 | 4,869 | 100 | % | ||||||||||||||
| Cost of revenue | - | - | - | - | - | |||||||||||||||
| Impairment of goodwill | 149,369 | - | - | 149,369 | 3,068 | % | ||||||||||||||
| General and administrative expenses | 500,368 | 253,126 | 7,144 | 760,638 | 15,622 | % | ||||||||||||||
| Operating loss | (649,737 | ) | (253,126 | ) | (2,275 | ) | (905,138 | ) | (18,589 | )% | ||||||||||
| Other income (expense) | 1,986 | (37 | ) | 1,948 | 40 | % | ||||||||||||||
| Loss before income taxes | (647,751 | ) | (253,126 | ) | (2,312 | ) | (903,190 | ) | (18,549 | )% | ||||||||||
| Provision for income taxes | - | - | - | - | - | |||||||||||||||
| Net loss | (647,751 | ) | (253,126 | ) | (2,312 | ) | (903,190 | ) | (18,549 | )% | ||||||||||
| Statements of Operations Data | OAPLT Year Ended June 30, 2022 (Predecessor) | RoyaLand Nevada Period from January 28, 2022 (Inception) to June 30, 2022 (Successor) | Pro Forma Combined Year Ended June 30, 2022 (Unaudited) | |||||||||||||
| Amount | %
of Revenue | |||||||||||||||
| Revenue | 29,925 | - | 29,925 | 100 | % | |||||||||||
| Cost of revenue | - | - | - | - | ||||||||||||
| General and administrative expenses | 63,514 | 171,120 | 234,634 | 784 | % | |||||||||||
| Operating loss | (33,589 | ) | (171,120 | ) | (204,709 | ) | (684 | )% | ||||||||
| Other income (expense) | 4,080 | - | 4,080 | 14 | % | |||||||||||
| Loss before income taxes | (29,509 | ) | (171,120 | ) | (200,629 | ) | (670 | )% | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net loss | (29,509 | ) | (171,120 | ) | (200,629 | ) | (670 | )% | ||||||||
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Revenue
Revenue for the years ended June 30, 2023 and 2022 was $4,869 and $29,925, respectively, representing a decrease of 83.7%. All revenue was generated from OAPLT for both periods. The principal activities of OAPLT for the periods presented above were the conception, development and management of a digital and artistic creation studio, and included the creation of apps, websites, the hosting of web products and the provision of services in relation thereto. The decrease in revenue was due to fewer client engagements.
For the year ended June 30, 2023, two customers accounted for 100% of net revenue. For the year ended June 30, 2022, five customers accounted for 94.1% of net revenue with one customer accounting for 30.2% of net revenue. Each of the customers contracted OAPLT to perform certain graphic design and web development services for discrete projects. OAPLT had no written agreements with these customers and the agreements are not ongoing. OAPLT had no material relationships with these customers. We do not expect to generate recurring revenue from these customers in future periods due to the change of our business strategy from contract design and development work to the design, development and promotion of TheRoyal.Land and myRoyal.World. The following table sets forth a summary of the material terms of the verbal agreements with these customers.
| Date of Invoice |
Hours | Amount of Invoice |
Percent of Yearly Revenue |
Type of Service | ||||||||||||
| Year ended June 30, 2023 | ||||||||||||||||
| Customer #1 | 10/04/22 | 6 | $ | 3,264 | 62.5 | % | Graphic design and web development | |||||||||
| Customer #2 | 11/22/22 | 3 | $ | 1,958 | 37.5 | % | Graphic design and web development | |||||||||
| Year ended June 30, 2022 | ||||||||||||||||
| Customer #1 | 2/18/2022 | 4 | $ | 2,256 | 30.2 | % | Graphic design and web development | |||||||||
| 3/26/2022 | 6 | $ | 3,383 | |||||||||||||
| 6/10/2022 | 6 | $ | 3,383 | |||||||||||||
| Customer #2 | 9/3/2021 | 10 | $ | 5,075 | 29.0 | % | Graphic design and video production | |||||||||
| 12/17/2021 | 10 | $ | 3,609 | |||||||||||||
| Customer #3 | 5/30/2022 | 7 | $ | 3,947 | 13.2 | % | Graphic design | |||||||||
| Customer #4 | 3/26/2022 | 6 | $ | 3,383 | 11.3 | % | Graphic design and web development | |||||||||
| Customer #5 | 9/28/2021 | 5 | $ | 3,102 | 10.4 | % | Web development | |||||||||
Impairment of Goodwill
On November 29, 2022, The RoyaLand Company Ltd. acquired 100% of the issued and outstanding shares of OAPLT. The acquisition was accounted for as a purchase business combination in accordance with IFRS 3, Business Combinations, whereby the purchase price paid to effect the acquisition was allocated to recognize the acquired assets and liabilities at fair value. In allocating the purchase price, The RoyaLand Company Ltd. recognized initial goodwill of $149,369. The goodwill consisted primarily of intangible assets related to the knowhow, design and merchandising of OAPLT’s brands that do not qualify for separate recognition in accordance with IFRS 3. At the time of our acquisition, OAPLT had a relationship with a game developer, which relationship was a significant reason for making the acquisition and for our determination of value of OAPLT’s brand. In December 2022, it became unclear how much of the work performed by the game developer, if any, we would be able to use in our game development, calling into question the value of the relationship with the game developer. As a result, there were uncertainties as to the future financial performance of OAPLT. Given these circumstances, we recorded an operating expense of $149,369 during the period November 29, 2022 to June 30, 2023 as an impairment of the goodwill asset.
45
General and Administrative Expenses
General and administrative expenses for the years ended June 30, 2023 and 2022 was $760,638 and $234,634, respectively, representing an increase of 224.2%. For the year ended June 30, 2023, our general and administrative expenses principally consisted of consulting fees ($386,182) and legal and accounting costs ($344,605). The consulting fees include, among other things, $175,000 cost of common shares issued to advisors and $35,095 in expenses relating to our Chief Financial Officer and Chief Technology Officer. Consulting fees also include $170,087 paid to a previous game developer with which we no longer have a business relationship. Legal and accounting costs are associated with our investor offerings discussed in Note 7 to the accompanying consolidated financial statements.
For the year ended June 30, 2022, our general and administrative expenses mainly consisted of consulting fees ($166,193), wages and benefits ($45,983), and legal and accounting costs ($11,122). The consulting fees were amounts paid to the previous game developer mentioned above. Wages and benefits were amounts paid to employees of OAPLT, while legal and accounting costs are associated with our investor offerings discussed in Note 7 to the accompanying consolidated financial statements.
Operating Loss
Operating loss for the years ended June 30, 2023 and 2022 was $905,138 and $204,709, respectively, representing an increase of 342.2%. Operating loss for the years ended June 30, 2023 and 2022 resulted from the factors discussed above.
Other Income (Expense)
Other income for the years ended June 30, 2023 and 2022 was $1,948 and $4,080, respectively, representing a decrease of 52.3%. Other income for the year ended June 30, 2023 represents the collection of certain OAPLT amounts receivable written off in previous periods offset by interest expense of $60. Other income for the year ended June 30, 2022 mainly consisted of operating grants.
Net Loss
Net loss for the years ended June 30, 2023 and 2022 was $903,190 and $200,629, respectively, representing an increase of 350.2%. These losses resulted from the factors discussed above.
46
Comparison of Six Months Ended December 31, 2023 and 2022
The following table sets forth key components of the interim consolidated results of operations of The RoyaLand Company Ltd., or the Successor company, and of OAPLT, or the Predecessor company, for the six-month periods ended December 31, 2023 and 2022.
| 2023 | 2022 | |||||||||||||||||||||||
| Statements of Operations Data | The RoyaLand Company Ltd. (Successor) July 1, 2023 to December 31, 2023 | % of Revenue | The RoyaLand Company Ltd. (Successor) November 29, 2022 to December 31, 2022 | % of Revenue | OAPLT (Predecessor) July 1, 2022 to November 28, 2022 | % of Revenue | ||||||||||||||||||
| Revenue | - | N/A | - | N/A | $ | 4,869 | 100 | % | ||||||||||||||||
| Cost of revenue | - | N/A | - | N/A | - | - | % | |||||||||||||||||
| Impairment of goodwill | - | N/A | $ | 149,369 | N/A | - | - | % | ||||||||||||||||
| General and administrative expenses | $ | 738,091 | N/A | 20,520 | N/A | 7,144 | 147 | % | ||||||||||||||||
| Operating loss | (738,091 | ) | N/A | (169,889 | ) | N/A | (2,275 | ) | (47 | )% | ||||||||||||||
| Other income (expense) | - | N/A | - | N/A | (37 | ) | - | % | ||||||||||||||||
| Loss before income taxes | (738,091 | ) | N/A | (169,889 | ) | N/A | (2,312 | ) | (47 | )% | ||||||||||||||
| Provision for income taxes | - | N/A | - | N/A | - | - | % | |||||||||||||||||
| Net loss | $ | (738,091 | ) | N/A | $ | (169,889 | ) | N/A | $ | (2,312 | ) | (47 | )% | |||||||||||
Revenue
The RoyaLand Company Ltd. (Successor) – For the periods July 1, 2023 to December 31, 2023 and November 29, 2022 to December 31, 2022, no revenue was recorded.
OAPLT (Predecessor) – The principal activities of OAPLT for the period presented above was the conception, development and management of a digital and artistic creation studio, and included the creation of apps, websites, the hosting of web products and the provision of services in relation thereto. Revenue for the period from July 1, 2022 to November 28, 2022 was $4,869. OAPLT has not generated revenue subsequent to the period ended November 28, 2022.
For the six months ended December 31, 2022, our revenue, all of which was recorded by OAPLT, was accounted for by two customers with one of the customers accounting for 62.5%. Each of the customers contracted OAPLT to perform certain graphic design and web development services for discrete projects. OAPLT had no written agreements with these customers and the agreements are not ongoing. OAPLT had no material relationships with these customers. We do not expect to generate recurring revenue from these customers in future periods due to the change of our business strategy from contract design and development work to the design, development and promotion of TheRoyal.Land and myRoyal.World. The following table sets forth a summary of the material terms of the verbal agreements with these two customers.
| Date of Invoice | Hours | Amount of Invoice | Percent of Yearly Revenue | Type of Service | |||||||||||
| Customer #1 | 10/4/22 | 6 | € | 3,000 | 62.5 | % | Graphic design and web development | ||||||||
| Customer #2 | 11/22/22 | 2 | € | 1,800 | 37.5 | % | Web development and UX consulting | ||||||||
47
Impairment of Goodwill
On November 29, 2022, The RoyaLand Company Ltd. acquired 100% of the issued and outstanding shares of OAPLT. The acquisition was accounted for as a purchase business combination in accordance with IFRS 3, Business Combinations, whereby the purchase price paid to effect the acquisition was allocated to recognize the acquired assets and liabilities at fair value. In allocating the purchase price, The RoyaLand Company Ltd. recognized initial goodwill of $149,369. The goodwill consisted primarily of intangible assets related to the knowhow, design and merchandising of OAPLT’s brands that do not qualify for separate recognition in accordance with IFRS 3. At December 31, 2022, we determined that it was unclear whether there is value to OAPLT’s knowhow and brand. As such, we recorded an operating expense of $149,369 in the period November 29, 2022 to December 31, 2022 as an impairment of the goodwill asset.
General and Administrative Expenses
The RoyaLand Company Ltd. (Successor) –Our general and administrative expenses consisted of the following for the six-month periods ended December 31, 2023 and 2022:
| 2023 | 2022 | |||||||||||
| The
RoyaLand Company Ltd. (Successor) July 1, 2023 to December 31, 2023 | The RoyaLand Company Ltd. (Successor) November 29, 2022 to December 31, 2022 | OAPLT (Predecessor) July 1, 2022 to November 28, 2022 | ||||||||||
| Consulting: | ||||||||||||
| Expenses associated with Neosperience agreement | $ | 301,617 | $ | - | $ | - | ||||||
| Expenses associated with Skyline agreement | 30,000 | - | - | |||||||||
| CFO and CTO consulting expenses | 72,719 | - | - | |||||||||
| Other consulting expenses | 17,760 | - | - | |||||||||
| Legal and accounting | 258,831 | 19,730 | 3,483 | |||||||||
| Filing fees | 27,372 | - | - | |||||||||
| Bad debts | 520 | - | 1,240 | |||||||||
| Other | 29,272 | 790 | 2,421 | |||||||||
| Total general and administrative expense | 738,091 | 20,520 | 7,144 | |||||||||
The RoyaLand Company Ltd. (Successor) – During the six months ended December 31, 2023, RoyaLand Company Ltd. entered into agreements with Neosperience S.P.A. and Skyline Corporate Communications Group, LLC, both of which related to our effort to develop our MMORPG called TheRoyal.Land. Information concerning these agreements and the expenses related thereto is described in Note 7 to the accompanying interim condensed consolidated financial statements.
Expenses for our CFO and CTO were $72,719 for the six months ended December 31, 2023. We had no such expenses in prior periods.
The increases in legal and accounting, filing fees, and other expenses are principally associated with the investor offerings discussed in Note 7 to the accompanying interim condensed consolidated financial statements.
OAPLT (Predecessor) – General and administrative expenses principally consisted of wages and benefits, accounting costs, bad debts and taxes. During the six-month period July 1, 2021 to December 31, 2021, wages and benefits totaled $47,356 compared to $1,353 for the period July 1, 2022 to November 28, 2022 and $1,258 for the period November 29, 2022 to December 31, 2022. The reduction was primarily driven by the significantly lower revenue when comparing the same two periods as well as reduced cash resources. In addition, the period in 2022 saw a decrease from the 2021 period for legal and accounting fees (down $3,939) and taxes (down $1,984) while all other categories of expenses were down $2,275. These decreases were primarily the result of lower business volume.
48
Operating Loss
The operating losses for RoyaLand Company Ltd. (Successor) and OAPLT (Predecessor) are a result of the factors described above.
Other Income (Expense)
OAPLT (Predecessor) – Other expense during the period July 1, 2022 to November 28, 2022 of $37 is interest expense.
Net Loss
The net losses for RoyaLand Company Ltd. (Successor) and OAPLT (Predecessor) are a result of the factors described above.
Liquidity and Capital Resources
As of December 31, 2023, the Company had a consolidated cash balance of $254,688 and total assets of $335,910. As of June 30, 2023, we had a consolidated cash balance (including cash in escrow) and total assets of $134,543 and $192,233, respectively. To date, we have financed our operations primarily through revenue generated from operations and sales of our common shares.
Management has prepared estimates of operations and believes that sufficient funds will be generated from operations and equity financings to fund our operations for at least the next eight months. During the six months ended December 31, 2023, we raised gross proceeds of $900,000 in private placements of our Class B Common Shares. After consideration of the cost of share issuance, our net proceeds were $715,820. Subsequent to December 31, 2023, we raised $300,000 in private placements of our Class B Common Shares. If we are unable to raise additional funds, our currently available cash resources will be sufficient to fund our operations for at least the next eight months. The Company’s founders have verbally agreed to support the Company if there is any deficit until the funds are raised. In the future, we may require additional cash resources due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.
49
The impact of COVID-19 on our business has been considered in these assumptions; however, it is too early to know the full impact of COVID-19 or its timing on a return to more normal operations.
The accompanying consolidated financial statements have been prepared on a going concern basis under which we are expected to be able to realize our assets and satisfy our liabilities in the normal course of business.
Going Concern
The accompanying consolidated financial statements for the Company have been prepared assuming that we will continue as a going concern. However, our independent registered public accounting firm has expressed substantial doubt as to the Company’s ability to continue as a going concern. We have incurred net losses since our inception, and as of December 31, 2023, we had cash of $254,688 and an accumulated deficit of $1,810,088. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through public offerings, including this offering, private equity offerings, debt financings, and government or other third-party funding. These plans, if successful, will mitigate the factors which raise substantial doubt about our ability to continue as a going concern.
However, the sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.
Summary of Cash Flow
The following tables provide detailed information about our net cash flow for all financial statement periods presented in this prospectus.
Years Ended June 30, 2023 and 2022
The following table sets forth key components of the Company’s cash flow during the period from November 29, 2022 to June 30, 2023 (Successor), the period from July 1, 2022 to November 28, 2022 (Predecessor), and for the year ended June 30, 2022 (Predecessor).
| Period from November 29, 2022 to June 30, 2023 (Successor) |
Period from July 1, 2022 to November 28, 2022 (Predecessor) |
Year Ended July 1, 2021 to June 30, 2022 (Predecessor) |
||||||||||
| Net cash used in operating activities | $ | (424,740 | ) | $ | (3,330 | ) | $ | (27,028 | ) | |||
| Net cash provided by (used in) investing activities | - | - | - | |||||||||
| Net cash provided by (used in) financing activities | 413,336 | (19 | ) | 21 | ||||||||
| Net increase (decrease) in cash | (11,404 | ) | (3,349 | ) | (27,007 | ) | ||||||
| Cash, beginning of year | 146,130 | 5,292 | 34,665 | |||||||||
| Foreign currency translation adjustment | (183 | ) | 119 | (2,114 | ) | |||||||
| Cash, including cash in escrow, end of year | 134,543 | 2,062 | 5,544 | |||||||||
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While the above table reflects amounts reported in our accompanying consolidated financial statements, we believe that a review of cash flow results which combine entire amounts for the Successor and Predecessor companies is more useful in discussing our overall cash flow changes when comparing the years ended June 30, 2023 and 2022.
The following tables reflect unaudited pro forma combined results for the years ended June 30, 2023 and 2022.
| Cash Flow Data | The RoyaLand Company Ltd. Period
from November 29, 2022 to June 30, 2023 (Successor) | RoyaLand Nevada Period from July 1, 2022 to November 28, 2022 (Successor) | OAPLT Period from July 1, 2022 to November 28, 2022 (Predecessor) | Pro Forma Combined (Unaudited) | ||||||||||||
| Net cash used in operating activities | (424,740 | ) | (66,915 | ) | 19 | (491,636 | ) | |||||||||
| Net cash used in investing activities | - | (132,989 | ) | - | (132,989 | ) | ||||||||||
| Net cash provided by financing activities | 413,336 | 275,000 | (19 | ) | 688,317 | |||||||||||
| Increase (decrease) in cash | (11,404 | ) | 75,096 | - | 63,692 | |||||||||||
| Cash, beginning of period | 146,130 | (75,096 | ) | - | 71,034 | |||||||||||
| Currency translation adjustment | (183 | ) | - | - | (183 | ) | ||||||||||
| Cash, end of period, including cash in escrow | 134,543 | - | - | 134,543 | ||||||||||||
| Cash Flow Data | OAPLT Period from July 1, 2022 to November 28, 2022 (Predecessor) | RoyaLand Nevada Period from January 28, 2022 (Inception) to June 30, 2022 (Successor) | Pro Forma Combined (Unaudited) | |||||||||
| Net cash used in operating activities | (27,028 | ) | (155,966 | ) | (182,994 | ) | ||||||
| Net cash provided by financing activities | 21 | 227,000 | 227,021 | |||||||||
| Increase (decrease) in cash | (27,007 | ) | 71,034 | 44,027 | ||||||||
| Cash, beginning of period | 34,665 | - | 34,665 | |||||||||
| Currency translation adjustment | (2,114 | ) | - | (2,114 | ) | |||||||
| Cash, end of period | 5,544 | 71,034 | 76,578 | |||||||||
To date, the Company has financed its operations primarily through customer revenue and sales of its shares.
Net cash used in operating activities was $491,636 and $182,994 for the years ended June 30, 2023 and 2022, respectively. The increase was primarily due to the increase in the net loss during the year ended June 30, 2023 as compared to the year ended June 30, 2022.
Net cash used in investing activities was $132,989 and $0 for the years ended June 30, 2023 and 2022, respectively. The increase was primarily due to the cash paid for the acquisition of OAPLT.
Net cash provided by financing activities was $688,317 and $227,021 for the years ended June 30, 2023 and 2022, respectively. The increase was primarily due to an increase in the net proceeds from the sale of our common shares during the year ended June 30, 2023 as compared to the year ended June 30, 2022.
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Six Months Ended December 31, 2023 and 2022
The following table sets forth key components of our Company’s cash flow during the six-month periods ended December 31, 2023 and 2022.
| The RoyaLand Company Ltd. (Successor) July 1, 2023 to December 31, 2023 | The RoyaLand Company Ltd. (Successor) November 29, 2022 to December 31, 2022 | OAPLT (Predecessor) July 1, 2022 to November 28, 2022 | ||||||||||
| Net cash used in operating activities | $ | (572,376 | ) | $ | (121,773 | ) | $ | (3,330 | ) | |||
| Net cash provided by (used in) investing activities | - | - | - | |||||||||
| Net cash provided by (used in) financing activities | 693,109 | 26,486 | (19 | ) | ||||||||
| Net increase (decrease) in cash | 120,733 | (95,287 | ) | (3,349 | ) | |||||||
| Cash, beginning of period | 134,543 | 146,130 | 5,292 | |||||||||
| Foreign currency translation adjustment | (588 | ) | - | 119 | ||||||||
| Cash, end of period | 254,688 | 50,843 | 2,062 | |||||||||
The RoyaLand Company Ltd. (Successor)
To date, The RoyaLand Company Ltd. has financed its operations primarily through the sale of its shares.
During the period July 1 2023 to December 31, 2023, The RoyaLand Company Ltd. used net cash in its operating activities, primarily as a result of its net loss of $738,091 offset to some degree by an increase in accounts payable and accrued liabilities of $168,411. For the period November 29, 2022 to December 31, 2022, net cash used in operating activities resulted from the net loss of $169,889 offset primarily by an increase in accounts payable and accrued liabilities of $48,062.
During the periods July 1, 2023 to December 31, 2023 and November 29, 2022 to December 31, 2022, there was no net cash provided by (used in) investing activities.
During the period July 1, 2023 to December 31, 2023, net cash provided by financing activities mainly resulted from net proceeds from the sale of the Company’s Class B common shares totaling $715,820 partially offset by deferred offering costs of $20,835 related to the investor offering discussed in Note 7 to the accompanying interim condensed consolidated financial statements. During the period November 29, 2022 to December 31, 2022, net cash provided by financing activities resulted from proceeds from the exercise of stock options of $37,457 offset by deferred offering costs of $10,971.
OAPLT (Predecessor)
In previous periods, OAPLT had financed its operations primarily through customer revenue.
Net cash used in operating activities for the period July 1, 2022 to November 28, 2022 resulted from the net loss of $2,312 plus a decrease in accounts receivable and accrued liabilities of $4,670 offset somewhat by a decrease in accounts receivable of $3,652.
There was no net cash provided by (used in) investing activities for the period July 1, 2022 to November 28, 2022.
Net cash used in financing activities for the period July 1, 2022 to November 28, 2022 resulted from repayments to related parties.
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Founder Share Issuances
On January 28, 2022, RoyaLand Company issued 100,000 shares of common stock in connection with the incorporation of the RoyaLand Company, at an issue price of $0.001 per share, for a total consideration of $100. On March 1, 2022, the RoyaLand Company amended its articles of incorporation to authorize 300,000,000 shares of stock, consisting of (i) 250,000,000 shares of Common Stock, $0.001 par value per share, of which, 20,000,000 shares were designated Class A Common Stock, par value $0.001 per share, or the Class A Common Stock, and 230,000,000 shares were designated as Class B Common Stock, $0.001 par value per share, or the Class B Common Stock, and (ii) 50,000,000 shares of Preferred Stock, $0.001 par value per share; and effected a 100 to 1 forward stock split resulting in issued and outstanding shares of 6,500,000 of Class A Common Stock and 3,500,000 shares of Class B Common Stock.
The following table presents all of the shares owned before and after the forward stock split.
Shareholder | Common Stock Before Split | Class
A Common Stock After Split | Class
B Common Stock After Split | Aggregate Purchase Price Paid | ||||||||||||
| Emanuele Filiberto di Savoia, Chief Executive Officer and Director | 65,000 | 6,500,000 | - | $ | 65 | |||||||||||
| Pinehurst Partners LLC (1) | 25,000 | - | 2,500,000 | $ | 25 | |||||||||||
| Jean-Claude Sindres, Chief Strategy and Creative Officer | 10,000 | - | 1,000,000 | $ | 10 | |||||||||||
| (1) | Pinehurst Partners LLC is a Colorado limited liability company, 100% owned by the Roth individual retirement account of Daniel Joseph McClory. Pinehurst Partners LLC’s managing member is Daniel Joseph McClory, our Executive Chairman and director. Daniel Joseph McClory is deemed to beneficially own the Class A Common Shares owned by Pinehurst Partners LLC and has sole voting and dispositive powers over its shares. Pinehurst Partners LLC’s business address is 6525 Gunpark Drive, Suite 370-103, Boulder, CO 80301. |
On October 25, 2022, we issued 1,000,000 Class A Common Shares in connection with the incorporation of The RoyaLand Company Ltd., at an issue price of $0.0002 per share, for a total consideration of $200. All of the shares were sold to members of our board of directors, executive officers or their affiliates and beneficial owners of more than 5% of our outstanding share capital, in reliance upon (i) the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws, or (ii) the provisions of Regulation S promulgated under the Securities Act.
The following table presents the amounts of Class A Common Shares issued and aggregate purchase prices paid by the members of our board of directors, executive officers or their affiliates and beneficial owners of more than 5% of our outstanding share capital. The terms of these purchases were the same for all purchasers of our common shares.
Shareholder | Class
A Common Shares | Aggregate Purchase Price Paid | ||||||
| Emanuele Filiberto di Savoia, Chief Executive Officer and Director | 650,000 | $ | 130 | |||||
| Pinehurst Partners LLC (1) | 250,000 | $ | 50 | |||||
| Jean-Claude Sindres, Chief Strategy and Creative Officer | 100,000 | $ | 20 | |||||
| (1) | Pinehurst Partners LLC is a Colorado limited liability company, 100% owned by the Roth individual retirement account of Daniel Joseph McClory. Pinehurst Partners LLC’s managing member is Daniel Joseph McClory, our Executive Chairman and director. Daniel Joseph McClory is deemed to beneficially own the Class A Common Shares owned by Pinehurst Partners LLC and has sole voting and dispositive powers over its shares. Pinehurst Partners LLC’s business address is 6525 Gunpark Drive, Suite 370-103, Boulder, CO 80301. |
Private Placements
On August 12, 2022 and September 30, 2022, RoyaLand Company conducted private placements of shares of Class B Common Stock and entered into certain subscription agreements with a number of (i) “accredited investors” as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, RoyaLand Company issued 2,000,000 shares of Class B Common Stock at $0.25 per share for a total of $500,000. The shares were subsequently exchanged for Class B Common Shares as described below under “—Share Exchange Agreements”. The Class B Common Shares that the private placement investors now hold as a result of these transactions are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”.
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On March 3, 2023, March 28, 2023, May 4, 2023, and June 30, 2023, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 450,000 Class B Common Shares at $1.00 per share for a total of $450,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $31,500, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $4,500, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 31,500 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
On July 14, 2023 and July 18, 2023, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 375,000 Class B Common Shares at $1.00 per share for a total of $375,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $26,250, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $3,750, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 26,250 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
On July 21, 2023, we conducted a private placement of units of securities, consisting of (i) one Class B Common Share and (ii) a three-year-term warrant to purchase 2.5 Class B Common Shares (the “Units”), and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 500,000 Units at $1.00 per Unit for a total of $500,000. The Units are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in this private placement. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $35,000, or 7% of the gross amount actually received by the Company in the private placement, and a non-accountable expense allowance of $5,000, or 1% of the gross amount actually received by the Company in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 35,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
Share Exchange Agreements
On November 28, 2022, we entered into a share exchange agreement with RoyaLand Company and its stockholders, pursuant to which all the stockholders of RoyaLand Company exchanged their shares for an equal number of shares in the Company, except for Emanuele Filiberto di Savoia, Pinehurst Partners, LLC, and Jean-Claude Sindres, who received the amount of shares they had in RoyaLand Company minus the amount of Company shares they subscribed for on October 25, 2022. As a result, the share exchange became effective under Nevada and Bermuda law, and RoyaLand Company became our wholly-owned subsidiary.
On November 29, 2022, we entered into a share purchase agreement as buyer with the shareholders of OAPLT as sellers, pursuant to which we purchased all of OAPLT’s share capital for cash of $132,988 and the option for the sellers to subscribe for up to 75,000 Class B Common Shares of the Company at a maximum price of $0.50 per share. As a result, the share purchase became effective under French law, and OAPLT became our wholly-owned subsidiary. On November 29, 2022, the sellers exercised their option to subscribe for 75,000 Class B Common Shares for $0.50 per share in reliance upon the provisions of Regulation S promulgated under the Securities Act.
Share Transfer
On January 6, 2023, Emanuele Filiberto di Savoia, our Chief Executive Officer and director, transferred 500,000 Class A Common Shares to Arturo Barone, which upon transfer were automatically converted to 500,000 Class B Common Shares.
On March 23, 2023, Jean Claude Sindres, our Chief Strategy and Creative Officer, transferred 100,000 Class A Common Shares to Neurosciences Research International – FZCO, which upon transfer were automatically converted to 100,000 Class B Common Shares.
On June 14, 2023, Daniel Joseph McClory, our Executive Chairman and director, transferred 180,000 Class B Common Shares to each of Grant McClory, Pierce McClory, and Shaye McClory and 60,000 Class B Common Shares to Alberto Libanori, our director.
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Restricted Share Issuance Under Equity Incentive Plan
On May 31, 2023, we entered into advisor agreements with seven consultants, pursuant to which we issued 25,000 Class B Common Shares under the 2023 Plan as compensation for services, for a total issuance of 175,000 Class B Common Shares.
Contractual Obligations
None
Capital Expenditures
None
Lease Commitments
None
Contingencies
We are currently not a defendant in any material legal proceedings, investigation, or claims.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Quantitative and Qualitative Disclosures about Market Risk
Risk Management Overview
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in foreign exchange rates as well as, to a lesser extent, inflation and credit and concentration risks. This note provides information about our exposure to each of these risks, our objectives, policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout these consolidated financial statements.
Financial Risk Factors (the Company)
We believe our activities do not expose us to any market, credit or liquidity risk.
Financial Risk Factors (OAPLT)
Given the short-term nature of OAPLT’s assets and liabilities and the stability of the markets in which it operates, we believe its exposure to be minimal. The exposure to credit risk is influenced mainly by the individual characteristics of each customer and the concentration of risk from the top few customers. Given that OAPLT’s customer agreements generally consist of one performance obligation, its exposure to credit risk is also not significant. With respect to liquidity, OAPLT’s ability to meet its obligations on time is dependent on the success of its operations, which to date have given it adequate liquidity to meet our obligations.
With respect to concentration risks, for the year ended June 30, 2023, two customers accounted for 100% of net revenues with one customer accounting for 62.5% of net revenues and for the year ended June 30, 2022, five customers accounted for 94.1% of net revenues with one customer accounting for 30.2% of net revenues.
OAPLT’s functional currency is the euro but its results and financial positions are translated into U.S. dollars as follows:
| (i) | Assets and liabilities are translated at the current exchange rate at the balance sheet date and historical rates for equity; |
| (ii) | Revenue and expenses are translated at the weighted average closing exchange rate for the period reported in the consolidated statement of profit or loss. When the average exchange rate does not provide a reasonable approximation of the cumulative effect of the rates prevailing on the transaction date, the Company utilizes the closing exchange rate on the date of the transaction. |
| (iii) | Gains and losses resulting from foreign currency translation are included as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in the results of operations. |
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Critical Accounting Policies and Estimates
The following discussion relates to critical accounting policies for our company. The preparation of financial statements in conformity with IFRS requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
Use of Estimates and Judgments
The preparation of financial statements in conformity with IFRS requires management to make estimates, judgements and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues, and expenses during the period. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Areas in which management has made critical judgments in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements include the determination of our Company’s functional currencies and the collectability of our accounts receivable and other current assets. Information about key assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year are included in the notes to the financial statements included with this prospectus.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors that market participants would use in valuing the asset or liability. The fair value hierarchy consists of the following three levels of inputs that may be used to measure fair value:
| Level 1 | — | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
| |||
| Level 2 | — | Inputs other than quoted prices included in Level 1 that are observable in the marketplace either directly (i.e., as prices) or indirectly (i.e., derived from prices).
| |||
| Level 3 | — | Unobservable inputs which are supported by little or no market activity. |
Revenue Recognition
We recognize revenue in OAPLT under the guidance of IFRS 15, Revenue from Contracts with Customers. Under this guidance, revenue is recognized upon the application of the following steps:
| 1. | Identification of the contract with a customer; |
| 2. | Identification of the performance obligations in the contract; |
| 3. | Determination of the transaction price; |
| 4. | Allocation of the transaction price to the performance obligations in the contract; and |
| 5. | Recognition of revenue when, or as, the performance obligation is satisfied. |
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Our revenue arrangements with customers predominantly involve a single performance obligation related to the creation and delivery of apps, websites, the hosting of web products and the provision of services in relation thereto. A payment obligation is established at the time we transfer control of the product or service to the customer.
We exclude from the measurement of each transaction price, if applicable, all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer. Such taxes collected are included in accounts payable on the balance sheets as they would ultimately be remitted to governmental authorities.
Deferred Offering Costs
Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to our investor offering described in Note 7 in the notes to the financial statements. Deferred offering costs will be charged to shareholders’ equity upon the completion of the offering. Should the offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations.
Income Taxes
Income tax expense comprises current and deferred taxes. Current taxes and deferred taxes are recognized in profit or loss except to the extent that they relate to a business combination, or items recognized directly in equity or in other comprehensive loss.
Current taxes are the expected tax receivable or payable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax receivable or payable in respect of previous years. Deferred taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred taxes are not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.
In addition, deferred taxes are not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred taxes are measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the tax laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Net Income/Loss Per Share
We compute net income (loss) per share, or EPS for our shares. Under the provisions of IAS 33, Earnings per Share, basic EPS is calculated by dividing the profit or loss attributable to our capital shareholders by the weighted average number of capital shares outstanding during the period. Diluted EPS is computed similar to basic EPS except that the weighted average shares outstanding are increased to include additional shares for the assumed exercise of any exercisable instruments, if dilutive. The number of additional shares is calculated by assuming that outstanding exercisable instruments were exercised and that the proceeds from such exercise were used to acquire capital shares at the average market price during the reporting periods. As of December 31, 2023 and 2022, and June 30, 2023 and 2022, we had no potentially dilutive shares.
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Overview
RoyaLand is a Bermuda holding company focused on creating an online and offline immersive, fantasy-based royalty-themed experience called myRoyal.World, primarily centered around a mobile-first massively multiplayer online role-playing game, or MMORPG, called TheRoyal.Land. We are actively focused on developing what we believe to be a novel, interactive and immersive game based on a player-empowered design. We plan to build proprietary digital avatars and provide opportunities to players to earn in-game reward currency, build virtual land, and own their online assets while enhancing all of these features with what we consider to be premium incremental in-game content.
(This is a pre-launch screenshot from TheRoyal.Land which is subject to change prior to release.)
We are developing TheRoyal.Land and myRoyal.World in collaboration with our founder, the Monaco-based grandson of the last King of Italy, Emanuele Filiberto di Savoia, who claims the titles of His Royal Highness, Prince of Venice, and Prince of Piedmont and is also referred to in this prospectus as the hereditary “Prince of Italy.” In addition, with the support of and affiliation with seven other royal families and families with legal, hereditary or historically based claims to royal positions in Russia, Albania, France, Bulgaria, Yugoslavia, Lesotho, and Mecklenburg collectively referred to as the Royal Families, TheRoyal.Land is intended to deliver this unique past-meets-future entertainment experience.
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We believe that TheRoyal.Land will introduce the first historically inspired monarchy-based MMORPG, founded by the Prince of Italy and reinforced by the Royal Families.
Our objective is to connect and engage with players from around the world through royalty-themed entertainment by becoming a worldwide leader in the development, publishing, and distribution of high-quality interactive entertainment content and services, as well as related media, that deliver engaging entertainment experiences to our network of connected players on a year-round basis. Players, in their selected roles, will represent every part of TheRoyal.Land society. From the Artisans that guide the skilled trades of old to the Knights and Squires that guard the Realm. From Prisoner to Prince, each role will hold specific purposes, abilities, skills, chances for advancement, and adventures.
We are currently in the development phase for TheRoyal.Land and myRoyal.World. On June 30, 2023, we entered into a project agreement with Neosperience S.p.A., or Neosperience, pursuant to which Neosperience will design and develop TheRoyal.Land using its proprietary technology. The first phase of the project agreement has already commenced. Neosperience plans to use its models to create complex and dynamic in-game environments and realistic and emotive characters and to assist with dynamically adjusting the difficulty level and game balance in real time based on player behavior and performance to keep the game challenging yet rewarding. For example, Neosperience’s technology is designed to imbue non-player characters, or NPCs, with various behaviors, which we believe makes them seem more lifelike and responsive thereby enhancing player immersion and creating a more engaging gameplay experience. Additionally, Neosperience intends to use advanced modeling and rendering techniques to create realistic player characters and NPCs that dynamically interact utilizing a full range of human-like emotions, reactions and movements giving them a depth of character which we believe is rarely seen in video games.
As of the date of this prospectus, the expected cost to ready the game for beta version release is approximately $500,000 to $1 million. The pre-production playable beta version of TheRoyal.Land is expected to be released within 2024. Unforeseen delays in product development, turnover of resources and lack of capital may impact our delivery timeline. In addition, we have secured the domains, TheRoyaLand.online and TheRoyaLand.io, on which we expect to host TheRoyal.Land, and have finished website development for TheRoyal.Land. We are also in the early stages of discussions with media companies to develop myRoyal.World media assets for various streaming platforms. We plan to add additional internal resources to ensure the quality and timely delivery of TheRoyal.Land and myRoyal.World’s assets and experiences.
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(This is a pre-launch screenshot from TheRoyal.Land which is subject to change prior to release.)
Our Corporate History and Structure
We were incorporated pursuant to the laws of Bermuda as The RoyaLand Company Ltd., an exempted company with limited liability, on October 18, 2022. On January 28, 2022, RoyaLand Company, a Nevada corporation, or RoyaLand Company, was formed, and subsequently conducted private placements, as described below. On November 28, 2022, we acquired RoyaLand Company in a share exchange transaction in which its shareholders became our shareholders and RoyaLand Company became our wholly-owned subsidiary, as described below. OAPLT, a French joint stock company (société par actions simplifiée), or OAPLT, was formed on November 24, 2017. On November 29, 2022, OAPLT was acquired by us from its shareholders and became our wholly-owned subsidiary, as described below.
On August 12, 2022 and September 30, 2022, RoyaLand Company conducted private placements of shares of Class B Common Stock, and entered into certain subscription agreements with a number of (i) “accredited investors” as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, RoyaLand Company issued 2,000,000 shares of Class B Common Stock at $0.25 per share for a total of $500,000. The shares were subsequently exchanged for Class B Common Shares as described below. The Class B Common Shares that the private placement investors now hold as a result of these transactions are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”.
On October 25, 2022, we issued 1,000,000 Class A Common Shares in connection with the incorporation of The RoyaLand Company Ltd., at an issue price of $0.0002 per share, for a total consideration of $200. All of the shares were sold to members of our board of directors, executive officers or their affiliates and beneficial owners of more than 5% of our outstanding share capital, in reliance upon (i) the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws, or (ii) the provisions of Regulation S promulgated under the Securities Act.
On November 28, 2022, we entered into a share exchange agreement with RoyaLand Company and its stockholders, pursuant to which all the stockholders of RoyaLand Company exchanged their shares for an equal number of shares in the Company, except for Emanuele Filiberto di Savoia, Pinehurst Partners, LLC, and Jean-Claude Sindres, who received the amount of shares they had in RoyaLand Company minus the amount of Company shares they subscribed for on October 25, 2022. As a result, the share exchange became effective under Nevada and Bermuda law, and RoyaLand Company became our wholly-owned subsidiary.
On November 29, 2022, we entered into a share purchase agreement as buyer with the shareholders of OAPLT as sellers, pursuant to which we purchased all of OAPLT’s share capital for cash of $132,988 and the option for the sellers to subscribe for up to 75,000 Class B Common Shares of the Company at a maximum price of $0.50 per share. As a result, the share purchase became effective under French law, and OAPLT became our wholly-owned subsidiary. On November 29, 2022, the sellers exercised their option to subscribe for 75,000 Class B Common Shares for $0.50 per share in reliance upon the provisions of Regulation S promulgated under the Securities Act.
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On January 6, 2023, Emanuele Filiberto di Savoia, our Chief Executive Officer and director, transferred 500,000 Class A Common Shares to Arturo Barone, which upon transfer were automatically converted to 500,000 Class B Common Shares.
On March 23, 2023, Jean Claude Sindres, our Chief Strategy and Creative Officer, transferred 100,000 Class A Common Shares to Neurosciences Research International – FZCO, which upon transfer were automatically converted to 100,000 Class B Common Shares.
On June 14, 2023, Daniel Joseph McClory, our Executive Chairman and director, transferred 180,000 Class B Common Shares to each of Grant McClory, Pierce McClory, and Shaye McClory and 60,000 Class B Common Shares to Alberto Libanori, our director.
On March 3, 2023, March 28, 2023, May 4, 2023, June 30, 2023, July 14, 2023 and July 18, 2023, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 825,000 Class B Common Shares at $1.00 per share for a total of $825,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $57,750, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $8,250, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 57,750 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
On May 31, 2023, we entered into advisor agreements with seven consultants, pursuant to which we issued 25,000 Class B Common Shares under the 2023 Plan as compensation for services, for a total issuance of 175,000 Class B Common Shares.
On July 21, 2023, we conducted a private placement of units of securities, consisting of (i) one Class B Common Share and (ii) a three-year-term warrant to purchase 2.5 Class B Common Shares (the “Units”), and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 500,000 Units at $1.00 per Unit for a total of $500,000. The Units are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in this private placement. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $35,000, or 7% of the gross amount actually received by the Company in the private placement, and a non-accountable expense allowance of $5,000, or 1% of the gross amount actually received by the Company in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 35,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
On March 8, 2024, April 17, 2024, and April 24, 2024, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 300,000 Class B Common Shares at $1.00 per share for a total of $300,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $21,000, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $3,000, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 21,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
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The following diagram depicts our organizational structure, including our subsidiaries, following the completion of this offering. This diagram includes our controlling shareholders of Class A Common Shares, as a group, current shareholders of Class B Common Shares, as a group, and the Class B Common Shares that holders of our private placement warrants will receive upon exercise of the warrants, as a group. The Class A Common Shares and Class B Common Shares holdings of these shareholders is also depicted.
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Our Industry
We believe TheRoyal.Land is at the nexus of several expanding markets in the video games market, with worldwide revenue expected to grow to approximately $282.3 billion in 2024 according to Statista (Statista, Video Games – Worldwide, November 2023). The most relevant segments of the video games market to our business are mobile games and online games.
Mobile Games
Mobile games are gaming applications for smart devices such as smartphones and tablets. Leading app stores like Google’s Play Store and Apple’s App Store offer paid app downloads (single purchases) and freemium games that are free to download but usually allow in-app purchases for more or special content or access. Physical games for mobile consoles/handhelds and free-to-play gaming apps are not included.
| ● | Revenue in the mobile games segment is projected to reach approximately $98.74 billion in 2023. | |
| ● | Revenue is expected to show a compound annual growth rate, or CAGR, of approximately 6.39% from 2024 to 2027, resulting in a projected market volume of approximately $118.9 billion by 2027. | |
| ● | In the mobile games segment, the number of users is expected to amount to approximately 1.9 billion users by 2027. | |
| ● | User penetration will be approximately 22.1% in 2024 and is expected to hit approximately 23.3% by 2027. | |
| ● | In a global comparison, most revenue will be generated in China (approximately $34.66 billion in 2024). | |
| ● | The average revenue per user, or ARPU, in the mobile games segment is projected to amount to approximately $57.64 in 2024. |
(Statista, Mobile Games – Worldwide, November 2023)
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Online Games
Online games include massively multiplayer online games, or MMOGs, and casual and social games that can be played directly in the internet browser or with software that is installed on the user’s device. This category covers subscription-based games, e.g., World of Warcraft, and free-to-play games with in-game purchases for additional premium content or functionalities, e.g., Fortnite.
| ● | Revenue in the online games segment is projected to reach approximately $27.97 billion in 2024. | |
| ● | Revenue is expected to show a CAGR of approximately 5.20% from 2024 to 2027, resulting in a projected market volume of approximately $32.56 billion by 2027. | |
| ● | In the online games segment, the number of users is expected to amount to approximately 1.2 billion by 2027. | |
| ● | User penetration will be approximately 15.1% in 2024 and is expected to hit approximately 15.8% by 2027. | |
| ● | In a global comparison, most revenue will be generated in China (approximately $6.5 billion in 2024). | |
| ● | The ARPU in the online games segment is projected to amount to approximately $23.88 in 2024. |
(Statista, Online Games – Worldwide, November 2023)
Our Market Opportunity
We believe that royal families and their societies remain of great interest to the public, as reflected in popular series with royalty-related themes such as “Downton Abbey” and “The Crown.” In our view, the passing in September 2022 of Her Majesty Queen Elizabeth II of England and the transition to her son, King Charles III, has also brought heightened attention and relevance to the royalty market. We plan on relying on the following marketing campaigns and approaches to penetrate the market:
| ● | Hosting X Spaces on Gaming: We will host real-time conversations using Twitter Spaces, a feature within Twitter that allows for live audio conversations, for our followers and players to discuss the state of gaming, primarily MMORPGs and mobile games. |
| ● | Releasing Video Teasers: We plan to release short video teasers to develop and solidify interest in our suite of experiences, which will include in-game cut scenes and gameplay. |
| ● | Hosting contests: We plan to develop strong communities, both online and offline, and plan to keep these communities engaged by hosting a variety of contests involving TheRoyal.Land. |
| ● | Utilizing X and Instagram Ads: We plan to utilize ads on social media, such as X and Instagram, to increase awareness of TheRoyal.Land and build a loyal following in collaboration with key vendors and advertising experts. |
| ● | Developing YouTube Sponsorships: We believe influencers have been essential for brands and we plan to curate our social media influencers for TheRoyal.Land, with a particular focus on YouTube. |
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Our Business Model and Revenue Drivers
We expect to offer players many ways to experience our royalty-centered world and adventures and interact with our community.
TheRoyal.Land
We seek to build a strong, established franchise through compelling content and by expanding our community to reach as many consumers as possible by offering our content on multiple platforms, particularly mobile, the largest and fastest growing platform, and delivering compelling experiences across multiple business models, including premium, free-to-play, and subscription-based.
Our main planned product is TheRoyal.Land. We expect players to be attracted to its novel game mechanics and the community we are actively developing. Also, we plan on providing creative tools for the community to engage more deeply with our content and experiences. We plan to use these attributes to enable an engaged community, a fluid gaming experience, and tight cybersecurity.
As part of this experience, we believe it would enable two types of business opportunities:
Business-to-Consumer Opportunities
Our business-to-consumer strategy centers on our players, their needs and feelings, once they come into contact with our user-centered game and immersive royal experience. We plan to derive revenue from selling premium accessories, such as unique skins, weapons, and tools, and access to more quests, missions, and areas within TheRoyal.Land. Additionally, we plan to derive revenue from sales to players of plots of virtual land, buildings, and other structures in TheRoyal.Land, which is designed to replicate real-world venues and other related locations portrayed in TheRoyal.Land.
Business-to-Business Opportunities
Our business-to-business strategy is focused on onboarding large brands and companies so that they can deploy their digital strategy and product marketing around TheRoyal.Land, reaching what we believe will be our diverse and dynamic community. We plan to work with other businesses to extend their brands inside TheRoyal.Land, and we expect to develop further collaborative relationships with them. Currently, we plan to offer in-game advertising and virtual land sales to businesses as TheRoyal.Land is being designed to be an immersive world. While traversing our game, players may see products and stores from real-life companies or brands. We expect to be able to sell these brands advertising space and virtual land in TheRoyal.Land.
myRoyal.World
We plan to provide real-life experiences to complement TheRoyal.Land and our virtual engagement with our customers to immerse them in a royal experience; hence, myRoyal.Land would provide the following offline experiences:
| ● | Media production: Utilizing our partnerships with the Royal Families, we plan to jointly promote our royal experience by creating television shows and movies in collaboration with leading streaming platforms, such as Netflix, Amazon Prime or Disney, and are in the early stages of discussions with media companies. |
| ● | Merchandise: We plan to offer TheRoyal.Land themed merchandise, such as t-shirts, hats and caps and hoodies, and tickets to TheRoyal.Land based events, such as virtual and live appearances with the Royal Families and the launches of our mobile and online games. We do not currently have any merchandise or events scheduled. |
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Competitive Strengths
We believe that the following competitive strengths contribute to our success and differentiate us from our competitors:
| ● | Unique video game experience. We intend to provide authentic and unique royalty-based digital and physical products and experiences, including TheRoyal.Land, an MMORPG with experiences and fun game mechanics that immerse the player at any game stage, whether they are just starting or have already logged hundreds of hours of gameplay. TheRoyal.Land is being planned by the Royal Families to be an immersive, strategic, role-playing action game within a historically based setting. |
| ● | Solid community. A game without a community has no future, which is why we are endeavoring to develop a stable game community and video game that connects game creators and game players. We believe an enthusiastic community will constantly improve the gaming experience. We envision the game creators and developers interacting with the players to continuously receive feedback so we can offer players a game that better meets our founders’ goals and the expectations of the players. We plan to enable players to communicate with each other, help each other, form coalitions, and elect the Queen or King for the game’s upcoming months/seasons. |
| ● | Actual ownership. We plan to enable a player to be the owner of their avatar representing their digital identity utilizing traditional in-game purchase methods customary for MMORPGs. |
Growth Strategies
The key elements of our strategy to expand our business include the following:
| ● | Utilizing the brands of the Royal Families. We plan to capitalize on the brand rights relating to the legacies of the Royal Families mentioned above, including any currently held royal titles, followers, and brands, by enabling them to transition to the virtual worlds we intend to create together. |
| ● | Developing unique, player-owned, and tradeable avatars. We plan to create engaging, attractive, functional, and, ultimately, purchasable and tradable avatars for TheRoyal.Land for our players and community. |
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Our Game – TheRoyal.Land
Currently Envisioned Game Synopsis
In the Year 500, the Realm was split into the Ten Lands. Each Land, in turn, was gifted with a part of the divinely protected Queen Saël Demidea in the form of a Divine Artifact. These ten Divine Artifacts imbue each Land with its own identity and birthright.
(This is a pre-launch screenshot from TheRoyal.Land which is subject to change prior to release.)
For another 808 years, Queen Saël ruled over these Lands, and she brought peace, prosperity, and order.
But now? Chaos and division rule. A shattered monarchy, spoiled by savagery, awaits either divine deliverance or destruction. With Queen Saël’s unexpected death and loss of her divine protection, the Ten Lands have fallen into turmoil and rivalry. And Saël’s heirs contemplate their path to the vacant seat of power.
Some may be worthy, and some may not. Only the Test of the Forge will decide each fate: To pass the Test, a royal claimant must find and plunge a Divine Artifact into the eternal flames of the Forge. Either wisdom and worth or madness and destruction may follow. Both legitimate and illegitimate heirs plot to ascend to the throne, but at what cost to themselves or the people of TheRoyal.Land?
But what of you? You are the people. Be you Duke, Duchess, Farmer, or Artisan - the choice is yours. You ply the earth or wield the sword to further yourself, your people, and your Land.
Countess, Duke, Baroness, or Marquis. You are the nobility of TheRoyal.Land. In service to Queen Saël, your charge is to aid the Royal Court. To rule in the Queen’s name and carry out the royal charge. But now? To whom shall you pledge your loyalty?
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Dame or Knight. Your mission is simple: To serve and defend the Royal Court and the people. But you have yet much work to do. The wastelands crawl with vile beasts and strange creatures. And nothing but a shadow rests upon the throne. And if there is to be war? Where would your loyalty lie then?
Farmer and Artisan. You are the providers. You feed, clothe, and fend for the people. Your work is hard but profitable. Through your trades, you earn $Royal with which to support your family. You pay your taxes. You are the wealth of the Realm. But whose Realm will it be now?
And the Prisoners, you are too in the Realm. You are the rogue—the liar and a thief. Your disloyalty and dishonesty have cost you your freedom but haven’t hampered your ambition. Will you do your penance for liberty... Or to whom shall you lie, cheat, or steal to alter your present condition? The darkest souls are the most difficult to see in a fallen world. Atonement, however, always offers a path to honor and redemption should that road be chosen.
MMORPG Designed to Have Universal Appeal
TheRoyal.Land is intended to merge conventional MMORPG experiences with the dynamics of offline events and interactions, providing a full royal-themed experience. Players are expected to be able to select from various preferred roles in TheRoyal.Land social structure, from farming to royalty. Each avatar is planned to offer specialized skills and attributes. Each character class is designed to have its unique way of earning TheRoyal.Land in-game currencies as the game is played.
Experienced PC and console gamers are expected to revel in a fantasy world. We are designing TheRoyal.Land to enable players to explore, quest, compete, and collaborate with others across the Ten Lands. We expect that players will be able to build, craft, sell, and command to expand their wealth, reputation, and experience.
We are developing a framework for an MMORPG and the licensing of its real-world merchandise with the Royal Families, while building TheRoyal.Land community with a series of initiatives, including:
| ● | X“Ask Management Anything” online chat sessions and community hub introducing TheRoyal.Land concept, experiences, and the ability to interact directly with the Royal Families in this leading social media communications environment. |
| ● | Discord site and community hub furthering TheRoyal.Land concept, experiences, and planned MMORPG environment. |
Planned Features
Based on a mythical monarchy inspired by the Royal Families, TheRoyal.Land is planned for launch with the following planned features:
| ● | Play to earn in-game reward currency. This is planned to be the primary medium of exchange between players and is expected to serve as the principal source of rewards, potentially allowing them to buy premium accessories. |
| ● | Premium incremental in-game content. We plan to offer players enhanced experiences and customization opportunities by releasing premium total in-game content in character accessories such as unique skins, weapons, and tools; access to more quests, missions, and areas within TheRoyal.Land game, and more building and design options. We expect that these digital revenue streams will be more recurring and have relatively higher profit margins. |
Essential Design Elements Expected to be Included in TheRoyal.Land
TheRoyal.Land is currently in development, but we expect it to have the following essential design elements. At the beginning of the game, the player will choose which character class they would like to be, ranging from a prisoner to a duke. This choice will decide which quests and missions the player will be given. The character’s quests can vary from simple actions to economic and social interactions with other players in the community. Every six months, the community of players can elect their Queen or King. The status of Queen or King will give access to powerful advantages in TheRoyal.Land, such as greater decision-making power, receiving accessories for one’s character, receiving a plot of land or castle, buying or trading more raw materials, and more.
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TheRoyal.Land is planned to offer immersive play-and-earn opportunities through trades, collecting taxes, completing specific tasks, and building prosperous TheRoyal.Land related careers, players are expected to be able to earn valuable in-game currencies to deepen and extend their gameplay.
We believe that TheRoyal.Land will introduce the first historically inspired monarchy-based MMORPG, founded by the Prince of Italy and reinforced the Royal Families. Players, in their selected roles, will represent every part of TheRoyal.Land society. From the Artisans that guide the skilled trades of old to the Knights and Squires that guard the Realm. From Prisoner to Prince, each role will hold specific purposes, abilities, skills, chances for advancement, and adventures.
From farming to fiefdoms, TheRoyal.Land is expected to create an enchanting world for gamers to master. Players are expected to be able to make their way through these lands, participate in deep storylines and enjoy distinctive graphic designs.
TheRoyal.Land Characters as Currently Envisioned
QUEEN/KING: The Queen and King will be elected by popular vote of the community every six months. This will be a title that any other character class can be elected to and will give access to powerful advantages in TheRoyal.Land, such as greater decision-making power, receiving accessories for one’s character, receiving a plot of land or castle, buying or trading more raw materials, and more.
PRINCE/PRINCESS: The Prince/Princess will be in charge of one of the Ten Lands and will give the military, judicial and financial directives to the Marquis/Marquise, Count/Countess and Duke/Duchess, respectively. They will rule over their Land with divine wisdom and must be level-headed in their decisions, lest they succumb to madness.
DUKE/DUCHESS: The Duke/Duchess will be in charge of royal finances. The Duke/Duchess must manage all financial aspects of their domains. They will be in direct contact with the Prince/Princess, the citizens creating the natural wealth, and the Barons/Baronesses. They must be strategic in prioritizing construction and the distribution of men, materials, and gold. They will have only one goal, that their people prosper against the enemy.
COUNT/COUNTESS: The Count/Countess will be the great administrator of royal justice. Exercising the functions of witness, lawyer respectively, and judge to apply the divine laws of the kingdom, they will monitor the populations in search of misdeeds, treacheries, impostors, scammers, spies, and conspiracies to have these perpetrators brought to justice and locked up. They will have the heavy task of assigning roles to each new prisoner according to his abilities.
MARQUIS/MARQUISE: The Marquis/Marquise will carry out their military duties on the lands of TheRoyal.Land and report directly to the Prince/Princess. As the possessor of territory, their title of nobility will place them above that of the Knight/Dame. They will also rank as generals in TheRoyal.Land army thanks to their military power and ability to master the art of war.
BARON/BARONESS: The Baron/Baroness will owe homage to the Duke/Duchess and Count/Countess. They must be elegant and refined and carry the kingdom’s colors beyond its borders. Diplomatic missions, espionage, commodities exchanges, materials, techniques, or tough negotiations will be within their role, so the Baron must know how to be versatile. Master of arms by education, they will also vigorously defend the wealth and international stature of the kingdom.
KNIGHT/DAME: The Knight/Dame will be known for bravery, power, and courage. When admitted into the order of chivalry, they will acquire a title of nobility of a higher degree than that of Soldier, with a fitting combat mount. They must use their expertise in mounted combat, hand-to-hand combat skills, and other armed interventions to extend the kingdom’s influence. The Knight/Dame will protect the kingdom mostly outside its walls.
SOLDIER: The Soldier will come from the people. Selected and trained very young in the royal army, their commitment will be nurtured into their convictions. The barracks will be their home, iron their tool, and the regiment their family. They will be equipped and educated to defend their kingdom at the cost of their life. With catapults, knives, bows, halberds, and other weaponry, the Soldier will be called on to use their skills to defend the kingdom.
SQUIRE: The Squire will be a Gentleman or Lady in the service of the Knights, the equipment of war, and the Barons or Baronesses. Managing the equestrian staff, they must train and care for the beasts ridden by the Knights/Dames and refurbish the equipment of the royal army in combat situations. The Squire must be brave, quick, and resourceful in a conflict zone. They must act according to alliances under the orders of the Baron/Baroness.
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ARTISAN: The Artisan will be a legal status awarded by a kingdom to a person experienced in manual work. The Artisan must be gifted with their art, the practice of crafting materials into tools. They will be invested in the knowledge and conventional techniques specific to their city. A central figure in the kingdom’s development, they will be the only class with knowledge of technology. Exercising their qualities in the service of the Duke/Duchess, they must also develop infrastructure within the kingdom and outside.
FARMER: The Farmer will be vital to the longevity of a kingdom. They must manage both the kingdom’s agricultural needs and community health. Their farms must produce the livestock and agricultural commodities that will feed and enable the kingdom to thrive. They will be under the protection and supervision of the Marquis/Marquise.
PRISONER: The Prisoner will be anonymous; they have lost their rank and honor. Fallen into the hands of the enemy during a war or punished by their nation, they will find themselves in the common jails among the poor. Their main objective is to regain freedom. They must prove their worth by rendering community services to earn it honorably. For some, being held by the enemy will be fatal, while for others, those with enough patience and intelligence, it will be an opportunity to prove their worth in other ways.
Development Timeline
| ● | Phase One: This is the preproduction phase where we intend to complete the scripting of the story around the game, develop and draw the game environment elements and the scenery, the different characters, and the details of the gameplay features. We have engaged Neosperience to complete the storyboard of TheRoyal.Land which has commenced and moved the game into production and development under Phase Two. |
| ● | Phase Two: In this phase, we plan to start the production and development of the first prototype, which includes the different characters, whether they are playable or just decorative. We will also plan the production of the various sets, animations, and voice-overs and produce the game interactions, as well as the production and development of the online pipeline. We expect this phase of development to take a minimum of nine months. |
| ● | Phase Three: In this phase, we will be testing the prototype version with the debugging process. At the same time, we will be deploying our marketing for our beta launch. Our beta launch will include a carefully curated process to select the demographics we wish to introduce to this version of the game in order to gather the most relevant feedback. We expect this phase of development to take approximately four months. |
| ● | Phase Four: In this phase, we will release the game worldwide accessible by mobile and desktop browsers and start the maintenance system. The game will be accessible while online after following a simple registration process. We believe we will be able to release TheRoyal.Land within the next twenty-four months. |
Unforeseen delays in product development, turnover of resources and lack of capital may impact our delivery timeline. We plan to add additional internal resources to ensure high quality and timely delivery of TheRoyal.Land and TheRoyal.Land-themed media assets.
Competition
Competition in the entertainment software industry is based on innovation, features, playability, product quality, brand name recognition, compatibility with popular platforms, access to distribution channels, price, marketing, and customer service. We compete for the leisure time and discretionary spending of consumers with other interactive entertainment companies and software competitors, as well as with providers of different forms of entertainment, such as film, television, social networking, music, and other consumer products. We believe our main competitors may include:
| ● | Minecraft: Minecraft is a multi-platform “sandbox” adventure game, like a virtual 3D Lego-like building game, which gives players a practically infinite hollow virtual world with which they can discover and extract raw materials, craft tools, and items, and builds structures, earthworks, and simple machines. |
| ● | Elden Ring: In Elden Ring, players control a customizable player character on a journey to repair the Elden Ring and become the new Elden Lord. The game is presented from a third-person perspective, with players roaming its interactive open world. Gameplay elements include combat using several weapons and magic spells, horseback riding and crafting. |
| ● | World of Warcraft: World of Warcraft is an MMORPG. Like other MMORPGs, the game allows players to create a character avatar and explore an open game world in third- or first-person view, exploring the landscape, fighting various monsters, completing quests, and interacting with non-player characters or other players. The game encourages players to work together to complete quests, enter dungeons and engage in player versus player combat; however, the game can also be played solo without interacting with others. The game primarily focuses on character progression, in which players earn experience points to level up their character to make them more powerful and buy and sell items using in-game currency to acquire better equipment, among other game systems. |
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We believe that we have competitive strengths, some of which are discussed above, that position us favorably. However, the technology industry is evolving rapidly and is increasingly competitive. Our success depends, in part, on our ability to be efficient in all aspects of the business and achieve the appropriate cost structure. Some of our competitors have economic resources more significant than ours. They may have lower cost structures allowing them to withstand volatility within the industry better and throughout the economy as a whole while retaining significantly greater operating and financial flexibility than our company.
Intellectual Property
The protection of our intellectual property and all corresponding rights throughout the world, including our trademarks, service marks, trade dress, logos, trade names, domain names, goodwill, patents, copyrights, works of authorship (whether or not copyrightable), software and trade secrets, know-how, and proprietary and other confidential information, together with all applications, registrations, renewals, extensions, improvements and counterparts in connection with any of the preceding, is essential to the success of our business. We will seek to protect our intellectual property rights by filing applications in various copyright, patent, trademark, and other government offices, as applicable, and relying on applicable laws and regulations in the U.S. and internationally, as well as a variety of administrative procedures. We are seeking to register our core brands as domain names, trademarks, and service marks in the U.S. and many other jurisdictions. We will also have a program to continue to secure, police, and enforce trademarks, service marks, trade dresses, logos, trade names, and domain names that correspond to our brands in markets of interest. We may file patent applications in the U.S. and extend them into international jurisdictions covering specific aspects of our proprietary technology and innovations. We also rely on contractual restrictions to protect our proprietary rights where appropriate when offering or procuring products and services. We have routinely entered into confidentiality, invention disclosure, assignment agreements with our employees and contractors, and non-disclosure agreements with external parties with whom we conduct business to control access to and use and disclosure of our proprietary information.
Facilities
Our Bermuda holding company’s registered office is located at c/o Conyers Corporate Services (Bermuda) Limited, Clarendon House, 2 Church Street, Hamilton, Pembroke, HM11, Bermuda.
Our subsidiary OAPLT’s corporate office is located at 60 rue Francois 1er, 75008 Paris, France. We lease this facility pursuant to a one-year lease agreement, dated February 17, 2023, which will renew for subsequent one-year terms until terminated by either party upon three months’ notice. The lease provides for a base rent of €300 annually, subject to yearly increases.
We believe that all our properties have been adequately maintained, are generally in good condition, and are suitable and adequate for our businesses.
Employees
As of April 1, 2024, we had no full-time or part-time employees and three independent contractors. None of our contractors are represented by labor unions, and we believe that we have an excellent relationship with our contractors.
Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
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Our Privacy Policy
We recognize that gamers care deeply about how their personal information is collected, used and shared.
When gamers use our game, they will be required to provide us with certain personal information. We intend to take commercially reasonable and appropriate measures to protect this personal information from accidental loss, misuse, and unauthorized access, disclosure, alteration, or destruction, taking into account the risks involved in processing and the nature of such data, and comply with applicable laws and regulations. We do not intend to transfer any personal information to third-parties that do not act on our behalf, and should we intend to do so, we will only do so with users’ consent. Similarly, we do not intend to collect sensitive personal information from users.
We may disclose personal information to certain types of third-party companies, but only to the extent needed to enable them to provide such services. The types of companies that may receive personal information and their functions are: marketing assistance, analytics and reporting, customer support, email and SMS delivery, cloud infrastructure, and systems monitoring. All such third parties function as our agents, performing services at our instruction and on our behalf pursuant to contracts which require them to provide at least the same level of privacy protection as is required by our privacy policy. In addition, we may be required to disclose personal information in response to lawful requests by public authorities, including for the purpose of meeting national security or law enforcement requirements. We may also disclose personal information to other third parties when compelled to do so by government authorities or required by law or regulation including, but not limited to, in response to court orders and subpoenas.
Laws and Regulations
We will be subject to various laws and regulations that affect companies conducting business on the Internet and mobile platforms, including those relating to privacy, use and protection of player and employee personal information and data (including the collection of data from minors), the Internet, behavioral tracking, mobile applications, content, advertising and marketing activities and anti-corruption. Additional laws in all of these areas are likely to be passed in the future, which could result in significant limitations on or changes to the ways in which we can collect, use, host, store or transmit the personal information and data of our customers or employees, communicate with our players and deliver products and services, which may significantly increase our compliance costs.
Data Protection and Information Security Regulations
We may be subject to a number of laws, rules, directives, and regulations (or privacy and data protection laws) relating to the collection, use, retention, security, processing, and transfer of personally identifiable information about our customers, users, and employees, or personal data, in the countries where we operate. Our business relies on the processing of personal data in many jurisdictions and the movement of data across national borders. As a result, much of the personal data that we process, which may include certain financial information associated with individuals, is subject to one or more privacy and data protection laws in one or more jurisdictions. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between or among us, our subsidiaries, and other parties with which we have commercial relationships.
In the United States, privacy and information safeguarding requirements under privacy laws include the Gramm-Leach-Bliley Act, the Telephone Consumer Privacy Act, and the California Consumer Privacy Act, which requires privacy protections comparable to those afforded by the GDPR, as well as the maintenance of a written, comprehensive information security program. The California Privacy Rights Act, which expands upon the consumer data use restrictions, penalties and enforcement provisions under the CCPA, and Virginia’s Consumer Data Protection Act, another comprehensive data privacy law, will become effective January 1, 2023. The Colorado Privacy Act and Connecticut’s An Act Concerning Personal Data Privacy and Online Monitoring, which are also comprehensive consumer privacy laws, will become effective July 1, 2023. The Utah Consumer Privacy Act, regarding business handling of consumers’ personal data, becomes effective December 31, 2023. In addition, several other states and the federal government have considered or are considering privacy laws like the CCPA. Although we do not intend to carry out any substantial business activities in the United States or to become subject to these laws, we must continue to monitor and assess the impact of these laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
Outside of the United States, data protection laws, including the EU General Data Protection Regulation, or the GDPR, also might apply to some of our operations or business collaborators. Legal requirements in these countries relating to the collection, storage, processing and transfer of personal data/information continue to evolve. The GDPR imposes, among other things, data protection requirements that include strict obligations and restrictions on the ability to collect, analyze and transfer EU personal data/information, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances, and possible substantial fines for any violations (including possible fines for certain violations of up to the greater of 20 million euros or 4% of total company revenue). Other governmental authorities around the world have enacted or are considering similar types of legislative and regulatory proposals concerning data protection.
Regulatory scrutiny of privacy, data protection, cybersecurity practices, and the processing of personal data is increasing around the world. Regulatory authorities are continuously considering numerous legislative and regulatory proposals and interpretive guidelines that may contain additional privacy and data protection obligations. In addition, the interpretation and application of these privacy and data protection laws in the United States, Europe, and elsewhere are often uncertain and in a state of flux.
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Laws and Regulations Relating to E-Commerce
Our business will be subject to a variety of laws and regulations applicable to companies conducting business on the Internet. Jurisdictions vary as to how, or whether, existing laws governing areas such as personal privacy and data security, consumer protection or sales and other taxes, among other areas, apply to the Internet and e-commerce, and these laws are continually evolving. For example, certain applicable privacy laws and regulations require us to provide users with our policies on sharing information with third parties, and advance notice of any changes to these policies. Related laws may govern the manner in which we store or transfer sensitive information or impose obligations on us in the event of a security breach or inadvertent disclosure of such information. Additionally, tax regulations in jurisdictions where we do not currently collect state or local taxes may subject us to the obligation to collect and remit such taxes, or to additional taxes, or to requirements intended to assist jurisdictions with their tax collection efforts.
New legislation or regulation, the application of laws from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the Internet and e-commerce generally could result in significant additional taxes on our business. Further, we could be subject to fines or other payments for any past failures to comply with these requirements. The continued growth and demand for e-commerce is likely to result in more laws and regulations that impose additional compliance burdens on e-commerce companies.
Foreign Corrupt Practices Laws
We may be subject to various United States and non-U.S. anti-corruption laws, or Anti-Corruption Laws, including the FCPA in the United States and the Bermuda Bribery Act 2016 in Bermuda. These laws generally prohibit companies and their intermediaries from engaging in bribery or making other improper payments of cash (or anything else of value) to government officials and other persons in order to obtain or retain business. Our business operations also must be conducted in compliance with applicable economic sanctions laws and regulations, or Trade Controls, including rules administered by the United States Department of the Treasury’s Office of Foreign Assets Control, the United States Department of State, the United States Department of Commerce, the United Nations Security Council and other relevant authorities.
We strive to conduct our business activities in compliance with applicable Anti-Corruption Laws and Trade Controls, and we are not aware of issues of historical noncompliance. However, we cannot guarantee full compliance currently or in the future. Violations of Anti-Corruption Laws or Trade Controls, or even allegations of such violations, could result in civil or criminal penalties, as well as adversely affect our business, financial condition and results of operations. Further, changes to the applicable laws and regulations, and/or significant business growth, may result in the need for increased compliance-related resources and costs.
Tax Laws and Regulations
Changes in tax laws or regulations in the jurisdictions in which we do business, or changes in how the tax laws are interpreted, could further impact our effective tax rate, further restrict our ability to repatriate undistributed offshore earnings, or impose new restrictions, costs or prohibitions on our current practices and reduce our net income and adversely affect our cash flows.
We are also subject to tax audits and our tax positions may be challenged by tax authorities. Although we believe that our current tax provisions are reasonable and appropriate, there can be no assurance that these items will be settled for the amounts accrued, that additional tax exposures will not be identified in the future or that additional tax reserves will not be necessary for any such exposures. Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions could result in a material adverse effect on our business, results of operations and financial condition.
Other Regulations
We will also be subject to international, federal, national, regional, state, local and other laws and regulations affecting our business, including Cboe’s rules, various labor, workplace and related laws, and environmental laws and regulations. Failure to comply with such laws and regulations may expose us to potential liability and have an adverse effect on our results of operations.
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Directors and Executive Officers
The following table sets forth certain information regarding our directors and executive officers.
| NAME | AGE | POSITION | ||
| Emanuele Filiberto di Savoia | 51 | Chief Executive Officer and Director | ||
| Bryan Elbez | 33 | Chief Financial Officer | ||
| Jean-Claude Sindres | 51 | Chief Strategy and Creative Officer | ||
| Soheil Raissi | 68 | Chief Technology Officer | ||
| Daniel Joseph McClory | 64 | Executive Chairman and Director | ||
| Alberto Libanori | 34 | Director |
Emanuele Filiberto di Savoia has served as our Chief Executive Officer and as a member of our board of directors since October 2022. Mr. di Savoia is the grandson of Umberto II, the last reigning king of Italy who was deposed in 1946 and whose heirs could not set foot on Italian soil until 2002, and is considered the Prince of Italy. Mr. di Savoia worked as a hedge fund manager at Republic National Bank of New York from 1993 to 1996 and at Syz Bank from 1996 to 2005, both located in Geneva, Switzerland. Mr. di Savoia created the Altin Fund in 1997, the first hedge fund listed on the Zurich Stock Exchange. In 2003, Mr. di Savoia established the Emanuele Filiberto Charity Fund Foundation, which supports Italian nonprofits in such areas as health, education and poverty. Mr. di Savoia created his production company “AristoCrazy” in 2014 and has appeared on various television programs since 1994, including serving as a co-host on the talent show “Ciak... si Canta! (“Cut... the Singer!”) and competing on “Ballando con le Stelle,” the Italian version of “Dancing with the Stars,” which he won. In 2014, Mr. di Savoia created his own fashion brand called “PrinceTees” introducing a line of exclusive t-shirts made of cotton and cashmere. In 2017, Mr. di Savoia created Prince of Venice restaurants, a fast casual concept of fresh homemade pasta and Roman-style pizza. Mr. di Savoia has also written two books, Sognando L’Italia (Dreaming of Italy), a memoir about growing up in exile published in 1998, and the novel Mi Fai Stare Bene (You Make Me Feel Good), a fictional love story published in 2022 about the exploits of a well-known Italian radio DJ. Mr. di Savoia earned a bachelor’s degree in Political Science from the University of Geneva.
Bryan Elbez has served as our Chief Financial Officer since April 2023. Since September 2016, Mr. Elbez has been at Malom Consulting, a CPA firm in the U.S., beginning as an accountant and becoming a Certified Public Accountant in 2021, specializing in international taxation with a particular focus on the French-U.S. tax treaty. From August 2021 to December 2022, Mr. Elbez served as the Chief Financial Officer of Emets Management, an installation company, and supported their administrative and financial departments. Mr. Elbez has extensive expertise in accounting, corporate finance, corporate tax, management and administration consultancy and corporate services. Mr. Elbez earned a bachelor’s degree in Accounting from Enoes – Ecole Expertise Comptable et Audit and a master’s degree in Accounting from Ines Expertise. Since July 2018, Mr. Elbez has been licensed as a Certified Public Accountant. Mr. Elbez is fluent in English, French and Spanish.
Jean-Claude Sindres has served as our Chief Strategy and Creative Officer since February 2023. Since 1999, Mr. Sindres has been working as a musician and DJ with a focus on electro music and is currently focused on personal passion projects under the name SINDRES. Mr. Sindres created the group Bel Amour in 2000, whose song “bel amour” ended up in the EMI UK top charts in 2000. In 2001, he became the executive producer and director of Barfly, a compilation CD of electronic dance music, and he also produced tracks for the Buddha Bar compilation CDs from 2001 to 2007. Mr. Sindres collaborated with David Guetta and Sandy Vee on David Guetta’s album One Love in 2009, which won International Album of the Year at the 11th NRJ Music Awards. From 2010 to 2013, Mr. Sindres worked with RedOne as a songwriter on “Live My Life” by Far East Movement, “Name of Love” by French DJ Jean-Roch, and “Flashing Lights” and “We Run The Night (RedOne Remix)” by Havana Brown. Mr. Sindres worked on the French movies “Babysitting,” “Babysitting 2” and “The New Adventures of Aladdin” as a music consultant and composer from 2014 to 2016.
Soheil Raissi has served as our Chief Technology Officer since February 2023. Mr. Raissi has also served as the Chief Technology Officer of MarginPoint, a software development company focused on inventory management and field service solutions, since May 2018. Since July 2007, Mr. Raissi has been the Managing Principal and Chief Technology Strategist at Maptics, a digital transformation and software development company focused on blockchain, machine learning and artificial intelligence. From January 2016 to December 2017, Mr. Raissi was the Chief Information & Technology Officer at A-Mark Precious Metals, Inc. (Nasdaq: AMRK), a Fortune-500 precious metal trading company. Prior to working at A-Mark, Mr. Raissi was the Founder and Chief Executive Officer of FastPoint Technologies, a SaaS solution provider in the pharmaceutical market that linked manufacturers, distributors, and pharmacies to secure the supply chain and improve product security and patient safety between March 2010 and December 2015. Mr. Raissi is an active member of the Southern California Society of Information Management (SCSIM) and serves on the advisory boards of several technology companies. From 2002 to 2005, Mr. Raissi was an Advisory Committee Member of World Wide Web Consortium (W3C) and MIT Auto ID Labs. Mr. Raissi earned a bachelor’s degree in Computer Science from California State University.
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Daniel Joseph McClory has served as our Executive Chairman and as a member of our board of directors since October 2022. Mr. McClory has also served as Executive Chairman and a member of the board of directors of Brera Holdings PLC (Nasdaq: BREA) since July 2022. Mr. McClory is a co-founder and has been the Chief Executive Officer of Boustead & Company Limited, a non-bank financial institution, since July 2016. He has also been at its wholly owned subsidiary Boustead Securities, LLC and served as the Managing Director, Head of Equity Capital Markets and Head of China since July 2016. Prior to working at Boustead, Mr. McClory held Managing Director positions at Bonwick Capital Partners, LLC, Burnham Securities Inc. and at Hunter Wise Financial Group, LLC between May 2003 and July 2016. Mr. McClory’s teams have ranked in the Top Ten of League Tables for placement agents, won “Deal of the Year” at the M&A Advisor Awards, and completed IPOs and transactions for clients listed on Nasdaq, the NYSE, the London Stock Exchange, Toronto Stock Exchange, the Stock Exchange of Hong Kong, and the Irish Stock Exchange. Mr. McClory serves on the boards of the USA Track & Field Foundation, the Eastern Michigan University Champions Advisory Board, and the Alder Foundation, where he listed the first-ever foreign-funded, venture philanthropy-backed IPO on Bovespa’s Social Stock Exchange in Brazil. Mr. McClory is a dual U.S.-Italian citizen who earned a bachelor’s degree in English and a master’s degree in Language and International Trade from Eastern Michigan University. In 2010, Eastern Michigan University awarded Mr. McClory an honorary Doctor of Public Service degree.
Dr. Alberto Libanori has served as a member of our board of directors since October 2022. Since April 2022, Dr. Libanori has served as a Senior Advisor of Boustead & Company Limited. Dr. Libanori has also been a member of the board of directors for Mainz Biomed N.V. (Nasdaq: MYNZ) since November 2021 and Brera Holdings PLC (Nasdaq: BREA) since July 2022. Previously, Dr. Libanori founded and helped with the strategic exits of a number of technology start-ups including Atelier Mnemist SAS and Cutech, which was acquired by Symrise. He also has 10 years’ work experience at the science-business interface in venture capital, business development & licensing, M&A and IPOs, focusing on life-sciences, med-tech and cosmeceuticals, working with L’Oréal Research and Innovation, M-Ventures, and Novartis Venture Funds. Dr. Libanori has published more than 30 peer-reviewed articles in journals including Nature Electronics, Advanced Materials, and ACS Nano, and is the holder of two patents. Dr. Libanori holds a PhD and MS in Bioengineering from UCLA, with focus on wearable and implantable bioelectronics and biomaterials for regenerative medicine, an MPhil in Bioscience Enterprise from Cambridge University, and a bachelor’s in Bimolecular Sciences (Hons) from St Andrews University. Dr. Libanori is fluent in English, French, Spanish, Mandarin Chinese and Portuguese, alongside his native Italian.
No family relationships exist between any of our directors and executive officers. There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any person referred to above was selected as a director or member of senior management.
Board of Directors
Our board of directors currently consists of three directors, one of whom satisfies the “independence” requirements of Rule 10A-3 under the Exchange Act and Nasdaq Rule 5605. Our bye-laws provide that our board of directors shall consist of such number of directors being not less than one director and not more than such maximum number of directors as the board of directors may from time to time determine. A director is not required to hold any shares in our company to qualify to serve as a director. Our board of directors may exercise all the powers of our company to borrow money, mortgage or charge its undertaking, property and uncalled capital, and to issue debentures, bonds and other securities, subject to applicable stock exchange limitations, if any, whenever money is borrowed or as security for any debt, liability or obligation of our company or of any third-party.
Board Committees
Due to the small size of our board of directors and the early stage of our operations, we do not currently have, and do not currently intend to establish, any committees of the board of directors, including an audit committee, a compensation committee or a nominating and corporate governance committee. Our board of directors currently performs the functions of those committees.
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Code of Ethics
We have adopted a code of ethics that applies to all of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Such code of ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, and reporting of violations of the code.
A copy of the code of ethics has been filed as an exhibit to the registration statement of which this prospectus is a part. We are required to disclose any amendment to, or waiver from, a provision of our code of ethics applicable to our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar functions. We intend to use our website as a method of disseminating this disclosure as well as by SEC filings, as permitted or required by applicable SEC rules. Any such disclosure will be posted to our website within four (4) business days following the date of any such amendment to, or waiver from, a provision of our code of ethics.
Foreign Private Issuer Exemption
Once the registration statement of which this prospectus is a part is declared effective by the SEC, we will become subject to the information reporting requirements of the Exchange Act that are applicable to “foreign private issuers,” and under those requirements we will file certain reports with the SEC. As a foreign private issuer, we will not be subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, although we report our financial results on a quarterly basis, we will not be required to issue quarterly reports, proxy statements that comply with the requirements applicable to U.S. domestic reporting companies, or individual executive compensation information that is as detailed as that required of U.S. domestic reporting companies. We also will have four months after the end of each fiscal year to file our annual reports with the SEC and we will not be required to file current reports as frequently or promptly as U.S. domestic reporting companies. We also present our financial statements pursuant to IFRS as issued by the International Accounting Standards Board, instead of pursuant to U.S. generally accepted accounting principles. Furthermore, our officers, directors and principal shareholders will be exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we will also not be subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act.
The following are some of the home country corporate governance exemptions that we may apply as a foreign private issuer instead of those otherwise required under the Exchange Act for domestic U.S. issuers:
| ● | Exemption from filing quarterly reports on Form 10-Q, from filing proxy solicitation materials on Schedule 14A or 14C in connection with annual or special meetings of shareholders, from providing current reports on Form 8-K disclosing significant events within four days of their occurrence, and from the disclosure requirements of Regulation FD. |
| ● | Exemption from Section 16 rules regarding sales of equity securities by insiders, which will provide less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act. |
These exemptions and leniencies will reduce the frequency and scope of information and protections available to you in comparison to those applicable to a U.S. domestic reporting company.
Duties of Directors
Under Bermuda common law, members of the board of directors of a Bermuda company owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following essential elements:
| ● | a duty to act in good faith in the best interests of the company; |
| ● | a duty not to make a personal profit from opportunities that arise from the office of director; |
| ● | a duty to avoid conflicts of interest; and |
| ● | a duty to exercise powers for the purpose for which such powers were intended. |
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The Companies Act imposes a duty on directors of a Bermuda company to act honestly and in good faith with a view to the best interests of the company, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In addition, the Companies Act imposes various duties on directors and officers of a company with respect to certain matters of management and administration of the company. Directors and officers generally owe fiduciary duties to the company, and not to the company’s individual shareholders. Our shareholders may not have a direct cause of action against our directors.
Terms of Directors and Officers
Our bye-laws provide for a minimum of one director and not more than the maximum number of directors as our board of directors may from time to time determine. Directors shall hold office for such terms as the shareholders determine or, in absence of such determination, until the next annual general meeting or until their successors are elected or appointed or their office is otherwise vacated.
Employment and Indemnification Agreements
We expect we will enter into employment or consulting agreements with certain of our executive officers. Each of these agreements will provide for an initial salary and bonus. Some of our executive officers may agree to covenants not to compete against us or solicit our employees or customers during their service period and for a period of up to 12 months following termination.
Provisions in our bye-laws provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. Our bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually or in right of the Company, against any of our directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. However, these bye-law provisions will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not the Company may otherwise indemnify such officer or director.
Additionally, we intend to enter into agreements to indemnify our directors and our executive officers to the maximum extent allowed under applicable law. These agreements, among other things, will provide that we will indemnify our directors and executive officers for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts reasonably incurred by such person in any action or proceeding, including any action by or in our right, on account of any services undertaken by such person on our behalf or that person’s status as our director or executive officer.
Compensation of Directors and Executive Officers
We recorded $35,095 in total compensation to directors and executive officers for the year ended June 30, 2023, consisting of $24,645 in paid fees and $10,450 in accrued fees, to Bryan Elbez, our Chief Financial Officer, and Soheil Raissi, our Chief Technology Officer, as consulting fees paid through their respective companies. We have not set aside or accrued any additional amount to provide pension, retirement or other similar benefits to our directors and executive officers. Our board of directors may determine compensation to be paid to the directors and the executive officers. In January 2023, we adopted an equity incentive plan, see “—Equity Incentive Plan” below.
Under our consulting agreement with our Chief Financial Officer, Bryan Elbez, effective as of April 27, 2023, we agreed that, for a 7-month term, unless terminated earlier in accordance with its terms, we will pay to Mr. Elbez a monthly fee of $3,000. The Company will also provide standard indemnification and directors’ and officers’ insurance as of the effective date of the registration statement of which this prospectus forms a part. Mr. Elbez is also subject to certain confidentiality and non-competition provisions.
Under our consulting agreement with our Chief Technology Officer, Soheil Raissi, effective as of February 1, 2023, we agreed that, until December 31, 2023, unless terminated earlier in accordance with its terms, we will pay to Mr. Raissi a monthly fee of $7,000. The Company will also provide standard indemnification and directors’ and officers’ insurance as of the effective date of the registration statement of which this prospectus forms a part. Mr. Raissi is also subject to certain confidentiality and non-competition provisions.
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Under our independent director agreement with Alberto Libanori, he will receive an annual cash fee of $1,000 and an initial stock option award to purchase 50,000 Class B Common Shares, with an exercise price equal to $2.00, upon the effective date of the registration statement of which this prospectus forms a part, or the Effective Date. We will pay the annual cash compensation fee in four equal installments no later than the fifth business day of each calendar quarter commencing in the quarter following the Effective Date. The share option will vest over a three (3) year period beginning at the Effective Date at a rate of 1/3 per year. We will also reimburse Mr. Libanori for pre-approved reasonable business-related expenses incurred in good faith in connection with the performance of his director’s duties for us. As also required under the independent director agreement, we have separately entered into a standard indemnification agreement with Mr. Libanori, the term of which will begin on the Effective Date.
Equity Incentive Plan
Our board of directors approved The RoyaLand Company Ltd. 2023 Equity Incentive Plan, or the 2023 Plan, on January 13, 2023, which was ratified by the majority of our shareholders on February 6, 2023.
Purpose of the 2023 Plan: The purpose of the 2023 Plan is to advance our interests and the interests of our shareholders by providing an incentive to attract, retain and reward persons performing services for us and by motivating such persons to contribute to our growth and profitability. The maximum number of Class B Common Shares that may be issued pursuant to awards granted under the 2023 Plan will be 2,000,000 Class B Common Shares. Cancelled and forfeited share options and share awards may again become available for grant under the 2023 Plan. As of the date of this prospectus, we have granted 175,000 Class B Common Shares under the 2023 Plan and 1,825,000 Class B Common Shares remain available for issuance under the 2023 Plan. We intend that awards granted under the 2023 Plan will be exempt from or comply with Section 409A of the Internal Revenue Code, or the Code (including any amendments or replacements of such section), and the 2023 Plan shall be so construed.
The following summary briefly describes the principal features of the 2023 Plan and is qualified in its entirety by reference to the full text of the 2023 Plan.
Awards that may be granted include: (a) Incentive Share Options, or ISO (b) Non-qualified Share Options, (c) Share Appreciation Rights, (d) Restricted Shares, (e) Restricted Share Units, or RSUs, (f) Shares granted as a bonus or in lieu of another award, and (g) Performance Awards. These awards offer us and our shareholders the possibility of future value, depending on the long-term price appreciation of Class B Common Shares and the award holder’s continuing service with us.
Share options give the option holder the right to acquire from us a designated number of Class B Common Shares at a purchase price that is fixed at the time of the grant of the option. The exercise price will not be less than the market price of the Class B Common Shares on the date of grant. Share options granted may be either incentive share options or non-qualified share options.
Share appreciation rights, or SARs, which may be granted alone or in tandem with options, have an economic value similar to that of options. When an SAR for a particular number of shares is exercised, the holder receives a payment equal to the difference between the market price of the shares on the date of exercise and the exercise price of the shares under the SAR. Again, the exercise price for SARs normally is the market price of the shares on the date the SAR is granted. Under the 2023 Plan, holders of SARs may receive this payment – the appreciation value – either in cash or Class B Common Shares valued at the fair market value on the date of exercise. The form of payment will be determined by us.
Restricted shares are awards of a right to receive Class B Common Shares on a future date. Restricted Share Unit Awards are evidenced by award agreements in such form as our board of directors shall from time to time establish. Restricted shares can take the form of awards of restricted shares, which represent issued and outstanding Class B Common Shares subject to vesting criteria, or restricted share units, which represent the right to receive Class B Common Shares subject to satisfaction of the vesting criteria. Restricted shares are forfeitable and non-transferable until the shares vest. The vesting date or dates and other conditions for vesting are established when the shares are awarded.
Our board of directors may grant Class B Common Shares to any eligible recipient as a bonus, or to grant shares or other awards in lieu of obligations to pay cash or deliver other property under the 2023 Plan or under other plans or compensatory arrangements.
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The 2023 Plan also provides for performance awards, representing the right to receive a payment, which may be in the form of cash, Class B Common Shares, or a combination, based on the attainment of pre-established goals.
All of the permissible types of awards under the 2023 Plan are described in more detail below.
Administration of the 2023 Plan: The 2023 Plan is currently administered by our board of directors. All questions of interpretation of the 2023 Plan, of any award agreement or of any other form of agreement or other document employed by us in the administration of the 2023 Plan or of any award shall be determined by the board of directors, and such determinations shall be final, binding and conclusive upon all persons having an interest in the 2023 Plan or such award, unless fraudulent or made in bad faith. Any and all actions, decisions and determinations taken or made by the board of directors. in the exercise of its discretion pursuant to the 2023 Plan or award agreement or other agreement thereunder (other than determining questions of interpretation pursuant to the preceding sentence) shall be final, binding and conclusive upon all persons having an interest therein.
Eligible Recipients: Persons eligible to receive awards under the 2023 Plan will be those employees, consultants and directors of us or of any of our subsidiaries.
Shares Available Under the 2023 Plan: The maximum aggregate number of Class B Common Shares that may be issued under the 2023 Plan shall be 2,000,000 Class B Common Shares and shall consist of authorized but unissued or reacquired Class B Common Shares or any combination thereof, subject to adjustment for certain corporate changes affecting the shares, such as share splits, merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, or share dividend. Shares subject to an award under the 2023 Plan for which the award is canceled, forfeited, surrendered or expires again become available for grants under the 2023 Plan.
Share Options and Share Appreciation Rights:
General. Share options and SARs shall be evidenced by award agreements specifying the number of Class B Common Shares covered thereby, in such form as the board of directors shall from time to time establish. Each share option grant will identify the option as an ISO or Non-qualified Share Option. Subject to the provisions of the 2023 Plan, the administrator has the authority to determine all grants of share options. That determination will include: (i) the number of shares subject to any option; (ii) the exercise price per share; (iii) the expiration date of the option; (iv) the manner, time and date of permitted exercise; (v) other restrictions, if any, on the option or the shares underlying the option; and (vi) any other terms and conditions as the administrator may determine.
Option Price. The exercise price for each share option or SAR shall be established in the discretion of the board of directors; provided, however, that the exercise price per share for the share option or SAR shall be not less than the fair market value of a Class B Common Share on the effective date of grant of the share option or SAR. Notwithstanding the foregoing, a share option or SAR may be granted with an exercise price lower than the minimum exercise price set forth above if such share option or SAR is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code.
Exercise of Options. Share options may be immediately exercisable but subject to repurchase or may be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the board of directors and set forth in the award agreement evidencing such share option. No share option or SAR shall be exercisable after the expiration of ten (10) years after the effective date of grant of such share option or SAR. Subject to the foregoing, unless otherwise specified by the board of directors in the grant of a share option or SAR, any share option or SAR granted hereunder shall terminate ten (10) years after the effective date of grant of the share option or SAR, unless earlier terminated in accordance with its provisions. The board of directors may set a reasonable minimum number of Class B Common Shares that may be exercised at any one time.
Expiration or Termination. Options, if not previously exercised, will expire on the expiration date established by the administrator at the time of grant. In the case of incentive share options, such term cannot exceed seven years provided that in the case of holders of more than 10% of our total combined voting shares, such term cannot exceed five years. Options will terminate before their expiration date if the holder’s service with our company or a subsidiary terminates before the expiration date. The option may remain exercisable for specified periods after certain terminations of employment, including terminations as a result of death, disability or retirement, with the precise period during which the option may be exercised to be established by the administrator and reflected in the grant evidencing the award.
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Incentive Share Options. Share options intending to qualify as ISOs may only be granted to employees, as determined by the board of directors. No ISO shall be granted to any person if immediately after the grant of such award, such person would own common shares, including Class B Common Shares subject to outstanding awards held by him or her under the 2023 Plan or any other plan established by the Company, amounting to more than ten percent (10%) of the total combined voting power or value of all classes of common shares of the Company. To the extent that the award agreement specifies that an Option is intended to be treated as an ISO, the Option is intended to qualify to the greatest extent possible as an “incentive stock option” within the meaning of Section 422 of the Code, and shall be so construed; provided, however, that any such designation shall not be interpreted as a representation, guarantee or other undertaking on the part of the Company that the Option is or will be determined to qualify as an ISO. If and to the extent that any shares are issued under a portion of any Option that exceeds the $100,000 limitation of Section 422 of the Code, such Class B Common Shares shall not be treated as issued under an ISO notwithstanding any designation otherwise.
Restricted Share Awards: Share awards can also be granted under the 2023 Plan. A share award is a grant of Class B Common Shares or of a right to receive shares in the future. These awards will be subject to such conditions, restrictions and contingencies as the administrator shall determine at the date of grant. Those may include requirements for continuous service and/or the achievement of specified performance goals.
Restricted Share Units: RSU Awards shall be evidenced by award agreements in such form as the board of directors shall from time to time establish. The purchase price for shares issuable under each RSU Award shall be established by the board of directors in its discretion. Except as may be required by Applicable Law or established by the board of directors, no monetary payment (other than applicable tax withholding) shall be required as a condition of receiving an RSU Award. Shares issued pursuant to any RSU Award may (but need not) be made subject to vesting conditions based upon the satisfaction of such Service requirements, conditions, restrictions or Performance Criteria, as shall be established by the board of directors and set forth in the award agreement evidencing such award.
Performance Criteria: Under the 2023 Plan, Performance Criteria means business criteria including, but not limited to: revenue; revenue growth; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; earnings per share; operating income; pre- or after-tax income; net operating profit after taxes; economic value added (or an equivalent metric); ratio of operating earnings to capital spending; cash flow (before or after dividends); cash-flow per share (before or after dividends); net earnings; net sales; sales growth; share price performance; return on assets or net assets; return on equity; return on capital (including return on total capital or return on invested capital); cash flow return on investment; total shareholder return; improvement in or attainment of expense levels; and improvement in or attainment of working capital levels or Performance Criteria. Any Performance Criteria may be used to measure the Company’s performance as a whole or any of the Company’s business units and may be measured relative to a peer group or index.
Performance Awards. Performance awards shall be evidenced by award agreements in such form as the board of directors shall from time to time establish. Each performance award shall entitle the participant to a payment in cash or Class B Common Shares upon the attainment of Performance Criteria and other terms and conditions specified by the board of directors. Notwithstanding the satisfaction of any Performance Criteria, the amount to be paid under a performance award may be adjusted by the board of directors on the basis of such further consideration as the board of directors in its sole discretion shall determine. The board of directors may, in its discretion, substitute actual Class B Common Shares for the cash payment otherwise required to be made to a participant pursuant to a performance award.
Bonus Shares and Awards in Lieu of Obligations. The board of directors may grant Class B Common Shares to any eligible recipient as a bonus, or to grant Class B Common Shares or other awards in lieu of obligations to pay cash or deliver other property under the 2023 Plan or under other plans or compensatory arrangements, provided that, in the case of participants subject to Section 16 of the Exchange Act, the amount of such grants remains within the discretion of the board of directors to the extent necessary to ensure that acquisitions of Class B Common Shares or other awards are exempt from liability under Section 16(b) of the Exchange Act. Class B Common Shares or awards granted hereunder shall be subject to such other terms as shall be determined by the board of directors.
Other Material Provisions: Awards will be evidenced by a written agreement, in such form as may be approved by the administrator. In the event of various changes to the capitalization of our company, such as share splits, share dividends and similar re-capitalizations, an appropriate adjustment will be made by the administrator to the number of shares covered by outstanding awards or to the exercise price of such awards. The administrator is also permitted to include in the written agreement provisions that provide for certain changes in the award in the event of a change of control of our company, including acceleration of vesting. Except as otherwise determined by the administrator at the date of grant, awards will not be transferable, other than by will or the laws of descent and distribution. Prior to any award distribution, we are permitted to deduct or withhold amounts sufficient to satisfy any employee withholding tax requirements. Our board of directors also has the authority, at any time, to discontinue the granting of awards. The board of directors also has the authority to alter or amend the 2023 Plan or any outstanding award or may terminate the 2023 Plan as to further grants, provided that no amendment will, without the approval of our shareholders, to the extent that such approval is required by law or the rules of an applicable exchange, increase the number of shares available under the 2023 Plan, change the persons eligible for awards under the 2023 Plan, extend the time within which awards may be made, or amend the provisions of the 2023 Plan related to amendments. No amendment that would adversely affect any outstanding award made under the 2023 Plan can be made without the consent of the holder of such award.
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The following table sets forth certain information with respect to the beneficial ownership of our common shares as of the date of this prospectus for (i) each of our executive officers and directors; (ii) all of our executive officers and directors as a group; and (iii) each other shareholder known by us to be the beneficial owner of more than 5% of a class of our voting securities.
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any common shares that such person or any member of such group has the right to acquire within sixty (60) days of the date of this prospectus. For purposes of computing the percentage of outstanding shares held by each person or group of persons named below, any shares that such person or persons has the right to acquire within sixty (60) days of the date of this prospectus are deemed to be outstanding for such person, but not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership by any person.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o our company, The RoyaLand Company Ltd., Clarendon House, 2 Church Street, Hamilton, Pembroke, HM11, Bermuda.
| Common Shares Beneficially Owned(1) | ||||||||||||||||||||
| Name of Beneficial Owner | Class A Common Shares | Percent of Class A Common Shares (%) | Class B Common Shares | Percent of Class B Common Shares (%) | Total Voting Power(2) (%) | |||||||||||||||
| Emanuele Filiberto di Savoia, Chief Executive Officer and Director | 6,000,000 | 63.8 | - | - | 62.4 | |||||||||||||||
| Bryan Elbez, Chief Financial Officer | - | - | - | - | - | |||||||||||||||
| Daniel Joseph McClory, Executive Chairman and Director(3) | 2,500,000 | 26.6 | - | - | 26.0 | |||||||||||||||
| Jean-Claude Sindres, Chief Strategy and Creative Officer | 900,000 | 9.6 | - | - | 9.4 | |||||||||||||||
| Soheil Raissi, Chief Technology Officer | - | - | - | - | - | |||||||||||||||
| Alberto Libanori, Director(4) | - | - | 60,000 | 1.3 | * | |||||||||||||||
| All directors and executive officers as a group (6 persons) | 9,400,000 | 100.0 | 60,000 | 1.3 | 97.7 | |||||||||||||||
| Pinehurst Partners LLC(3) | 2,500,000 | 26.6 | - | - | 26.0 | |||||||||||||||
| Latigo Partners, LLC(5) | - | - | 445,000 | 9.9 | * | |||||||||||||||
| Keith C. Moore | - | - | 645,000 | (6) | 14.4 | * | ||||||||||||||
| BaseStones, Inc.(7) | - | - | 320,000 | 7.2 | * | |||||||||||||||
| Arturo Barone | - | - | 300,000 | 6.7 | * | |||||||||||||||
| GMS Sovereign Plus Fund SPC Ltd.(8) | - | - | 250,000 | 5.6 | * | |||||||||||||||
| Wing Kai Lam | - | - | 645,000 | (9) | 13.3 | * | ||||||||||||||
| Rui Wu | - | - | 637,500 | (10) | 13.0 | * | ||||||||||||||
| Eternal Horizon International Company Limited | - | - | 632,500 | (11) | 12.9 | * | ||||||||||||||
| Grant McClory | - | - | 225,000 | 5.0 | * | |||||||||||||||
| * | Less than 1% |
| (1) | Based on 9,400,000 Class A Common Shares, 2,500,000 (26.6%) of which are held in the United States by one shareholders, and 4,475,000 Class B Common Shares, 2,305,000 (51.5%) of which are held in the United States by twenty-eight shareholders, issued and outstanding as of the date of this prospectus. |
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| (2) | The holders of Class A Common Shares are entitled to twenty (20) votes for each Class A Common Share held of record, and the holders of Class B Common Shares are entitled to one (1) vote for each Class B Common Share held of record, on all matters submitted to a vote of the shareholders. A total of 13,875,000 common shares representing total voting power of 192,475,000 votes are outstanding as of the date of this prospectus. |
| (3) | The 2,500,000 Class A Common Shares beneficially owned by Daniel Joseph McClory are held by Pinehurst Partners LLC. Pinehurst Partners LLC is a Colorado limited liability company, 100% owned by the Roth individual retirement account of Daniel Joseph McClory. Pinehurst Partners LLC’s managing member is Daniel Joseph McClory, our Executive Chairman and director. Pinehurst Partners LLC’s business address is 6525 Gunpark Drive, Suite 370-103, Boulder, CO 80301, USA. |
| (4) | Under the independent director agreement between Alberto Libanori and the Company, Dr. Libanori will be granted a share option, with an exercise price equal to $2.00, to purchase 50,000 Class B Common Shares, which will vest over a three (3) year period at a rate of 1/3 per year following the effectiveness of his independent director agreement upon the effectiveness of the registration statement of which this prospectus forms a part. |
| (5) | Latigo Partners, LLC is a Nevada limited liability company. Latigo Partners, LLC’s managing member is Keith C. Moore. Keith C. Moore is deemed to beneficially own the Class B Common Shares owned by Latigo Partners, LLC and has sole voting and dispositive powers over its shares. Latigo Partners, LLC’s business address is 318 N Carson Street, Suite 208, Carson City, NV 89701, USA. |
| (6) | Consists of (i) 445,000 Class B Common Shares held by Latigo Partners, LLC; and (ii) 200,000 Class B Common Shares held by Keith C Moore Consulting, Inc., both of which are beneficially owned by Mr. Moore who has sole voting and dispositive power over them. |
| (7) | BaseStones, Inc. is a Nevada corporation. BaseStones, Inc.’s president is Mohammad Ansari. Mohammad Ansari is deemed to beneficially own the Class B Common Shares owned by BaseStones, Inc. and has sole voting and dispositive powers over its shares. BaseStones, Inc.’s business address is 1901 Avenue of the Stars, #200, Los Angeles, CA 90067, USA. |
| (8) | GMS Sovereign Plus Fund SPC Ltd. is a British Virgin Islands company. GMS Sovereign Plus Fund SPC Ltd.’s directors are Sukru Evrengun and Angelo Galli. Each of them is deemed to beneficially own the Class B Common Shares owned by GMS Sovereign Plus Fund SPC Ltd. and has shared voting and dispositive powers over its shares. GMS Sovereign Plus Fund SPC Ltd.’s business address is Sea Meadow House, PO Box 116, Road Town, British Virgin Islands. |
| (9) | Consists of (i) 270,000 Class B Common Shares and (ii) 375,000 Class B Common Shares issuable upon exercise of a warrant within 60 days of the date of this prospectus. |
| (10) | Consists of (i) 200,000 Class B Common Shares and (ii) 437,500 Class B Common Shares issuable upon exercise of a warrant within 60 days of the date of this prospectus. |
| (11) | Consists of (i) 195,000 Class B Common Shares and (ii) 437,500 Class B Common Shares issuable upon exercise of a warrant within 60 days of the date of this prospectus. Jie Xu has sole voting and dispositive power over the shares held by Eternal Horizon International Company Limited. Eternal Horizon International Company Limited’s business address is 30 de Castro St, PO Box 4518, Wickams Cay, British Virgin Islands. |
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
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In addition to the compensation arrangements discussed under “Management,” the following is a description of the material terms of those transactions with related parties to which we are party and which we are required to disclose pursuant to the disclosure rules of the SEC.
Corporate Reorganization
On November 28, 2022, we entered into a share exchange agreement with RoyaLand Company and its stockholders, pursuant to which all the stockholders of RoyaLand Company exchanged their shares for an equal number of shares in the Company, except for Emanuele Filiberto di Savoia, Pinehurst Partners, LLC, and Jean-Claude Sindres, who received the amount of shares they had in RoyaLand Company minus the amount of Company shares they subscribed for on October 25, 2022. As a result, the share exchange became effective under Nevada and Bermuda law, and RoyaLand Company became our wholly-owned subsidiary.
Sales of Securities
Founder Share Issuances
On January 28, 2022, RoyaLand Company issued 100,000 shares of common stock in connection with the incorporation of the RoyaLand Company, at an issue price of $0.001 per share, for a total consideration of $100. On March 1, 2022, the RoyaLand Company amended its articles of incorporation to authorize 300,000,000 shares of stock, consisting of (i) 250,000,000 shares of Common Stock, $0.001 par value per share, of which, 20,000,000 shares were designated Class A Common Stock, par value $0.001 per share, or the Class A Common Stock, and 230,000,000 shares were designated as Class B Common Stock, $0.001 par value per share, or the Class B Common Stock, and (ii) 50,000,000 shares of Preferred Stock, $0.001 par value per share; and effected a 100 to 1 forward stock split resulting in issued and outstanding shares of 6,500,000 of Class A Common Stock and 3,500,000 shares of Class B Common Stock.
The following table presents all of the shares owned before and after the forward stock split.
| Shareholder | Common Stock Before Split | Class A Common Stock After Split | Class B Common Stock After Split | Aggregate Purchase Price Paid | ||||||||||||
| Emanuele Filiberto di Savoia, Chief Executive Officer and Director | 65,000 | 6,500,000 | - | $ | 65 | |||||||||||
| Pinehurst Partners LLC (1) | 25,000 | - | 2,500,000 | $ | 25 | |||||||||||
| Jean-Claude Sindres, Chief Strategy and Creative Officer | 10,000 | - | 1,000,000 | $ | 10 | |||||||||||
| (1) | Pinehurst Partners LLC is a Colorado limited liability company, 100% owned by the Roth individual retirement account of Daniel Joseph McClory. Pinehurst Partners LLC’s managing member is Daniel Joseph McClory, our Executive Chairman and Director. Daniel Joseph McClory is deemed to beneficially own the Class A Common Shares owned by Pinehurst Partners LLC and has sole voting and dispositive powers over its shares. Pinehurst Partners LLC’s business address is 6525 Gunpark Drive, Suite 370-103, Boulder, CO 80301. |
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On October 25, 2022, we issued 1,000,000 Class A Common Shares in connection with the incorporation of The RoyaLand Company Ltd., at an issue price of $0.0002 per share, for a total consideration of $200. All of the shares were sold to members of our board of directors, executive officers or their affiliates and beneficial owners of more than 5% of our outstanding share capital, in reliance upon (i) the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws, or (ii) the provisions of Regulation S promulgated under the Securities Act.
The following table presents the amounts of Class A Common Shares issued and aggregate purchase prices paid by the members of our board of directors, executive officers or their affiliates and beneficial owners of more than 5% of our outstanding share capital. The terms of these purchases were the same for all purchasers of our common shares.
| Shareholder | Class A Common Shares | Aggregate Purchase | ||||||
| Emanuele Filiberto di Savoia, Chief Executive Officer and Director | 650,000 | $ | 130 | |||||
| Pinehurst Partners LLC (1) | 250,000 | $ | 50 | |||||
| Jean-Claude Sindres, Chief Strategy and Creative Officer | 100,000 | $ | 20 | |||||
| (1) | Pinehurst Partners LLC is a Colorado limited liability company, 100% owned by the Roth individual retirement account of Daniel Joseph McClory. Pinehurst Partners LLC’s managing member is Daniel Joseph McClory, our Executive Chairman and Director. Daniel Joseph McClory is deemed to beneficially own the Class A Common Shares owned by Pinehurst Partners LLC and has sole voting and dispositive powers over its shares. Pinehurst Partners LLC’s business address is 6525 Gunpark Drive, Suite 370-103, Boulder, CO 80301. |
Under our bye-laws, we are authorized to issue two classes of common shares, Class A Common Shares and Class B Common Shares, and any number of classes of preference shares. Class A Common Shares are entitled to twenty votes per share on proposals requiring or requesting shareholder approval, and Class B Common Shares are entitled to one vote on any such matter. Class A Common Shares may be voluntarily converted into Class B Common Shares. A transfer of Class A Common Shares will result in their automatic conversion into Class B Common Shares upon such transfer, except that the transfer of Class A Common Shares to another holder of Class A Common Shares will not result in such automatic conversion. Class B Common Shares are not convertible. Other than as to voting and conversion rights, Class A Common Shares and Class B Common Shares have the same rights and preferences and rank equally.
As a result of the above share issuances and the share transfers discussed in “Business–Our Corporate History and Structure,” our founders, some of whom are, or are beneficially owned by, our officers and directors, own 9,400,000 Class A Common Shares, which amounts to 188,000,000 votes out of a total of 192,175,000 votes held by our outstanding common shares.
Private Placements
On August 12, 2022 and September 30, 2022, RoyaLand Company conducted private placements of shares of Class B Common Stock, and entered into certain subscription agreements with a number of (i) “accredited investors” as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, RoyaLand Company issued 2,000,000 shares of Class B Common Stock at $0.25 per share for a total of $500,000. The shares were subsequently exchanged for Class B Common Shares as described above under “—Corporate Reorganization”. The Class B Common Shares that the private placement investors now hold as a result of these transactions are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Daniel Joseph McClory, our Executive Chairman and Director, purchased 600,000 shares of Class B Common Stock for $150,000.
On March 3, 2023, March 28, 2023, May 4, 2023, June 30, 2023, July 14, 2023 and July 18, 2023, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 825,000 Class B Common Shares at $1.00 per share for a total of $825,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $57,750, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $8,250, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 57,750 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
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On July 21, 2023, we conducted a private placement of units of securities, consisting of (i) one Class B Common Share and (ii) a three-year-term warrant to purchase 2.5 Class B Common Shares (the “Units”), and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 500,000 Units at $1.00 per Unit for a total of $500,000. The Units are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in this private placement. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $35,000, or 7% of the gross amount actually received by the Company in the private placement, and a non-accountable expense allowance of $5,000, or 1% of the gross amount actually received by the Company in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 35,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
On March 8, 2024, April 17, 2024, and April 24, 2024, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 300,000 Class B Common Shares at $1.00 per share for a total of $300,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $21,000, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $3,000, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 21,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
Restricted Share Issuance Under Equity Incentive Plan
On May 31, 2023, we entered into advisor agreements with seven consultants, pursuant to which we issued 25,000 Class B Common Shares under the 2023 Plan as compensation for services, for a total issuance of 175,000 Class B Common Shares.
Indemnification Agreements
We have adopted provisions in our bye-laws that provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. We intend to enter into indemnification agreements with our directors and our executive officers which will provide, among other things, that we will indemnify our directors and executive officers against any liability brought against them by reason of their service as directors, except in cases where such liability arises from fraud, dishonesty, bad faith, gross negligence, willful default or willful misfeasance. Subject to Section 14 of the Securities Act, which renders void any waiver of the provisions of the Securities Act, our bye-laws provide that our shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of our directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. However, these bye-law provisions will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director. In order to attract and retain qualified directors and officers, we expect to purchase and maintain customary directors’ and officers’ liability insurance and other types of comparable insurance.
Other Agreements
At the time of incorporation of RoyaLand Company, Daniel Joseph McClory, our Executive Chairman and Director, made advances totaling $2,000 to open two bank accounts. In addition, during the year ended June 30, 2023, Mr. McClory made additional advances of $8,500, such that as of June 30, 2023, the amount due to Mr. McClory was $10,500, which amount carried no interest and was due on demand.
From time to time, OAPLT made advances to and received advances from the former owners, Thibault Cazin and Gaultier Cazin. As of June 30, 2023, the amount due to Mr. Gaultier Cazin of $1,876 carried no interest.
Related Party Transaction Policy
Prior to the consummation of this offering, we intend to enter into a new related party transaction policy. Pursuant to such related party transaction policy, any related party transaction must be approved or ratified by our board of directors or a designated committee thereof. In determining whether to approve or ratify a transaction with a related party, our board of directors or the designated committee will consider all relevant facts and circumstances, including without limitation the commercial reasonableness of the terms, the benefit and perceived benefit, or lack thereof, to us, opportunity costs of alternate transactions, the materiality and character of the related party’s direct or indirect interest and the actual or apparent conflict of interest of the related party. Our board of directors or the designated committee will not approve or ratify a related party transaction unless it has determined that, upon consideration of all relevant information, such transaction is in, or not inconsistent with, our best interests and the best interests of our shareholders.
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DESCRIPTION OF SHARE CAPITAL AND BYE-LAWS
General
The following is a description of the material terms of our bye-laws and memorandum of association as will be in effect upon the completion of this offering. The following description may not contain all of the information that is important to you and we therefore refer you to our bye-laws and memorandum of association, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part.
We are a Bermuda exempted company with limited liability. We are registered with the Registrar of Companies in Bermuda under registration number 202201824. We were incorporated on October 18, 2022, under the name The RoyaLand Company Ltd. Our registered office is located at c/o Conyers Corporate Services (Bermuda) Limited, Clarendon House, 2 Church Street, Hamilton HM11, Bermuda. Our affairs are governed by our memorandum of association and bye-laws and the Companies Act 1981 of Bermuda, or the Companies Act, and the common law of Bermuda.
The objects of our business are unrestricted, and the company has the capacity of a natural person. We can therefore undertake activities without restriction on our capacity.
A register of holders will be maintained in the United States by Transhare Corporation, who will serve as registrar and transfer agent. The authorized share capital of the Company currently consists of 20,000,000 Class A Common Shares of par value $0.0002 each, 430,000,000 Class B Common Shares of par value $0.0002 each, and 50,000,000 undesignated preference shares of par value $0.0002 each.
Pursuant to our bye-laws, subject to any resolution of the shareholders to the contrary, our board of directors is authorized to issue any of our authorized but unissued shares. There are no limitations on the right of non-Bermudians or non-residents of Bermuda to hold or vote our shares.
As of the date of this prospectus, we have 9,400,000 Class A Common Shares, 4,475,000 Class B Common Shares, and no preference shares issued and outstanding.
Share Capital
Common Shares
General
All of our issued and outstanding common shares are fully paid and non-assessable. Certificates representing our issued and outstanding common shares are generally not issued and legal title to our issued shares is recorded in registered form in the register of members. Our issued and outstanding common shares consist of Class A Common Shares and Class B Common Shares. Holders of Class A Common Shares and Class B Common Shares have the same rights other than with respect to voting and conversion rights. Holders of our common shares have no preemptive, redemption, conversion or sinking fund rights (except as described below under the heading “—Conversion”). If we issue any preference shares, the rights, preferences and privileges of holders of our Class A Common Shares and Class B Common Shares will be subject to, and may be adversely affected by, the rights of the holders of such preference shares.
Dividends
The holders of our common shares will be entitled to such dividends as may be declared by our board of directors, subject to the Companies Act and our bye-laws. Dividends and other distributions on issued and outstanding shares may be paid out of the funds of the Company lawfully available for such purpose, subject to any preference of any issued and outstanding preference shares. Dividends and other distributions will be distributed among the holders of our common shares on a pro rata basis.
Under Bermuda law, we may not declare or pay any dividends if there are reasonable grounds for believing that (i) we are, or after the payment of such dividends would be, unable to pay our liabilities as they become due, or (ii) the realizable value of our assets would thereby be less than our liabilities. There are no restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to U.S. residents who are holders of our common shares.
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Voting Rights
Under our bye-laws, each holder of Class A Common Shares is entitled to twenty (20) votes per Class A Common Share held and each holder of Class B Common Shares is entitled to one (1) vote per Class B common share held.
Under our bye-laws, the quorum required for a general meeting of shareholders to consider any resolution or take any action, including with respect to any meeting convened to consider or adopt a resolution required for an amalgamation or merger of the Company, is two or more persons present at the start of the meeting and representing in person or by proxy in excess of 50% of the total voting rights of all issued and outstanding shares in the Company.
Subject to the Companies Act and our bye-laws, to be passed at a general meeting of the Company, a resolution requires the affirmative vote of at least a majority of the votes cast at such meeting.
At any general meeting of the Company a resolution put to the vote of the meeting shall in the first instance be by a show of hands. A poll may be demanded by (i) the chairman of the meeting; (ii) at least three shareholders present or voting by proxy or (iii) one or more shareholders present or represented by proxy holding not less than one-tenth of the total voting rights of the shareholders holding all of the issued and outstanding Class A Common Shares and Class B Common Shares and any other shares of the Company or not less than one-tenth of the aggregate sum paid up on all issued and outstanding Class A Common Shares and Class B Common Shares and any other shares of the Company having the right to attend and vote.
Conversion
Each Class A Common Share is convertible into one Class B Common Share at any time at the option of the holder of such Class A Common Share. Any Class A Common Shares that are converted into Class B Common Shares may not be reissued. The disparate voting rights of our Class A Common Shares will not change upon transfer unless such Class A Common Shares are first converted into our Class B Common Shares. A transfer of Class A Common Shares will result in their automatic conversion into Class B Common Shares upon such transfer, except that the transfer of Class A Common Shares to another holder of Class A Common Shares will not result in such automatic conversion.
Variation of Rights
As a matter of Bermuda law, the holders of one class of shares may not vary the voting rights of such class of shares relative to another class of shares, without the approval of the holders of each other class of our voting shares then in issue. As such, if at any time we have more than one class of shares, the rights attaching to any class, unless otherwise provided for by the terms of issue of the relevant class, may be varied either: (i) with the consent in writing of the holders of three-fourths of the issued shares of that class; or (ii) with the sanction of a resolution passed by a majority of the votes cast at a separate general meeting of the relevant class of shareholders at which a quorum consisting of two persons at least holding or representing by proxy one-third of the issued shares of the class is present. In addition, as the rights attaching to any class of shares are set forth in our bye-laws, a resolution of a general meeting of the Company would generally be required to be passed to amend the bye-laws to vary such rights. For purposes of the Class A Common Shares or Class B Common Shares, the only rights specifically attaching to such shares that may be varied as described in this paragraph are the voting, dividend and liquidation rights.
Our bye-laws specify that the creation or issue of shares ranking equally with existing shares will not, unless expressly provided by the terms of issue of existing shares, vary the rights attached to existing shares. In addition, the creation or issue of preference shares ranking prior to common shares will not be deemed to vary the rights attached to common shares or, subject to the terms of any other series of preference shares, to vary the rights attached to any other series of preference shares.
Transfer of Shares
Our board of directors may in its absolute discretion and without assigning any reason refuse to register the transfer of a share that is not fully paid. Our board of directors may also refuse to recognize an instrument of transfer of a share unless it is accompanied by the relevant share certificate and such other evidence of the transferor’s right to make the transfer as our board of directors shall reasonably require. Subject to these restrictions, a holder of common shares may transfer the title to all or any of its common shares by completing a form of transfer in the form set out in our bye-laws (or as near thereto as circumstances admit) or in such other common form as the board may accept. The instrument of transfer must be signed by the transferor and transferee, although in the case of a fully paid share our board of directors may accept the instrument signed only by the transferor.
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Liquidation
In the event of our liquidation, dissolution or winding up, the holders of our Class A Common Shares and Class B Common Shares are entitled to share equally and ratably in our assets, if any, remaining after the payment of all of our debts and liabilities, subject to any liquidation preference on any issued and outstanding preference shares.
Election and Removal of Directors
Our bye-laws provide that our board of directors shall consist of such number of directors being not less than one director and not more than such maximum number of directors as the board of directors may from time to time determine.
Our bye-laws provide that only persons who are proposed or nominated in accordance with our bye-laws shall be eligible for election as directors. Any shareholder or the board of directors may propose any person for election as a director. Where any person, other than a director retiring at the meeting or a person proposed for re-election or election as a director by the board of directors, is to be proposed for election as a director, notice must be given to the Company of the intention to propose him and of his willingness to serve as a director. If a director is to be elected at an annual general meeting, such notice must be given not less than 90 days nor more than 120 days before the anniversary of the last annual general meeting or, in the event the annual general meeting is called for a date that is not 30 days before or after such anniversary, the notice must be given not later than 10 days following the earlier of the date on which notice of the annual general meeting was posted to shareholders or the date on which public disclosure of the date of the annual general meeting was made. If a director is to be elected at a special general meeting, such notice must be given not later than 10 days following the earlier of the date on which notice of the special general meeting was posted to shareholders or the date on which public disclosure of the date of the special general meeting was made.
Our bye-laws provide that shareholders entitled to vote for the election of directors may, at any special general meeting convened and held in accordance with our bye-laws, remove a director only with cause, provided that the notice of any such meeting convened for the purpose of removing a director shall contain a statement of the intention so to do and be served on such director not less than 14 days before the meeting and at such meeting the director shall be entitled to be heard on the motion for such director’s removal.
Proceedings of Board of Directors
Our bye-laws provide that our business is to be managed and conducted by our board of directors. Bermuda law permits individual and corporate directors and there is no requirement in our bye-laws or Bermuda law that directors hold any of our shares.
The remuneration of our directors is determined by our board of directors, and there is no requirement that a specified number or percentage of “independent” directors must approve any such determination. Our directors may also be paid all travel, hotel and other expenses properly incurred by them in connection with our business or their duties as directors.
Provided a director discloses a direct or indirect interest in any contract or arrangement with us as required by Bermuda law, such director is entitled to vote in respect of any such contract or arrangement in which he or she is interested unless he or she is disqualified from voting by the chairman of the relevant board meeting.
Preference Shares
Pursuant to Bermuda law and our bye-laws, our board of directors may establish by resolution one or more series of preference shares in such number and with such designations, dividend rates, relative voting rights, conversion or exchange rights, redemption rights, liquidation rights and other relative participation, optional or other special rights, qualifications, limitations or restrictions as may be fixed by the board without any further shareholder approval. Such rights, preferences, powers and limitations could have the effect of discouraging an attempt to obtain control of the Company.
Share Options
On January 13, 2023, we adopted The RoyaLand Company Ltd. 2023 Equity Incentive Plan, or the 2023 Plan. The purpose of the 2023 Plan is to grant restricted share and share options to our officers, employees, directors, advisors and consultants. The maximum number of Class B Common Shares that may be issued pursuant to awards granted under the 2023 Plan will be 2,000,000 Class B Common Shares. Cancelled and forfeited share options and share awards may again become available for grant under the 2023 Plan. The 2023 Plan will expire on January 13, 2033. For further information, please see “Management—Equity Incentive Plan”.
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Capitalization of Profits and Reserves
Pursuant to our bye-laws, our board of directors may (i) capitalize any part of the amount of our share premium or other reserve accounts or any amount credited to our profit and loss account or otherwise available for distribution by applying such sum in paying up unissued shares to be allotted as fully paid bonus shares pro rata (except in connection with the conversion of shares) to the shareholders; or (ii) capitalize any sum standing to the credit of a reserve account or sums otherwise available for dividend or distribution by paying up in full, partly paid or nil paid shares of those shareholders who would have been entitled to such sums if they were distributed by way of dividend or distribution.
Meetings of Shareholders
Subject to the provisions of the Companies Act, the Company shall not be required to hold an annual general meeting in each year. Where the Company elects to hold an annual general meeting, such meeting shall be held at such time and place as the president or the chairman of the Company (if any) or any two directors or any director and the secretary or the board of directors shall appoint.
The president or the chairman of the Company (if any) or any two directors or any director and the secretary or the board of directors may convene a special general meeting whenever in their judgment such a meeting is necessary.
The quorum required for a general meeting of shareholders to consider any resolution or take any action is two or more persons present at the start of the meeting and representing in person or by proxy in excess of 50% of the total voting rights of all issued and outstanding shares in the Company.
Under Bermuda law, shareholders may, as set forth below and at their own expense (unless the company otherwise resolves), require the company to: (i) give notice to all shareholders entitled to receive notice of the annual general meeting of any resolution that the shareholders may properly move at the next annual general meeting; and/or (ii) circulate to all shareholders entitled to receive notice of any general meeting a statement (of not more than one thousand words) in respect of any matter referred to in the proposed resolution or any business to be conducted at such general meeting. The number of shareholders necessary for such a requisition is either: (i) any number of shareholders representing not less than 10% of the total voting rights of all shareholders entitled to vote at the meeting to which the requisition relates; or (ii) not less than 100 shareholders.
Certain Provisions of Bermuda Law
We have been designated by the Bermuda Monetary Authority as a non-resident for Bermuda exchange control purposes. This designation allows us to engage in transactions in currencies other than the Bermuda dollar, and there are no restrictions on our ability to transfer funds (other than funds denominated in Bermuda dollars) in and out of Bermuda or to pay dividends to United States residents who are holders of our common shares.
Consent under the Exchange Control Act 1972 (and its related regulations) has been requested from the Bermuda Monetary Authority for the issue and transfer of our Class B Common Shares to and between non-residents of Bermuda for exchange control purposes provided our Class B Common Shares become quoted on OTCQB. Approvals or permissions given by the Bermuda Monetary Authority do not constitute a guarantee by the Bermuda Monetary Authority as to our performance or our creditworthiness. Accordingly, in giving such consent or permissions, the Bermuda Monetary Authority shall not be liable for the financial soundness, performance or default of our business or for the correctness of any opinions or statements expressed in this prospectus. Certain issues and transfers of common shares involving persons deemed resident in Bermuda for exchange control purposes require the specific consent of the Bermuda Monetary Authority.
In accordance with Bermuda law, share certificates are only issued in the names of companies, partnerships or individuals. In the case of a shareholder acting in a special capacity (for example as a trustee), certificates may, at the request of the shareholder, record the capacity in which the shareholder is acting. Notwithstanding such recording of any special capacity, we are not bound to investigate or see to the execution of any such trust. We will take no notice of any trust applicable to any of our shares, whether or not we have been notified of such trust.
History of Securities Issuances
In the past three years, we have issued the following securities.
Private Placements
On August 12, 2022 and September 30, 2022, RoyaLand Company conducted private placements of shares of Class B Common Stock, and entered into certain subscription agreements with a number of (i) “accredited investors” as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, RoyaLand Company issued 2,000,000 shares of Class B Common Stock at $0.25 per share for a total of $500,000. The shares were subsequently exchanged for Class B Common Shares as described below under “—Share Exchange Agreements”. The Class B Common Shares that the private placement investors now hold as a result of these transactions are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”.
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On March 3, 2023, March 28, 2023, May 4, 2023, June 30, 2023, July 14, 2023 and July 18, 2023, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 825,000 Class B Common Shares at $1.00 per share for a total of $825,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $57,750, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $8,250, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 57,750 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
On July 21, 2023, we conducted a private placement of units of securities, consisting of (i) one Class B Common Share and (ii) a three-year-term warrant to purchase 2.5 Class B Common Shares (the “Units”), and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 500,000 Units at $1.00 per Unit for a total of $500,000. The Units are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in this private placement. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $35,000, or 7% of the gross amount actually received by the Company in the private placement, and a non-accountable expense allowance of $5,000, or 1% of the gross amount actually received by the Company in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 35,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
On March 8, 2024, April 17, 2024, and April 24, 2024, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 300,000 Class B Common Shares at $1.00 per share for a total of $300,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $21,000, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $3,000, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 21,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
Restricted Share Issuance Under Equity Incentive Plan
On May 31, 2023, we entered into advisor agreements with seven consultants, pursuant to which we issued 25,000 Class B Common Shares under the 2023 Plan as compensation for services, for a total issuance of 175,000 Class B Common Shares.
Founder Share Issuances
On January 28, 2022, RoyaLand Company issued 100,000 shares of common stock in connection with the incorporation of the RoyaLand Company, at an issue price of $0.001 per share, for a total consideration of $100. On March 1, 2022, the RoyaLand Company amended its articles of incorporation to authorize 300,000,000 shares of stock, consisting of (i) 250,000,000 shares of Common Stock, $0.001 par value per share, of which, 20,000,000 shares were designated Class A Common Stock, par value $0.001 per share, or the Class A Common Stock, and 230,000,000 shares were designated as Class B Common Stock, $0.001 par value per share, or the Class B Common Stock, and (ii) 50,000,000 shares of Preferred Stock, $0.001 par value per share; and effected a 100 to 1 forward stock split resulting in issued and outstanding shares of 6,500,000 of Class A Common Stock and 3,500,000 shares of Class B Common Stock.
The following table presents all of the shares owned before and after the forward stock split.
| Shareholder | Common Stock Before Split | Class A Common Stock After Split | Class B Common Stock After Split | Aggregate Purchase Price Paid | ||||||||||||
| Emanuele Filiberto di Savoia, Chief Executive Officer and Director | 65,000 | 6,500,000 | - | $ | 65 | |||||||||||
| Pinehurst Partners LLC (1) | 25,000 | - | 2,500,000 | $ | 25 | |||||||||||
| Jean-Claude Sindres, Chief Strategy and Creative Officer | 10,000 | - | 1,000,000 | $ | 10 | |||||||||||
| (1) | Pinehurst Partners LLC is a Colorado limited liability company, 100% owned by the Roth individual retirement account of Daniel Joseph McClory. Pinehurst Partners LLC’s managing member is Daniel Joseph McClory, our Executive Chairman and director. Daniel Joseph McClory is deemed to beneficially own the Class A Common Shares owned by Pinehurst Partners LLC and has sole voting and dispositive powers over its shares. Pinehurst Partners LLC’s business address is 6525 Gunpark Drive, Suite 370-103, Boulder, CO 80301. |
On October 25, 2022, we issued 1,000,000 Class A Common Shares in connection with the incorporation of The RoyaLand Company Ltd., at an issue price of $0.0002 per share, for a total consideration of $200. All of the shares were sold to members of our board of directors, executive officers or their affiliates and beneficial owners of more than 5% of our outstanding share capital, in reliance upon (i) the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws, or (ii) the provisions of Regulation S promulgated under the Securities Act.
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The following table presents the amounts of Class A Common Shares issued and aggregate purchase prices paid by the members of our board of directors, executive officers or their affiliates and beneficial owners of more than 5% of our outstanding share capital. The terms of these purchases were the same for all purchasers of our common shares.
| Shareholder | Class A Common Shares | Aggregate Purchase Price Paid | ||||||
| Emanuele Filiberto di Savoia, Chief Executive Officer and Director | 650,000 | $ | 130 | |||||
| Pinehurst Partners LLC (1) | 250,000 | $ | 50 | |||||
| Jean-Claude Sindres, Chief Strategy and Creative Officer | 100,000 | $ | 20 | |||||
| (1) | Pinehurst Partners LLC is a Colorado limited liability company, 100% owned by the Roth individual retirement account of Daniel Joseph McClory. Pinehurst Partners LLC’s managing member is Daniel Joseph McClory, our Executive Chairman and director. Daniel Joseph McClory is deemed to beneficially own the Class A Common Shares owned by Pinehurst Partners LLC and has sole voting and dispositive powers over its shares. Pinehurst Partners LLC’s business address is 6525 Gunpark Drive, Suite 370-103, Boulder, CO 80301. |
Share Exchange Agreements
On November 28, 2022, we entered into a share exchange agreement with RoyaLand Company and its stockholders, pursuant to which all the stockholders of RoyaLand Company exchanged their shares for an equal number of shares in the Company, except for Emanuele Filiberto di Savoia, Pinehurst Partners, LLC, and Jean-Claude Sindres, who received the amount of shares they had in RoyaLand Company minus the amount of Company shares they subscribed for on October 25, 2022. As a result, the share exchange became effective under Nevada and Bermuda law, and RoyaLand Company became our wholly-owned subsidiary.
On November 29, 2022, we entered into a share purchase agreement as buyer with the shareholders of OAPLT as sellers, pursuant to which we purchased all of OAPLT’s share capital for cash of $132,988 and the option for the sellers to subscribe for up to 75,000 Class B Common Shares of the Company at a maximum price of $0.50 per share. As a result, the share purchase became effective under French law, and OAPLT became our wholly-owned subsidiary. On November 29, 2022, the sellers exercised their option to subscribe for 75,000 Class B Common Shares for $0.50 per share in reliance upon the provisions of Regulation S promulgated under the Securities Act.
Limitation of Liability and Indemnification of Directors and Officers
We have adopted provisions in our bye-laws that provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. We intend to enter into indemnification agreements with our directors and our executive officers which will provide, among other things, that we will indemnify our directors and executive officers against any liability brought against them by reason of their service as directors, except in cases where such liability arises from fraud, dishonesty, bad faith, gross negligence, willful default or willful misfeasance. Subject to Section 14 of the Securities Act, which renders void any waiver of the provisions of the Securities Act, our bye-laws provide that our shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of our directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. However, these bye-law provisions will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director. In order to attract and retain qualified directors and officers, we expect to purchase and maintain customary directors’ and officers’ liability insurance and other types of comparable insurance.
At present, we are not aware of any pending or threatened litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification would be required or permitted.
Listing
We plan to apply to quote our Class B Common Shares on the OTCQB under the symbol “RLND”. However, the quotation of the Company’s Class B Common Shares on the OTCQB is not a condition of the Company’s proceeding with this offering, and no assurance can be given that our application to quote the Class B Common Shares on the OTCQB will be approved or that an active trading market for our Class B Common Shares will develop.
Transfer Agent and Registrar
The transfer agent and registrar for our common shares in the United States is Transhare Corporation, located at Bayside Center 1, 17755 US Highway 19N, Suite 140, Clearwater, Florida 33764. Transhare’s phone number is 303-662-1112 and its website is www.transhare.com.
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MATERIAL DIFFERENCES BETWEEN BERMUDA LAW AND DELAWARE GENERAL CORPORATION LAW
Our corporate affairs will be governed by our bye-laws and applicable Bermuda law, including the Bermuda Companies Act. Bermuda laws differ from the various state laws applicable to U.S. corporations and their stockholders. The following is a summary of the material differences between the Companies Act (including modifications adopted pursuant to our bye-laws) and Bermuda common law applicable to us and our shareholders and the provisions of the Delaware General Corporation Law, or DGCL, applicable to U.S. companies organized under the laws of Delaware and their stockholders. This summary is qualified in its entirety by reference to the DGCL, the Bermuda laws and our governing corporate instruments. Before investing, you should consult your legal advisor regarding the impact of Bermuda corporate law on your specific circumstances and reasons for investing.
Duties of Directors
Our bye-laws provide that our business is to be managed and conducted by our board of directors. Under Bermuda common law, members of the board of directors of a Bermuda company owe a fiduciary duty to the company to act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their office honestly. This duty includes the following essential elements:
| ● | a duty to act in good faith in the best interests of the company; |
| ● | a duty not to make a personal profit from opportunities that arise from the office of director; |
| ● | a duty to avoid conflicts of interest; and |
| ● | a duty to exercise powers for the purpose for which such powers were intended. |
The Companies Act imposes a duty on directors and officers of a Bermuda company to act honestly and in good faith with a view to the best interests of the company, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In addition, the Companies Act imposes various duties on directors and officers of a company with respect to certain matters of management and administration of the company. Directors and officers generally owe fiduciary duties to the company, and not to the company’s individual shareholders. Our shareholders may not have a direct cause of action against our directors.
Under Delaware law, the business and affairs of a corporation are managed by or under the direction of its board of directors. In exercising their powers, directors are charged with a fiduciary duty of care to protect the interests of the corporation and a fiduciary duty of loyalty to act in the best interests of its stockholders. The duty of care requires that directors act in an informed and deliberative manner and inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of care also requires that directors exercise care in overseeing and investigating the conduct of corporate employees. The duty of loyalty may be summarized as the duty to act in good faith, not out of self-interest, and in a manner that the director reasonably believes to be in the best interests of the stockholders.
Delaware law provides that a party challenging the propriety of a decision of a board of directors bears the burden of rebutting the applicability of the presumptions afforded to directors by the “business judgment rule.” The business judgment rule is a presumption that in making a business decision, directors acted on an informed basis and that the action taken was in the best interests of the company and its stockholders, and accordingly, unless the presumption is rebutted, a board’s decision will be upheld unless there can be no rational business purpose for the action or the action constitutes corporate waste. If the presumption is not rebutted, the business judgment rule attaches to protect the directors and their decisions, and their business judgments will not be second guessed. Where, however, the presumption is rebutted, the directors bear the burden of demonstrating the entire fairness of the relevant transaction. Notwithstanding the foregoing, Delaware courts may subject directors’ conduct to enhanced scrutiny in respect of defensive actions taken in response to a threat to corporate control or the approval of a transaction resulting in a sale of control of the corporation.
Interested Directors
Bermuda law and our bye-laws provide that if a director has an interest in a material transaction or proposed material transaction with us or any of our subsidiaries or has a material interest in any person that is a party to such a transaction, the director must disclose the nature of that interest at the first opportunity either at a meeting of directors or in writing to the directors. Our bye-laws provide that, after a director has made such a declaration of interest, he is allowed to be counted for purposes of determining whether a quorum is present and to vote on a transaction in which he has an interest, unless disqualified from doing so by the chairman of the relevant board meeting.
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Under Delaware law, such transaction would not be voidable if (i) the material facts as to such interested director’s relationship or interests are disclosed or are known to the board of directors and the board in good faith authorizes the transaction by the affirmative vote of a majority of the disinterested directors, (ii) such material facts are disclosed or are known to the stockholders entitled to vote on such transaction and the transaction is specifically approved in good faith by vote of the majority of shares entitled to vote thereon or (iii) the transaction is fair as to the company as of the time it is authorized, approved or ratified. Under Delaware law, such interested director could be held liable for a transaction in which such director derived an improper personal benefit.
Voting Rights and Quorum Requirements
Under Bermuda law, the voting rights of our shareholders are regulated by our bye-laws and, in certain circumstances, the Companies Act. Under our bye-laws, the quorum required for a general meeting of shareholders to consider any resolution or take any action is two or more persons present at the start of the meeting and representing in person or by proxy in excess of 50% of the total voting rights of all issued and outstanding shares in the Company.
Any individual who is our shareholder and who is present at a meeting and entitled to vote at such meeting, may vote in person, as may any corporate shareholder that is represented by a duly authorized representative at a meeting of shareholders. Our bye-laws also permit attendance at general meetings by proxy, provided the instrument appointing the proxy is in the form specified in the bye-laws or such other form as the board may determine. Under our bye-laws, each holder of Class A Common Shares is entitled to twenty (20) votes per Class A Common Share held and each holder of Class B Common Shares is entitled to one (1) vote per Class B common share held.
Under Delaware law, unless otherwise provided in a company’s certificate of incorporation, each stockholder is entitled to one vote for each share of stock held by the stockholder. Delaware law provides that unless otherwise provided in a company’s certificate of incorporation or by-laws, a majority of the shares entitled to vote, present in person or represented by proxy, constitutes a quorum at a meeting of stockholders. In matters other than the election of directors, with the exception of special voting requirements related to extraordinary transactions, and unless otherwise provided in a company’s certificate of incorporation or by-laws, the affirmative vote of a majority of shares present in person or represented by proxy at the meeting entitled to vote is required for stockholder action, and the affirmative vote of a plurality of shares is required for the election of directors.
Dividend Rights
Under Bermuda law, a company may not declare or pay dividends if there are reasonable grounds for believing that: (i) the company is, or after the payment of such dividends would be, unable to pay its liabilities as they become due, or (ii) the realizable value of its assets would thereby be less than its liabilities. Under our bye-laws, our Class A Common Shares and Class B Common Shares are entitled to dividends if, as and when dividends are declared by our board of directors on such classes, subject to any preferred dividend right of the holders of any preference shares. See “Description of Share Capital and Bye-laws—Common Shares—Dividends” above.
Under Delaware law, subject to any restrictions contained in the company’s certificate of incorporation, a company may pay dividends out of surplus or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. Delaware law also provides that dividends may not be paid out of net profits if, after the payment of the dividend, capital is less than the capital represented by the outstanding stock of all classes having a preference upon the distribution of assets.
Amalgamations and Mergers
The amalgamation or merger of a Bermuda company with another company or corporation requires the amalgamation or merger agreement to be approved by the company’s board of directors and by its shareholders.
Under Bermuda law, in the event of an amalgamation or merger of a Bermuda company with another company or corporation, a shareholder of the Bermuda company who did not vote in favor of the amalgamation or merger and is not satisfied that fair value has been offered for such shareholder’s shares may, within one month of notice of the shareholders meeting, apply to the Supreme Court of Bermuda to appraise the fair value of those shares.
Under Delaware law, with certain exceptions, a merger, consolidation or sale of all or substantially all the assets of a corporation must be approved by the board of directors and a majority of the issued and outstanding shares entitled to vote thereon. Under Delaware law, a stockholder of a corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which such stockholder may receive cash in the amount of the fair value of the shares held by such stockholder (as determined by a court) in lieu of the consideration such stockholder would otherwise receive in the transaction.
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Compulsory Acquisition of Shares Held by Minority Holders
An acquiring party is generally able to acquire compulsorily the common shares of minority holders of a Bermuda company in the following ways:
| ● | By a procedure under the Companies Act known as a “scheme of arrangement.” A scheme of arrangement could be effected by obtaining the agreement of the holders of shares the subject of the scheme, representing in the aggregate a majority in number and at least 75% in value of the shareholders present and voting at a court ordered meeting held to consider the scheme of arrangement. The scheme of arrangement must then be sanctioned by the Bermuda Supreme Court. If a scheme of arrangement receives all necessary agreements and sanctions, upon the filing of the court order with the Registrar of Companies in Bermuda, all holders of common shares the subject of the scheme could be compelled to sell their common shares under the terms of the scheme of arrangement. |
| ● | If the acquiring party is a company it may compulsorily acquire all the shares of the target company, by acquiring pursuant to a tender offer 90% of the shares or class of shares not already owned by, or by a nominee for, the acquiring party (the offeror), or any of its subsidiaries. If an offeror has, within four months after the making of an offer for all the shares or class of shares not owned by, or by a nominee for, the offeror, or any of its subsidiaries, obtained the approval of the holders of 90% or more of all the shares to which the offer relates, the offeror may, at any time within two months beginning with the date on which the approval was obtained, require by notice any nontendering shareholder to transfer its shares on the same terms as the original offer. In those circumstances, nontendering shareholders will be compelled to sell their shares unless the Supreme Court of Bermuda (on application made within a one-month period from the date of the offeror’s notice of its intention to acquire such shares) orders otherwise. |
| ● | Where the acquiring party or parties hold not less than 95% of the shares or a class of shares of the company, such holder(s) may, pursuant to a notice given to the remaining shareholders or class of shareholders, acquire the shares of such remaining shareholders or class of shareholders. When this notice is given, the acquiring party is entitled and bound to acquire the shares of the remaining shareholders on the terms set out in the notice, unless a remaining shareholder, within one month of receiving such notice, applies to the Supreme Court of Bermuda for an appraisal of the value of their shares. This provision only applies where the acquiring party offers the same terms to all holders of shares whose shares are being acquired. |
Delaware law provides that a parent corporation, by resolution of its board of directors and without any stockholder vote, may merge with any subsidiary of which it owns at least 90% of each class of its capital stock. Upon any such merger, dissenting stockholders of the subsidiary would have appraisal rights.
Shareholders’ Suits
Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts would, however, permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association or bye-laws. Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it.
When the affairs of a company are being conducted in a manner that is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company.
Subject to Section 14 of the Securities Act, which renders void any waiver of the provisions of the Securities Act, our bye-laws contain a provision by virtue of which our shareholders waive any claim or right of action that they have, both individually and on our behalf, against any director or officer in relation to any action or failure to take action by such director or officer, except in respect of any fraud or dishonesty of such director or officer. This bye-law provision will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum.
Class actions and derivative actions generally are available to shareholders under Delaware law for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court generally has discretion to permit the winning party to recover attorneys’ fees incurred in connection with such action.
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Indemnification of Directors and Officers
Section 98 of the Companies Act provides generally that a Bermuda company may indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company.
Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act.
We have adopted provisions in our bye-laws that provide that we shall indemnify our officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. We will also enter into agreements with our directors, pursuant to which we have agreed to indemnify them against any liability brought against them by reason of their service as directors, except in cases where such liability arises from fraud, dishonesty, bad faith, gross negligence, willful default or willful misfeasance. Subject to Section 14 of the Securities Act, which renders void any waiver of the provisions of the Securities Act, our bye-laws provide that our shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of our directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. However, these bye-law provisions will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Section 98A of the Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not we may otherwise indemnify such officer or director. We expect to purchase and maintain a directors’ and officers’ liability policy for such a purpose.
Under Delaware law, a corporation may indemnify a director or officer of the corporation against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in defense of an action, suit or proceeding by reason of such position if (i) such director or officer acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and (ii) with respect to any criminal action or proceeding, such director or officer had no reasonable cause to believe his conduct was unlawful.
Access to Books and Records and Dissemination of Information
Members of the general public have a right to inspect the public documents of a company available at the office of the Registrar of Companies in Bermuda. These documents include the company’s memorandum of association, including its objects and powers, and certain alterations to the memorandum of association. The shareholders have the additional right to inspect the bye-laws of the company, minutes of general meetings and the company’s audited financial statements, which must be presented to the annual general meeting. The register of members of a company is also open to inspection by shareholders and by members of the general public without charge. The register of members is required to be open for inspection for not less than two hours in any business day (subject to the ability of a company to close the register of members for not more than thirty days in a year). A company is required to maintain its share register in Bermuda but may, subject to the provisions of the Companies Act, establish a branch register outside of Bermuda. A company is required to keep at its registered office a register of directors and officers that is open for inspection for not less than two hours in any business day by members of the public without charge. A company is also required to file with the Registrar of Companies in Bermuda a list of its directors to be maintained on a register, which register will be available for public inspection subject to such conditions as the Registrar may impose and on payment of such fee as may be prescribed. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any other corporate records.
Delaware law permits any stockholder to inspect or obtain copies of a corporation’s stockholder list and its other books and records for any purpose reasonably related to such person’s interest as a stockholder.
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Shareholder Proposals
Under Bermuda law, shareholders may, as set forth below and at their own expense (unless the company otherwise resolves), require the company to: (i) give notice to all shareholders entitled to receive notice of the annual general meeting of any resolution that the shareholders may properly move at the next annual general meeting; and/or (ii) circulate to all shareholders entitled to receive notice of any general meeting a statement (of not more than one thousand words) in respect of any matter referred to in the proposed resolution or any business to be conducted at such general meeting. The number of shareholders necessary for such a requisition is either: (i) any number of shareholders representing not less than 10% of the total voting rights of all shareholders entitled to vote at the meeting to which the requisition relates; or (ii) not less than 100 shareholders.
Delaware law provides that stockholders have the right to put any proposal before the annual meeting of stockholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but stockholders may be precluded from calling special meetings.
Calling of Special Shareholders’ Meetings
Under our bye-laws, a special general meeting may be called by the chairman of the board or by any two directors or any director and the secretary. Bermuda law also provides that a special general meeting must be called upon the request of shareholders holding not less than 10% of the paid-up capital of the company carrying the right to vote at general meetings.
Delaware law permits the board of directors or any person who is authorized under a corporation’s certificate of incorporation or bye-laws to call a special meeting of stockholders.
Amendment of Memorandum of Association and Bye-laws
Under our bye-laws, the memorandum of association may be amended by a resolution passed at a general meeting of the Company. Our bye-laws provide that no bye-law shall be rescinded, altered or amended, and no new bye-law shall be made, unless it shall have been approved by a resolution of our board of directors and by a resolution of our shareholders at a general meeting of the Company.
Under Bermuda law, the holders of an aggregate of not less than 20% in par value of a company’s issued share capital or any class thereof have the right to apply to the Supreme Court of Bermuda for an annulment of any amendment of the memorandum of association adopted by shareholders at any general meeting, other than an amendment that alters or reduces a company’s share capital as provided in the Companies Act. Where such an application is made, the amendment becomes effective only to the extent that it is confirmed by the Bermuda court. An application for an annulment of an amendment of the memorandum of association must be made within 21 days after the date on which the resolution altering the company’s memorandum of association is passed and may be made on behalf of persons entitled to make the application by one or more of their number as such holders may appoint in writing for such purpose. No application may be made by the shareholders voting in favor of the amendment.
Under Delaware law, amendment of the certificate of incorporation, which is the equivalent of a memorandum of association, of a company must be made by a resolution of the board of directors setting forth the amendment, declaring its advisability, and either calling a special meeting of the stockholders entitled to vote or directing that the proposed amendment be considered at the next annual meeting of the stockholders. Delaware law requires that, unless a different percentage is provided for in the certificate of incorporation, a majority of the voting power of the corporation is required to approve the amendment of the certificate of incorporation at the stockholders meeting. If the amendment would alter the number of authorized shares or par value or otherwise adversely affect the rights or preference of any class of a company’s stock, the holders of the issued and outstanding shares of such affected class, regardless of whether such holders are entitled to vote by the certificate of incorporation, are entitled to vote as a class upon the proposed amendment. However, the number of authorized shares of any class may be increased or decreased, to the extent not falling below the number of shares then issued and outstanding, by the affirmative vote of the holders of a majority of the stock entitled to vote, if so provided in the company’s certificate of incorporation that was authorized by the affirmative vote of the holders of a majority of such class or classes of stock.
Under Delaware law, unless the certificate of incorporation or by-laws provide for a different vote, holders of a majority of the voting power of a corporation and, if so provided in the certificate of incorporation, the directors of the corporation have the power to adopt, amend and repeal the by-laws of a corporation. Those by-laws dealing with the election of directors, classes of directors and the term of office of directors may only be rescinded, altered or amended upon approval by a resolution of the directors and by a resolution of shareholders carrying not less than a majority of all shares entitled to vote on the resolution.
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SHARES ELIGIBLE FOR FUTURE SALE
Before this offering, there has not been a public market for our common shares. Future sales of substantial amounts of Class B Common Shares, including shares issued upon the conversion of convertible notes, the exercise of outstanding options and warrants, in the public market after this offering, or the possibility of these sales occurring, could cause the prevailing market price for our Class B Common Shares to fall or impair our ability to raise equity capital in the future.
Immediately following the closing of this offering, we will have 5,725,000 Class B Common Shares issued and outstanding. The Class B Common Shares sold in this offering will be freely tradable without restriction or further registration or qualification under the Securities Act.
Previously issued common shares that were not offered and sold in this offering, as well as shares issuable upon the exercise of warrants and subject to employee stock options, are or will be upon issuance, “restricted securities,” as that term is defined in Rule 144 under the Securities Act. These restricted securities are eligible for public sale only if such public resale is registered under the Securities Act or if the resale qualifies for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which are summarized below.
Rule 144
In general, a person who has beneficially owned restricted common shares for at least twelve months, or at least six months in the event we have been a reporting company under the Exchange Act for at least ninety (90) days before the sale, would be entitled to sell such securities, provided that such person is not deemed to be an affiliate of ours at the time of sale or to have been an affiliate of ours at any time during the ninety (90) days preceding the sale. A person who is an affiliate of ours at such time would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of shares that does not exceed the greater of the following:
| ● | 1% of the number of common shares then outstanding; or |
| ● | 1% of the average weekly trading volume of our common shares during the four calendar weeks preceding the filing by such person of a notice on Form 144 with respect to the sale; |
provided that, in each case, we are subject to the periodic reporting requirements of the Exchange Act for at least 90 days before the sale. Rule 144 trades must also comply with the manner of sale, notice and other provisions of Rule 144, to the extent applicable.
Rule 701
In general, Rule 701 allows a shareholder who purchased shares pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of ours during the immediately preceding 90 days to sell those shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume limitation or notice provisions of Rule 144. All holders of Rule 701 shares, however, are required to wait until ninety (90) days after the date of this prospectus before selling shares pursuant to Rule 701.
Lock-Up Agreements
The subscription agreements we entered into with investors in connection with our private placements contained lockup provisions. Investors agreed not to sell, transfer or otherwise dispose of any of their Class B Common Shares until 180 days after the commencement of trading of our Class B Common Shares on a national securities exchange (“the Lock-Up Trigger Date”). Between the 181st and 270th day after the Lock-Up Trigger Date, the investors agreed not to sell, transfer or otherwise dispose of more than one-third of the Class B Common Shares purchased pursuant to the subscription agreement, subject to a maximum sale on any trading day of 3% of the daily volume. Between the 271st and 365th day after the Lock-Up Trigger Date, the investors agreed not to sell, transfer or otherwise dispose of more than one-third of the Class B Common Shares purchased pursuant to the subscription agreement, subject to a maximum sale on any trading day of 3% of the daily volume. After the 365th day after the Lock-Up Trigger Date, the investors will be entitled to sell the remaining Class B Common Shares purchased pursuant to the subscription agreement without contractual restriction, but subject to any restrictions arising under applicable law, including the Securities Act.
Notwithstanding the above, commencing 90 days after the Lock-Up Trigger Date, if the price per share of the Company’s Class B Common Shares is at least 50% higher than the IPO Price (as defined below) per share and trades at least 100,000 shares daily, both for ten (10) consecutive trading days, each investor may sell one-third of its shares subject to a maximum sale on any trading day of 3% of the daily volume; and if the Company’s Class B Common Shares price is at least 100% higher than the IPO Price per share and trades at least 100,000 shares daily, both for ten (10) consecutive trading days, each investor may sell up to an additional one-third of its Class B Common Shares subject to a maximum sale on any trading day of 3% of the daily volume; and if the Company’s Class B Common Shares price is at least 150% higher than the IPO Price per share and trades at least 100,000 shares daily, both for ten (10) consecutive trading days, each investor may sell an additional one-third constituting a maximum total of all of its shares subject to a maximum sale on any trading day of 3% of the daily volume. For purposes of this term, the “IPO Price” shall mean the price the Company’s Class B Common Shares is first sold to the public pursuant to an underwritten registered offering resulting in a listing of its Class B Common Shares on a national stock exchange.
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MATERIAL UNITED STATES AND BERMUDA INCOME TAX CONSIDERATIONS
The following summary contains a description of material Bermuda and U.S. federal tax consequences of the acquisition, ownership and disposition of our Class B Common Shares. This summary should not be considered a comprehensive description of all the tax considerations that may be relevant to the decision to acquire Class B Common Shares in this offering. Potential investors should consult their tax advisers regarding the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of our common shares in their particular circumstances.
Bermuda Tax Considerations
At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by us or by our shareholders in respect of our common shares. We have obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 31, 2035, be applicable to us or to any of our operations or to our shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or is payable by us in respect of real property owned or leased by us in Bermuda.
U.S. Federal Income Taxation Considerations
The following discussion describes the material U.S. federal income tax consequences relating to the ownership and disposition of our common shares by U.S. Holders (as defined below). This discussion applies to U.S. Holders that purchase our common shares pursuant to this prospectus and hold such common shares as capital assets. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, U.S. Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect. This discussion does not address all of the U.S. federal income tax consequences that may be relevant to specific U.S. Holders in light of their particular circumstances or to U.S. Holders subject to special treatment under U.S. federal income tax law (such as certain financial institutions, insurance companies, currency or securities dealers, traders in securities or other persons that generally mark their securities to market for U.S. federal income tax purposes, tax-exempt entities, retirement plans, regulated investment companies, real estate investment trusts, certain former citizens or residents of the United States, persons who hold our common shares as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or integrated investment, persons that have a “functional currency” other than the U.S. dollar, persons that own directly, indirectly or through attribution 10% or more of the voting power of our shares, corporations that accumulate earnings to avoid U.S. federal income tax, persons subject to special tax accounting rules under Section 451(b) of the Code, partnerships and other pass-through entities, and investors in such pass-through entities). This discussion does not address any U.S. state or local or non-U.S. tax consequences or any U.S. federal estate, gift or alternative minimum tax consequences.
As used in this discussion, the term “U.S. Holder” means a beneficial owner of our common shares that is, for U.S. federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source or (iv) a trust (x) with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its substantial decisions or (y) that has elected under applicable U.S. Treasury regulations to be treated as a domestic trust for U.S. federal income tax purposes.
If an entity treated as a partnership for U.S. federal income tax purposes holds our common shares, the U.S. federal income tax consequences relating to an investment in our common shares will depend in part upon the status and activities of such entity and the particular partner. Any such entity should consult its own tax advisor regarding the U.S. federal income tax consequences applicable to it and its partners of the purchase, ownership and disposition of our common shares. Persons considering an investment in our common shares should consult their own tax advisors as to the particular tax consequences applicable to them relating to the purchase, ownership and disposition of our common shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax laws.
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Passive Foreign Investment Company Consequences
In general, a corporation organized outside the United States will be treated as a passive foreign investment company, or PFIC, for any taxable year in which either (1) at least 75% of its gross income is “passive income” or (2) on average at least 50% of its assets, determined on a quarterly basis, are assets that produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, dividends, interest, royalties, rents, and gains from the sale or exchange of property that gives rise to passive income. Assets that produce or are held for the production of passive income generally include cash, even if held as working capital or raised in a public offering, marketable securities, and other assets that may produce passive income. Generally, in determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.
Because PFIC status is determined on an annual basis and generally cannot be determined until the end of the taxable year, there can be no assurance that we will not be a PFIC for the current taxable year, ending June 30, 2023. Because we may continue to hold a substantial amount of cash and cash equivalents, and because the calculation of the value of our assets may be based in part on the value of our common shares, which may fluctuate considerably, we may be a PFIC in future taxable years. Even if we determine that we are not a PFIC for a taxable year, there can be no assurance that the IRS will agree with our conclusion and that the IRS would not successfully challenge our position. Our status as a PFIC is a fact-intensive determination made on an annual basis.
If we are a PFIC in any taxable year during which a U.S. Holder owns our common shares, the U.S. Holder could be liable for additional taxes and interest charges under the “PFIC excess distribution regime” upon (1) a distribution paid during a taxable year that is greater than 125% of the average annual distributions paid in the three preceding taxable years, or, if shorter, the U.S. Holder’s holding period for our common shares, and (2) any gain recognized on a sale, exchange or other disposition, including a pledge, of our common shares, whether or not we continue to be a PFIC. Under the PFIC excess distribution regime, the tax on such distribution or gain would be determined by allocating the distribution or gain ratably over the U.S. Holder’s holding period for our common shares. The amount allocated to the current taxable year (i.e., the year in which the distribution occurs or the gain is recognized) and any year prior to the first taxable year in which we are a PFIC will be taxed as ordinary income earned in the current taxable year. The amount allocated to other taxable years will be taxed at the highest marginal rates in effect for individuals or corporations, as applicable, to ordinary income for each such taxable year, and an interest charge, generally applicable to underpayments of tax, will be added to the tax.
If we are a PFIC for any year during which a U.S. Holder holds our common shares, that U.S. Holder must generally continue to treat us as a PFIC for all succeeding years during which the U.S. Holder holds our common shares, unless we cease to meet the requirements for PFIC status and the U.S. Holder makes a “deemed sale” election with respect to our common shares. If the election is made, the U.S. Holder will be deemed to sell our common shares it holds at their fair market value on the last day of the last taxable year in which we qualified as a PFIC, and any gain recognized from such deemed sale would be taxed under the PFIC excess distribution regime. After the deemed sale election, the U.S. Holder’s common shares would not be treated as shares of a PFIC unless we subsequently again become a PFIC.
If we are a PFIC for any taxable year during which a U.S. Holder holds our common shares and one of our non-U.S. corporate subsidiaries is also a PFIC (i.e., a lower-tier PFIC), such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be taxed under the PFIC excess distribution regime on distributions by the lower-tier PFIC and on gain from the disposition of shares of the lower-tier PFIC even though such U.S. Holder would not receive the proceeds of those distributions or dispositions. U.S. Holders are advised to consult their tax advisors regarding the application of the PFIC rules to our non-U.S. subsidiaries.
If we are a PFIC, a U.S. Holder will not be subject to tax under the PFIC excess distribution regime on distributions or gain recognized on our common shares if such U.S. Holder makes a valid “mark-to-market” election for our common shares. A mark-to-market election is available to a U.S. Holder only for “marketable stock”.
Our common shares will be marketable stock so long as they remain listed on Cboe and are regularly traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. If a mark-to-market election is in effect, a U.S. Holder generally would take into account, as ordinary income each year, the excess of the fair market value of our common shares held at the end of such taxable year over the adjusted tax basis of such common shares. The U.S. Holder would also take into account, as an ordinary loss each year, the excess of the adjusted tax basis of such our common shares over their fair market value at the end of the taxable year, but only to the extent of the excess of amounts previously included in income over ordinary losses deducted as a result of the mark-to-market election. The U.S. Holder’s tax basis in our common shares would be adjusted to reflect any income or loss recognized as a result of the mark-to-market election. Any gain from a sale, exchange or other disposition of our common shares in any taxable year in which we are a PFIC would be treated as ordinary income and any loss from such sale, exchange or other disposition would be treated first as ordinary loss (to the extent of any net mark-to-market gains previously included in income) and thereafter as capital loss.
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A mark-to-market election will not apply to our common shares for any taxable year during which we are not a PFIC, but it will remain in effect with respect to any subsequent taxable year in which we become a PFIC. Such an election will not apply to any non-U.S. subsidiaries that we may organize or acquire in the future. Accordingly, a U.S. Holder may continue to be subject to tax under the PFIC excess distribution regime with respect to any lower-tier PFICs that we may organize or acquire in the future notwithstanding the U.S. Holder’s mark-to-market election for our common shares.
The tax consequences that would apply if we are or become a PFIC would also be different from those described above if a U.S. Holder were able to make a valid qualified electing fund, or QEF, election. At this time, we do not expect to provide U.S. Holders with the information necessary for a U.S. Holder to make a QEF election. Consequently, prospective investors should assume that a QEF election will not be available.
U.S. persons who are investors in a PFIC are generally required to file an annual information return on IRS Form 8621 containing such information as the U.S. Treasury Department may require. The failure to file IRS Form 8621 could result in the imposition of penalties and the extension of the statute of limitations with respect to U.S. federal income tax.
The U.S. federal income tax rules relating to PFICs are very complex. Prospective U.S. investors are strongly urged to consult their own tax advisors with respect to the impact of PFIC status on the purchase, ownership and disposition of our common shares, the consequences to them of an investment in a PFIC, any elections available with respect to our common shares and the IRS information reporting obligations with respect to the purchase, ownership and disposition of the common shares of a PFIC.
Distributions
Subject to the discussion above under “—Passive Foreign Investment Company Consequences”, a U.S. Holder that receives a distribution with respect to our common shares generally will be required to include the gross amount of such distribution in gross income as a dividend when actually or constructively received to the extent of the U.S. Holder’s pro rata share of our current and/or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent a distribution received by a U.S. Holder is not a dividend because it exceeds the U.S. Holder’s pro rata share of our current and accumulated earnings and profits, it will be treated first as a tax-free return of capital and reduce (but not below zero) the adjusted tax basis of the U.S. Holder’s common shares. To the extent the non-dividend portion of the distribution exceeds the adjusted tax basis of the U.S. Holder’s common shares, the remainder will be taxed as capital gain. Because we may not account for our earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect all distributions to be reported to them as dividends. Distributions on our common shares that are treated as dividends generally will constitute income from sources outside the United States for foreign tax credit purposes and generally will constitute passive category income. Such dividends will not be eligible for the “dividends received” deduction generally allowed to corporate shareholders with respect to dividends received from U.S. corporations.
Dividends paid by a “qualified foreign corporation” are eligible for taxation for certain non-corporate U.S. Holders at a reduced capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain requirements are met. However, if we are a PFIC for the taxable year in which the dividend is paid or the preceding taxable year (see discussion above under “—Passive Foreign Investment Company Consequences”), we will not be treated as a qualified foreign corporation, and therefore the reduced capital gains tax rate described above will not apply. Each U.S. Holder is advised to consult its tax advisors regarding the availability of the reduced tax rate on dividends with regard to its particular circumstances.
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A non-U.S. corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the U.S. Secretary of the Treasury determines is satisfactory for purposes of this provision and which includes an exchange of information provision, or (b) with respect to any dividend it pays on common shares that are readily tradable on an established securities market in the United States. No treaty exists between the United States and Bermuda that satisfies condition (a). However, subject to the discussion above under “—Passive Foreign Investment Company Consequences,” we believe that so long as our common shares are readily tradable on Cboe, which is an established market in the United States, we will be a qualified foreign corporation and any dividends that we pay will be “qualified dividend income” in the hands of individual U.S. Holders, provided that certain conditions are met, including holding period and the absence of certain risk reduction transactions.
Sale, Exchange or Other Disposition of Our Common Shares
Subject to the discussion above under “—Passive Foreign Investment Company Consequences”, a U.S. Holder generally will recognize capital gain or loss for U.S. federal income tax purposes upon the sale, exchange or other taxable disposition of our common shares in an amount equal to the difference, if any, between the amount realized (i.e., the amount of cash plus the fair market value of any property received) on the sale, exchange or other taxable disposition and such U.S. Holder’s adjusted tax basis in our common shares. Such capital gain or loss generally will be long-term capital gain taxable at a reduced rate for noncorporate U.S. Holders or long-term capital loss if, on the date of sale, exchange or other taxable disposition, our common shares were held by the U.S. Holder for more than one year. Any capital gain of a non-corporate U.S. Holder that is not long-term capital gain is taxed at ordinary income rates. The deductibility of capital losses is subject to limitations. Any gain or loss recognized from the sale or other disposition of our common shares will generally be treated as gain or loss from sources within the United States for U.S. foreign tax credit purposes.
Medicare Tax
Certain U.S. Holders that are individuals, estates or trusts and whose income exceeds certain thresholds generally are subject to a 3.8% tax on all or a portion of their net investment income, which may include their gross dividend income and net gains from the disposition of our common shares. If you are a United States person that is an individual, estate or trust, you are encouraged to consult your tax advisors regarding the applicability of this Medicare tax to your income and gains in respect of your investment in our common shares.
Information Reporting
U.S. Holders may be required to file certain U.S. information reporting returns with the IRS with respect to an investment in our common shares, including, among others, IRS Form 8938, Statement of Specified Foreign Financial Assets. As described above under “—Passive Foreign Investment Company Consequences,” each U.S. Holder who is a shareholder of a PFIC must file an annual report containing certain information. U.S. Holders paying more than $100,000 to acquire our common shares are required to file IRS Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation, reporting this payment. Substantial penalties may be imposed upon a U.S. Holder that fails to comply with the required information reporting.
U.S. Holders should consult their own tax advisors regarding the information reporting rules.
ALL PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS ABOUT THE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN OUR COMMON SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.
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ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated as an exempted company with limited liability pursuant to the laws of Bermuda. Some of our directors and officers reside outside of the United States. Service of process upon such persons may be difficult or impossible to effect within the United States. Furthermore, because most of our assets, and most of the assets of our directors and officers, are located outside of the United States, any judgment obtained in the United States, including a judgment based upon the civil liability provisions of United States federal securities laws, against us or any of such persons may not be collectible within the United States.
We have been advised that there is no treaty in force between the United States and Bermuda providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. As a result, whether a U.S. judgment would be enforceable in Bermuda against us or our directors and officers depends on whether the U.S. court that entered the judgment is recognized by the Bermuda court as having jurisdiction over us or our directors and officers, as determined by reference to Bermuda conflict of law rules. A judgment debt from a U.S. court that is final and for a sum certain based on U.S. federal securities laws will not be automatically enforceable in Bermuda unless the judgment debtor had submitted to the jurisdiction of the U.S. court, and the issue of submission and jurisdiction is a matter of Bermuda (not U.S.) law.
In addition, and irrespective of jurisdictional issues, the Bermuda courts will not enforce a U.S. federal securities law that is either penal or contrary to Bermuda public policy. We have been advised that an action brought pursuant to a U.S. public or penal law, the purpose of which is the enforcement of a sanction, power or right at the instance of the state in its sovereign capacity, will not be entertained by a Bermuda court. Certain remedies available under the laws of U.S. jurisdictions, including certain remedies under U.S. federal securities laws, would not be available under Bermuda law or enforceable in a Bermuda court, as they would be contrary to Bermuda public policy. Further, no claim may be brought in Bermuda against us or our directors and officers in the first instance for violation of U.S. federal securities laws because these laws have no extraterritorial jurisdiction under Bermuda law and do not have force of law in Bermuda. A Bermuda court may, however, impose civil liability on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Bermuda law.
Our agent for service of process in the United States is Cogency Global Inc.,122 East 42nd Street, 18th Floor, New York, NY 10168, (800) 221-0102.
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We are registering the Class B Common Shares in order to permit the selling shareholders to offer the shares for resale from time to time. Except for the ownership of these securities or as otherwise disclosed below, the selling shareholders have not had any position, office, or other material relationship with us or any of our predecessors or affiliates within the past three years, and based on the information provided to us by the selling shareholders, no selling shareholder is a broker-dealer or an affiliate of a broker-dealer.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any common shares that such person or any member of such group has the right to acquire within sixty (60) days of the date of this prospectus. For purposes of computing the percentage of outstanding Class B Common Shares held by each person or group of persons named below, any shares that such person or persons has the right to acquire within sixty (60) days of the date of this prospectus are deemed to be outstanding for such person, but not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership by any person.
The table below lists the selling shareholders and other information regarding the beneficial ownership of the Class B Common Shares by each of the selling shareholders. The second column lists the number of Class B Common Shares beneficially owned by each selling shareholder, based on its ownership of Class B Common Shares and the exercise prior to or upon the consummation of the Company’s initial public offering of the warrants issued to the selling shareholders, without regard to any limitations on conversions and exercises. The third column lists the Class B Common Shares being offered by this prospectus by the selling shareholders.
The selling shareholders can offer all, some or none of their Class B Common Shares. See “Plan of Distribution.” We therefore have no way of determining the number of Class B Common Shares each selling shareholder will hold after this offering. Therefore, the fourth and fifth columns assume that each selling shareholder will sell all Class B Common Shares covered by this prospectus.
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Unless otherwise indicated, the address of each selling shareholder listed in the table below is c/o our company, The RoyaLand Company Ltd., Clarendon House, 2 Church Street, Hamilton, Pembroke, HM11, Bermuda.
| Class B Common Shares Beneficially Owned Prior to this | Number of Shares Being | Class B Common Shares Beneficially Owned After this Offering | ||||||||||||||
| Name of Selling Shareholder | Offering | Offered | Shares | Percent(1) | ||||||||||||
| Arturo Barone | 300,000 | 300,000 | — | — | ||||||||||||
| BaseStones, Inc.(2) | 320,000 | 320,000 | — | — | ||||||||||||
| Chris Etherington | 90,000 | (3) | 45,000 | — | — | |||||||||||
| GMS Sovereign Plus Fund SPC Ltd.(4) | 250,000 | 250,000 | — | — | ||||||||||||
| Grant McClory | 225,000 | 225,000 | — | — | ||||||||||||
| Keith Moore Consulting, Inc.(5) | 200,000 | 200,000 | — | — | ||||||||||||
| Latigo Partners, LLC(6) | 445,000 | 445,000 | — | — | ||||||||||||
| Mark Olivier | 45,000 | 45,000 | — | — | ||||||||||||
| Michael Gatto and Danielle Gatto | 25,000 | 25,000 | — | — | ||||||||||||
| Neurosciences Research International – FZCO(7) | 100,000 | 50,000 | 50,000 | * | ||||||||||||
| Pierce McClory | 180,000 | 180,000 | — | — | ||||||||||||
| Shaye McClory | 180,000 | 180,000 | — | — | ||||||||||||
| Varkes Churukian | 45,000 | 45,000 | — | — | ||||||||||||
| Wing Kai Lam | 645,000 | (8) | 645,000 | — | — | |||||||||||
| Clayton Adams | 25,000 | 25,000 | — | — | ||||||||||||
| John Dodero | 45,000 | 45,000 | — | — | ||||||||||||
| Oleta Investments, LLC(9) | 45,000 | 45,000 | — | — | ||||||||||||
| Adewale Adegbenro | 200,000 | 200,000 | — | — | ||||||||||||
| Michael T. Rich Jr. | 25,000 | 25,000 | — | — | ||||||||||||
| Louis Sanzo | 25,000 | 25,000 | — | — | ||||||||||||
| Neosperience S.p.A.(10) | 125,000 | 125,000 | — | — | ||||||||||||
| Eternal Horizon International Company Limited(11) | 632,500 | (12) | 632,500 | — | — | |||||||||||
| Rui Wu | 637,500 | (13) | 637,500 | — | — | |||||||||||
| Brian Doubleday | 5,000 | 5,000 | — | — | ||||||||||||
| Chloe Churukian | 5,000 | 5,000 | — | — | ||||||||||||
| Hrag Churukian | 5,000 | 5,000 | — | — | ||||||||||||
| John Nicholson | 5,000 | 5,000 | — | — | ||||||||||||
| Jonathan Dodero | 5,000 | 5,000 | — | — | ||||||||||||
| Joseph Pryle | 5,000 | 5,000 | — | — | ||||||||||||
| Michael Webb | 5,000 | 5,000 | — | — | ||||||||||||
| Nareg Churukian | 5,000 | 5,000 | — | — | ||||||||||||
| One10 Food Sciences Pte. Ltd.(14) | 5,000 | 5,000 | — | — | ||||||||||||
| Samia Cheema | 5,000 | 5,000 | — | — | ||||||||||||
| * | Less than 1% |
| (1) | Applicable percentage ownership after this offering is based on 4,475,000 Class B Common Shares deemed to be outstanding as of the date of this prospectus. As noted above, for purposes of computing percentage ownership after this offering, we have assumed that any Class B Common Shares being offered will be sold in this offering, and any Class B Common Shares issuable upon exercise of a warrant that are being offered will be sold immediately following the exercise of the warrant under which such Class B Common Shares are issuable. |
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| (2) | Mohammad Ansari has sole voting and dispositive power over the shares held by BaseStones, Inc. BaseStones, Inc.’s business address is 1901 Avenue of the Stars, #200, Los Angeles, CA 90067, USA. |
| (3) | Consists of (i) 45,000 Class B Common Shares held by Chris Etherington; and (ii) 45,000 Class B Common Shares held by Oleta Investments, LLC, of which Mr. Etherington has sole voting and dispositive power. |
| (4) | Sukru Evrengun and Angelo Galli have shared voting and dispositive powers over shares held by GMS Sovereign Plus Fund SPC Ltd. GMS Sovereign Plus Fund SPC Ltd.’s business address is Sea Meadow House, PO Box 116, Road Town, British Virgin Islands. |
| (5) | Keith C. Moore has sole voting and dispositive power over the shares held by Keith C Moore Consulting, Inc. Keith C. Moore is the Chief Executive Officer of Boustead Securities, LLC, a broker-dealer which was engaged by the Company to act as placement agent and financial advisor. Keith C Moore Consulting, Inc. purchased its Class B Common Shares in the ordinary course of business, and at the time of the purchase of such shares, had no agreements or understandings, directly or indirectly, with any person to distribute the Class B Common Shares. Keith C Moore Consulting, Inc.’s business address is 318 N Carson St, Suite 208, Carson City, NV 89701, USA. |
| (6) | Keith C. Moore has sole voting and dispositive power over the shares held by Latigo Partners, LLC. Keith C. Moore is the Chief Executive Officer of Boustead Securities, LLC, a broker-dealer which was engaged by the Company to act as placement agent and financial advisor. Latigo Partners, LLC purchased its Class B Common Shares in the ordinary course of business, and at the time of the purchase of such shares, had no agreements or understandings, directly or indirectly, with any person to distribute the Class B Common Shares. Latigo Partners, LLC’s business address is 318 N Carson St, Suite 208, Carson City, NV 89701, USA. |
| (7) | David Lefrançois has sole voting and dispositive power over the shares held by Neurosciences Research International – FZCO. Neurosciences Research International – FZCO’s business address is WHP2-Block-A Commercial, Saih Shuaib 3, Dubai, UAE. |
| (8) | Consists of (i) 270,000 Class B Common Shares and (ii) 375,000 Class B Common Shares issuable upon exercise of a warrant. |
| (9) | Chris Etherington has sole voting and dispositive powers over the shares held by Oleta Investments, LLC. Oleta Investments, LLC’s business address is 318 N Carson Street, Suite 208, Carson City, NV 89701, USA. |
| (10) | Neosperience S.p.A. is a widely held public company listed on the Euronext Growth Milan segment of the Italian Stock Exchange (NSP.MI). As of June 30, 2023, Neos S.r.l. owned approximately 31.7% of Neosperience S.p.A.’s share capital. Neosperience S.p.A.’s business address is Via Orzinuovi, 20, 25125 Brescia, Italy. |
| (11) | Jie Xu has sole voting and dispositive power over the shares held by Eternal Horizon International Company Limited. Eternal Horizon International Company Limited’s business address is 30 de Castro St, PO Box 4518, Wickams Cay, British Virgin Islands. |
| (12) | Consists of (i) 195,000 Class B Common Shares and (ii) 437,500 Class B Common Shares issuable upon exercise of a warrant. |
| (13) | Consists of (i) 200,000 Class B Common Shares and (ii) 437,500 Class B Common Shares issuable upon exercise of a warrant. |
| (14) | Eric Nagel has sole voting and dispositive power over the shares held by One10 Food Sciences Pte. Ltd. One10 Food Sciences Pte. Ltd.’s business address is 3 Temasek Ave, 18F Centennial Tower, 039190, Singapore. |
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Each selling shareholder and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on any stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales will occur at a fixed price of $1.00 per share until our Class B Common Shares are quoted on the OTCQB or OTCQX marketplace, or listed on a national securities exchange. Thereafter, these sales will occur at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing market prices, or at negotiated prices. A selling shareholder may use any one or more of the following methods when selling securities:
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | settlement of short sales; |
| ● | in transactions through broker-dealers that agree with the selling shareholders to sell a specified number of such securities at a stipulated price per security; |
| ● | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| ● | a combination of any such methods of sale; or |
| ● | any other method permitted pursuant to applicable law. |
The selling shareholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended, or the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2121; and in the case of a principal transaction a markup or markdown in compliance with FINRA Rule 2121.
In connection with the sale of the securities or interests therein, the selling shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The selling shareholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The selling shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The selling shareholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling shareholder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.
We are required to pay certain fees and expenses incurred by us incident to the registration of the securities. We have agreed to indemnify the selling shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
The resale securities covered hereby will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended, or the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the Class B Common Shares for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the Class B Common Shares by the selling shareholders or any other person. We will make copies of this prospectus available to the selling shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
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EXPENSES RELATED TO THIS OFFERING
Set forth below is an itemization of our total expenses, which are expected to be incurred in connection with the securities being registered hereby. With the exception of the SEC registration fee, all amounts are estimates.
| Amount | ||||
| SEC registration fee | $ | 525.10 | ||
| Accounting fees and expenses | 10,000.00 | |||
| Legal fees and expenses | 30,000.00 | |||
| Printing fees and expenses | 5,000.00 | |||
| Miscellaneous | 4,474.90 | |||
| TOTAL | $ | 50,000.00 | ||
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The validity of the Class B Common Shares offered in this offering and certain other legal matters as to Bermuda law will be passed upon for us by Conyers Dill & Pearman Limited.
Our consolidated financial statements appearing elsewhere in this prospectus have been audited by TAAD LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The offices of TAAD LLP are located at 20955 Pathfinder Rd, Suite 370, Diamond Bar, CA 91765.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form F-1, including relevant exhibits and schedules, under the Securities Act with respect to the common shares to be sold in this offering. This prospectus, which constitutes a part of the registration statement, does not contain all of the information contained in the registration statement. You should read the registration statement on Form F-1 and its exhibits and schedules for further information with respect to us and the common shares.
Immediately upon completion of this offering, we will become subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov. Additionally, we will make these filings available, free of charge, on our website at www.theroyaland.net as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. The information on our website, other than these filings, is not, and should not be, considered part of this prospectus and is not incorporated by reference into this document.
As a foreign private issuer, we will be exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy statements to shareholders, and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
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Index to Consolidated Financial Statements
Index to Unaudited Interim Consolidated Financial Statements
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of The RoyaLand Company Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying balance sheets of The RoyaLand Company Ltd. and its subsidiaries (the “Company”) as of June 30, 2023 (Successor) and 2022 (Predecessor), and the related consolidated statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the year ended June 30, 2022 (Predecessor) and for the period from July 1, 2022 to November 28, 2022 (Predecessor) and the period from November 29, 2022 to June 30, 2023 (Successor), and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for the for the year ended June 30, 2022 (Predecessor), for the period from July 1, 2022 to November 28, 2022 (Predecessor), and for the period from November 29, 2022 to June 30, 2023 (Successor), in conformity with the International Financial Reporting Standards as issued by the International Accounting Standards Board.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements contemplate continuation of the Company as a going concern. As discussed in Note 2 of the consolidated financial statements, the Company’s operating losses raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 consolidated 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 consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ TAAD LLP. |
| We have served as the Company’s auditor since 2022. |
| Diamond Bar, CA |
| October 18, 2023 |
F-2
CONSOLIDATED BALANCE SHEETS
| As of June 30, | ||||||||
| 2023 | 2022 | |||||||
| (Successor) | (Predecessor) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash on hand | $ | 9,543 | $ | 5,544 | ||||
| Cash in escrow | 125,000 | — | ||||||
| Accounts receivable | — | 3,771 | ||||||
| Deferred offering costs | 57,690 | — | ||||||
| Total current assets | 192,233 | 9,315 | ||||||
| Total assets | $ | 192,233 | $ | 9,315 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Shareholders’ equity (deficit): | ||||||||
| Preference shares (Successor), par value $0.0002 per share, 50,000,000 shares authorized; no shares issued and outstanding at June 30, 2023 | $ | — | $ | — | ||||
| Common shares – Class A (Successor), par value $0.0002 per share, 20,000,000 shares authorized; 9,400,000 shares issued and outstanding at June 30, 2023 | 1,880 | — | ||||||
| Common shares – Class B (Successor), par value $0.0002 per share, 430,000,000 shares authorized; 3,150,000 shares issued and outstanding at June 30, 2023 | 630 | — | ||||||
| Common shares – Class B to be issued (Successor), 125,000 shares at June 30, 2023 | 25 | — | ||||||
| Share capital (Predecessor), nominal value €10 per share, 800 shares authorized; 800 shares issued and outstanding at June 30, 2022 | — | 9,545 | ||||||
| Legal reserves (Predecessor) | — | 955 | ||||||
| Additional paid-in capital | 1,086,122 | — | ||||||
| Subscription receivable | (200 | ) | — | |||||
| Other comprehensive loss | (183 | ) | (173 | ) | ||||
| Accumulated deficit | (1,071,997 | ) | (24,564 | ) | ||||
| Total shareholders’ equity (deficit) | 16,277 | (14,237 | ) | |||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | 13,274 | 10,109 | ||||||
| Accrued legal and accounting | 132,036 | — | ||||||
| Accrued wages and benefits | — | 9,821 | ||||||
| Accrued taxes | — | 2,660 | ||||||
| Other current liabilities | 18,216 | 943 | ||||||
| Due to related parties | 12,430 | 19 | ||||||
| Total current liabilities | 175,956 | 23,552 | ||||||
| Total liabilities | 175,956 | 23,552 | ||||||
| Total liabilities and shareholders’ equity (deficit) | $ | 192,233 | $ | 9,315 | ||||
See accompanying Notes to the Consolidated Financial Statements
F-3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| Period from November 29, 2022 to June 30, 2023 | Period from July 1, 2022 to November 28, 2022 | Year Ended June 30, 2022 | ||||||||||
| (Successor) | (Predecessor) | (Predecessor) | ||||||||||
| Net revenues | $ | — | $ | 4,869 | $ | 29,925 | ||||||
| Operating expenses: | ||||||||||||
| Impairment of goodwill | 149,369 | — | — | |||||||||
| General and administrative: | ||||||||||||
| Consulting (includes $175,000 in stock-based compensation for the period November 29, 2022 to June 30, 2023) | 216,095 | |||||||||||
| Legal and accounting | 259,808 | 3,483 | 7,207 | |||||||||
| Wages and benefits | — | 1,353 | 45,983 | |||||||||
| Bad debts | — | 1,240 | 1,340 | |||||||||
| All other | 24,465 | 1,068 | 8,984 | |||||||||
| Total operating expenses | 649,737 | 7,144 | 63,514 | |||||||||
| Operating loss | (649,737 | ) | (2,275 | ) | (33,589 | ) | ||||||
| Other income (expense): | ||||||||||||
| Interest expense, net | (22 | ) | (37 | ) | (107 | ) | ||||||
| Other income | 2,008 | — | 4,187 | |||||||||
| Total other income (expense) | 1,986 | (37 | ) | 4,080 | ||||||||
| Loss before provision for income taxes | (647,751 | ) | (2,312 | ) | (29,509 | ) | ||||||
| Provision (benefit) for income taxes | — | — | — | |||||||||
| Net loss | $ | (647,751 | ) | $ | (2,312 | ) | $ | (29,509 | ) | |||
| Other Comprehensive Income (Loss): | ||||||||||||
| Currency translation adjustment | (183 | ) | 115 | 364 | ||||||||
| Comprehensive loss | $ | (647,934 | ) | $ | (2,197 | ) | $ | (29,145 | ) | |||
| Weighted average shares outstanding: | ||||||||||||
| Capital shares – basic and diluted | — | 800 | 800 | |||||||||
| Common shares – basic and diluted | 12,225,350 | — | — | |||||||||
| Weighted average net loss per share: | ||||||||||||
| Per capital share – basic and diluted | $ | — | $ | (2.89 | ) | $ | (36.89 | ) | ||||
| Per common share – basic and diluted | $ | (0.05 | ) | $ | — | $ | — | |||||
See accompanying Notes to the Consolidated Financial Statements
F-4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
Successor
Preference Stock | Common Stock Class A | Common Stock Class B | Common Stock Class B To Be Issued | Additional Paid-In | Subscription | Other Comprehensive | Accumulated | Total
Shareholders’ | ||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Receivable | Loss | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance – November 28, 2022 | – | $ | – | 10,000,000 | $ | 2,000 | 2,000,000 | $ | 400 | $ | 497,800 | $ | (200 | ) | $ | – | $ | (424,246 | ) | $ | 75,754 | |||||||||||||||||||||||||||||||
| Net proceeds from sale of shares | – | – | – | – | 300,000 | 60 | 250,940 | – | – | – | 251,000 | |||||||||||||||||||||||||||||||||||||||||
| Net proceeds in escrow from sale of shares | – | – | – | – | – | – | 125,000 | $ | 25 | 124,975 | – | – | – | 125,000 | ||||||||||||||||||||||||||||||||||||||
| Issuance of shares to Advisors | – | – | – | – | 175,000 | 35 | 174,965 | – | – | – | 175,000 | |||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | – | – | – | – | 75,000 | 15 | 37,442 | – | – | – | 37,457 | |||||||||||||||||||||||||||||||||||||||||
| Transfer of shares | – | – | (600,000 | ) | (120 | ) | 600,000 | 120 | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | – | – | – | – | – | – | – | – | (183 | ) | – | (183 | ) | |||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | – | (647,751 | ) | (647,751 | ) | ||||||||||||||||||||||||||||||||||||||||
| Balance – June 30, 2023 | – | $ | – | 9,400,000 | $ | 1,880 | 3,150,000 | $ | 630 | 125,000 | $ | 25 | $ | 1,086,122 | $ | (200 | ) | $ | (183 | ) | $ | (1,071,997 | ) | $ | 16,277 | |||||||||||||||||||||||||||
Predecessor
Share Capital | Legal | Other Comprehensive | Retained Earnings | Total Shareholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Reserves | Loss | (Deficit) | (Deficit) | |||||||||||||||||||
| Balance – June 30, 2022 | 800 | $ | 9,545 | $ | 955 | $ | (173 | ) | $ | (24,564 | ) | $ | (14,237 | ) | ||||||||||
| Currency translation adjustment | — | — | — | 115 | — | 115 | ||||||||||||||||||
| Net loss | — | — | — | — | (2,312 | ) | (2,312 | ) | ||||||||||||||||
| Balance – November 28, 2022 | 800 | $ | 9,545 | $ | 955 | $ | (58 | ) | $ | (26,876 | ) | $ | (16,434 | ) | ||||||||||
Predecessor
Share Capital | Legal | Other Comprehensive | Retained Earnings | Total Shareholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Reserves | Loss | (Deficit) | (Deficit) | |||||||||||||||||||
| Balance – June 30, 2021 | 800 | $ | 9,545 | $ | 955 | $ | (537 | ) | $ | 4,945 | $ | 14,908 | ||||||||||||
| Currency translation adjustment | — | — | — | 364 | — | 364 | ||||||||||||||||||
| Net income | — | — | — | — | (29,509 | ) | (29,509 | ) | ||||||||||||||||
| Balance – June 30, 2022 | 800 | $ | 9,545 | $ | 955 | $ | (173 | ) | $ | (24,564 | ) | $ | (14,237 | ) | ||||||||||
See accompanying Notes to the Consolidated Financial Statements
F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Period November 29, 2022 to June 30, 2023 | Period July 1, 2022 to November 28, 2022 | For the Year Ended June 30, 2022 | ||||||||||
| (Successor) | (Predecessor) | (Predecessor) | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income loss | $ | (647,751 | ) | $ | (2,312 | ) | $ | (29,509 | ) | |||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Impairment of goodwill | 149,369 | — | — | |||||||||
| Stock-based compensation for Advisor shares | 175,000 | — | — | |||||||||
| Changes in operating assets/liabilities: | ||||||||||||
| Accounts receivable | — | 3,652 | 3,925 | |||||||||
| Accounts payable and accrued liabilities | (101,412 | ) | (4,670 | ) | (1,444 | ) | ||||||
| All other | 54 | — | — | |||||||||
| Net cash used in operating activities | (424,740 | ) | (3,330 | ) | (27,028 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Net proceeds from sale of common stock | 251,000 | — | — | |||||||||
| Proceeds in escrow from sale of common stock | 125,000 | |||||||||||
| Cash proceeds from exercise of stock options | 37,457 | — | — | |||||||||
| Deferred offering costs | (10,551 | ) | — | — | ||||||||
| Borrowings from related parties | 10,430 | — | 21 | |||||||||
| Repayments to related parties | — | (19 | ) | — | ||||||||
| Net cash provided by investing activities | 413,336 | (19 | ) | 21 | ||||||||
| Net change in cash | (11,404 | ) | (3,349 | ) | (27,007 | ) | ||||||
| Currency translation adjustment | (183 | ) | 119 | (2,114 | ) | |||||||
| Cash, beginning of period | 146,130 | 5,292 | 34,665 | |||||||||
| Cash, including cash in escrow, end of period | $ | 134,543 | $ | 2,062 | $ | 5,544 | ||||||
| Supplemental disclosures of cash flow information | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Interest | $ | — | $ | — | $ | — | ||||||
| Taxes | $ | — | $ | — | $ | — | ||||||
See accompanying Notes to the Consolidated Financial Statements
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Organization and Business |
Organization and Business
The RoyaLand Company Ltd. (“RoyaLand Ltd.”, “we” and “Successor”), an exempted company with limited liability, was incorporated on October 18, 2022, under the laws of Bermuda. Under our bye-laws, we are authorized to issue 50,000,000 undesignated preference shares, 20,000,000 Class A Common Shares and 430,000,000 Class B Common Shares. Concurrent with our formation, we issued 650,000 Class A Common Shares to our Chief Executive Officer (“CEO”), the majority owner, and 350,000 Class A Common Shares to two other individuals at an issue price of $0.0002 per share, their par value, for a total consideration of $200.
On November 28, 2022, we entered into a share exchange agreement (the “SEA”) with RoyaLand Company (“RoyaLand Company”), a United States company incorporated in the state of Nevada. At the time of the SEA, the majority of our shares were owned by our CEO and, as a result, we determined this to be a common control acquisition.
On November 29, 2022, we acquired 100% of the issued and outstanding shares of OAPLT (the “Acquisition”). OAPLT (the “Predecessor”) is a French joint stock company formed on November 24, 2017, whose main activities consist of the conception, development and management of a digital and artistic creation studio, and include the creation of apps, websites, the hosting of web products and the provision of services in relation thereto.
The accompanying consolidated financial statements are presented for two periods: Successor (RoyaLand Ltd.), relating to the period succeeding the Acquisition, and Predecessor (OAPLT), relating to the periods preceding the Acquisition with a black line differentiating periods that are not comparable.
RoyaLand Ltd. is a company focused on creating an online and offline immersive, fantasy-based royalty-themed experience called myRoyal.World, primarily centered around the mobile-first massively multiplayer online role-playing game, or MMORPG, called TheRoyal.Land. We intend for TheRoyaLand to be a novel interactive, immersive game based on a player-empowered design. The plan is to build proprietary digital avatars, provide opportunities to players to earn in-game reward currency, build virtual Land in the metaverse to empower users to own their online assets and enhance all of these features with premium incremental in-game content. TheRoyaLand game is currently in development.
See Notes 3 and 4 for further information regarding the SEA and the Acquisition.
| 2. | Summary of Significant Accounting Policies |
Basis of Presentation and Consolidation
These consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). Our year-end is June 30.
These consolidated financial statements include the accounts of the registrant, RoyaLand Ltd., and its wholly owned subsidiaries, RoyaLand Company and OAPLT. All intercompany transactions and balances have been eliminated. The SEA was accounted for as a common control acquisition while the acquisition of OAPLT was accounted for as a business combination.
F-7
Functional and Presentation Currency
These consolidated financial statements are prepared in the U.S. dollar, which is RoyaLand Ltd.’s functional currency. RoyaLand Company’s functional currency is the U.S. dollar and OAPLT’s functional currency is the euro. All financial information has been rounded to the nearest dollar except where indicated otherwise.
Going Concern Considerations
The accompanying consolidated financial statements contemplate continuation of our Company as a going concern. We have incurred net losses since our inception and we have an accumulated deficit of $1,071,997 at June 30, 2023. The continuation of our Company as a going concern is dependent upon our ability to raise additional funds and/or through the attainment of profitable operations. There are no assurances that we will be successful in obtaining sufficient capital to continue as a going concern.
On May 1, 2022, our wholly owned subsidiary RoyaLand Company entered into an agreement with Boustead Securities LLC (“Boustead”) under which Boustead agreed to provide certain services to us with respect to corporate financing transactions, including the private placement of securities. See Note 7 for further information. While we are confident we will be able to raise additional capital through this process, there are no assurances that we will be successful in obtaining such additional capital to continue as a going concern. If our working capital needs are not met and we are unable to obtain adequate capital, we could be forced to cease operations. The accompanying financial statements do not include any adjustments that might be necessary if our Company is unable to continue as a going concern.
Foreign Currency
Items included in the financial statements of each of our Company’s subsidiaries are measured using the currency of the primary economic environment in which each subsidiary operates (the functional currency). The financial statements are presented in U.S. dollars, the functional currency of RoyaLand Ltd.
The results and financial position of OAPLT, our Company’s subsidiary that has a different functional currency, are translated from euros into U.S. dollars as follows:
| (i) | Assets and liabilities are translated at the current exchange rate at the balance sheet date and historical rates for equity; |
| (ii) | Revenue and expenses are translated at the weighted average closing exchange rate for the period reported in the consolidated statement of profit or loss. When the average exchange rate does not provide a reasonable approximation of the cumulative effect of the rates prevailing on the transaction date, the Company utilizes the closing exchange rate on the date of the transaction. |
| (iii) | Gains and losses resulting from foreign currency translation are included as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in the results of operations. |
F-8
Use of Estimates
The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates, judgements and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues, and expenses during the period. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Areas in which management has made critical judgments in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the consolidated financial statements include the determination of our Company’s functional currencies, the collectability of our accounts receivable and the realization of our deferred offering costs. Information about key assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year are included in the following notes to the financial statements for the periods presented.
Cash and Cash Equivalents
We consider all short-term investments readily convertible to cash, without notice or penalty, with an initial maturity of 90 days or less to be cash equivalents.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors that market participants would use in valuing the asset or liability. The fair value hierarchy consists of the following three levels of inputs that may be used to measure fair value:
| Level 1 | — | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| Level 2 | — | Inputs other than quoted prices included in Level 1 that are observable in the marketplace either directly (i.e., as prices) or indirectly (i.e., derived from prices). | |
| Level 3 | — | Unobservable inputs which are supported by little or no market activity. |
For assets and liabilities, such as cash, accounts receivable and accounts payable/accrued liabilities maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Fair Value Hierarchy of liabilities that are recognized and measured at fair value in the consolidated financial statements as of June 30, 2023 (Successor) and 2022 (Predecessor) are shown below (level 3 inputs are not applicable):
| Fair Value Measurement Using | ||||||||
| Level 1 | Level 2 | |||||||
| LIABILITIES | ||||||||
| June 30, 2023 (Successor): | ||||||||
| Due to related party – recognized at fair value (1) | $ | — | $ | 12,430 | ||||
| June 30, 2022 (Predecessor): | ||||||||
| Due to related party – recognized at fair value (1) | — | 19 | ||||||
| (1) | The amounts due to related party contain no interest provision. Any imputed interest is immaterial. |
During the periods presented, there were no transfers between Levels 1, 2 or 3.
F-9
Financial Risk Factors
Our activities expose us to a variety of financial risks: market risk, credit risk and liquidity risk. Our primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on our financial performance.
The primary market risk to the Company is foreign exchange risk. Given the stability of the markets in which we operate, we believe our exposure to be minimal. Our exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. Given that our customer agreements generally consist of one performance obligation, we are paid based on milestones reached, typically within a short timeframe. As such, we believe that our exposure to credit risk is also not significant. With respect to liquidity, our ability to meet our obligations on time is dependent on the success of our operation and the support of our related party partners, which to date have given us adequate liquidity to meet our obligations.
Deferred Offering Costs
Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to our investor offering described in Notes 7 and 9. Deferred offering costs will be charged to shareholders’ equity upon the completion of the offering. Should the offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations.
Income Taxes
Income tax expense comprises current and deferred taxes. Current taxes and deferred taxes are recognized in profit or loss except to the extent that they relate to a business combination, or items recognized directly in equity or in other comprehensive loss.
Current taxes are the expected tax receivable or payable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax receivable or payable in respect of previous years. Deferred taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred taxes are not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.
In addition, deferred taxes are not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred taxes are measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the tax laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Net Income/Loss Per Share
Under the provisions of IAS 33, Earnings per Share, basic loss per common share is computed by dividing net loss available to each class of common shareholders by the weighted average number of shares of common stock outstanding for the period presented for their respective class. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of our Company, subject to anti-dilution limitations. As of June 30, 2023 and 2022, we had no potentially dilutive shares.
F-10
The table below presents the computation of the Successor’s basic and diluted loss per share for the period November 29, 2022 to June 30, 2023:
| For the Period November 29, 2022 to
June 30, 2023 | ||||
| Numerator: | ||||
| Net loss | $ | (647,751 | ) | |
| Denominator: | ||||
| Weighted average common shares outstanding—basic | ||||
| Class A common shares | 9,607,009 | |||
| Class B common shares | 2,618,341 | |||
| Total weighted average common shares outstanding - basic | 12,225,350 | |||
| Dilutive common share equivalents | - | |||
| Weighted average common shares outstanding—diluted | 12,225,350 | |||
| Net loss per share: | ||||
| Basic | $ | (0.05 | ) | |
| Diluted | $ | (0.05 | ) | |
The table below presents the computation of the Predecessor’s basic and diluted loss per share for the periods July 1, 2022 to November 28, 2022 and for the twelve months ended June 30, 2022:
| For the Period July 1, 2022 to November 28, 2022 | For the Twelve Months Ended June 30, 2022 | |||||||
| Numerator: | ||||||||
| Net loss | $ | (2,312 | ) | $ | (29,509 | ) | ||
| Denominator: | ||||||||
| Weighted average capital shares outstanding—basic | 800 | 800 | ||||||
| Dilutive common stock equivalents | - | - | ||||||
| Weighted average common shares outstanding—diluted | 800 | 800 | ||||||
| Net loss per share: | ||||||||
| Basic | $ | (2.89 | ) | $ | (36.89 | ) | ||
| Diluted | $ | (2.89 | ) | $ | (36.89 | ) | ||
New Accounting Pronouncements
We have reviewed all accounting pronouncements recently issued by the IAS and have determined that they are either not applicable or are not believed to have a material impact on our present or future consolidated financial statements.
| 3. | SEA with RoyaLand Nevada |
As mentioned in Note 1, on November 28, 2022, we entered an SEA with RoyaLand Company. At the time of the SEA, RoyaLand Company had the following shares issued and outstanding: 6,500,000 shares of Class A common stock, all of which were owned by our CEO, and 5,500,000 shares of Class B common stock owned by 9 different shareholders. Under the SEA, the shareholders of RoyaLand Company exchanged 100% of their shares of Class A and Class B common stock for a total of 9,000,000 Class A common shares and 2,000,000 Class B common shares of RoyaLand Ltd. As a result of the SEA, the issued and outstanding shares of RoyaLand Ltd. consisted of 10,000,000 Class A common shares, 6,500,000 of which are owned by our CEO, and 2,000,000 Class B common shares.
F-11
The SEA with RoyaLand Company resulted in the following shares being exchanged:
| RoyaLand Ltd. (Registrant) | RoyaLand Company | ||||||||||||||||
| Name of Shareholder | Class A Shares Received | Class B Shares Received | Class A Shares Exchanged | Class B Shares Exchanged | |||||||||||||
| CEO (1) | 5,850,000 | 6,500,000 | |||||||||||||||
| Shareholder #1 (2) | 2,250,000 | 2,500,000 | |||||||||||||||
| Shareholder #2 (3) | 900,000 | 1,000,000 | |||||||||||||||
| Shareholder #3 | 200,000 | 200,000 | |||||||||||||||
| Shareholder #4 | 100,000 | 100,000 | |||||||||||||||
| Shareholder #5 | 600,000 | 600,000 | |||||||||||||||
| Shareholder #6 | 200,000 | 200,000 | |||||||||||||||
| Shareholder #7 | 400,000 | 400,000 | |||||||||||||||
| Shareholder #8 | 200,000 | 200,000 | |||||||||||||||
| Shareholder #9 | 100,000 | 100,000 | |||||||||||||||
| Shareholder #10 | 200,000 | 200,000 | |||||||||||||||
| Total | 9,000,000 | 2,000,000 | 6,500,000 | 5,500,000 | |||||||||||||
| (1) | The CEO was issued 650,000 Class A common shares of RoyaLand Ltd. upon its formation on October 18, 2022, resulting in total ownership of 6,500,000 Class A common shares after the completion of the SEA. |
| (2) | Shareholder #1 was issued 250,000 Class A common shares of RoyaLand Ltd. upon its formation on October 18, 2022, resulting in total ownership of 2,500,000 Class A common shares after the completion of the SEA. |
| (3) | Shareholder #2 was issued 100,000 Class A common shares of RoyaLand Ltd. upon its formation on October 18, 2022, resulting in total ownership of 1,000,000 Class A common shares after the completion of the SEA. |
| 4. | Acquisition of OAPLT |
As mentioned in Note 1, on November 29, 2022, we acquired 100% of the issued and outstanding shares of OAPLT. The Acquisition was accounted for as a purchase business combination in accordance with IFRS 3, Business Combinations, whereby the purchase price paid to effect the Acquisition was allocated to recognize the acquired assets and liabilities at fair value. The allocation of purchase price is as follows:
| Purchase price | $ | 132,988 | ||
| Purchase price allocation at fair value: | ||||
| Cash | 2,055 | |||
| Accounts payable and accrued liabilities | (11,446 | ) | ||
| Other current liabilities | (6,990 | ) | ||
| Goodwill | 149,369 | |||
| Total purchase price | $ | 132,988 |
Goodwill consists primarily of intangible assets related to the know-how, design and merchandising of OAPLT’s brands that do not qualify for separate recognition in accordance with IFRS 3. At the time of our acquisition, OAPLT had a relationship with a game developer, which relationship was a significant reason for making the acquisition and for our determination of value of OAPLT’s brand. In December 2022, it became unclear how much of the work performed by the game developer, if any, we would be able to use in our game development, calling into question the value of the relationship with the game developer. As a result, there were uncertainties as to the future financial performance of OAPLT. Given these circumstances, we recorded an operating expense of $149,369 during the period November 29, 2022 to June 30, 2023 as an impairment of the goodwill asset.
| 5. | Related Party Transactions |
From time to time, our officers and shareholders have made advances to us. As of June 30, 2023, the amount due to related parties of $12,430 consisted primarily of amounts advanced to us by our officers. The advances carry no interest and are due on demand. Imputed interest is immaterial.
F-12
| 6. | Share Capital |
SUCCESSOR
Preference Shares
We are authorized to issue 50,000,000 undesignated preference shares, par value of $0.0002 each. Our board of directors will have the authority to determine the rights, preferences and designations of each series of preference shares to be issued including voting powers, dividend rights, conversion rights, and redemption/liquidation privileges, all as permitted by Bermuda law and our bye-laws. As of June 30, 2022, no series of preference shares has been designated by our board of directors and no preference shares have been issued.
Common Shares
We are authorized to issue 450,000,000 common shares, par value of $0.0002 each, and have designated two series of common shares whose rights are described below:
Class A Common Shares – we have designated and authorized 20,000,000 Class A common shares. Each Class A common share is entitled to 20 votes on all matters subject to a vote of shareholders and to such dividends as our board may from time to time declare. Each Class A common share may be converted at any time into one (1) Class B common share. There are 9,400,000 Class A common shares issued and outstanding at June 30, 2023, 6,000,000 of which are owned by our CEO.
Class B Common Shares – we have designated 430,000,000 Class B common shares. Each Class B common share is entitled to one (1) vote on all matters subject to a vote of shareholders. There are 3,150,000 Class B common shares issued and outstanding at June 30, 2023.
Concurrent with our formation, we issued a total of 1,000,000 Class A common shares to three individuals, one of which was our CEO who received 650,000 shares. Under the SEA described in Note 3, we exchanged 9,000,000 additional Class A common shares. Our CEO is currently our largest shareholder owning 6,000,000 Class A common shares. The 9,400,000 Class A shares issued and outstanding as of June 30, 2023 resulted from the SEA (9,000,000 shares), the issuance of Founders’ shares (1,000,000 shares) and the transfer of 600,000 shares discussed below.
Prior to the SEA, we sold 2,000,000 Class B common shares to various shareholders for $0.25 per share and received proceeds of $500,000. Additionally, we issued 75,000 shares to the former owners of OAPLT upon the exercise of their share options. The Class B common shares that these shareholders now hold as a result of these transactions are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B common shares, subject to certain exceptions.
During the period November 29, 2022 to June 30, 2023, there was the following additional activity in connection with our common stock:
Sales of Shares
During the period November 29, 2022 to June 30, 2023, we conducted private placements of our Class B common shares and issued 300,000 Class B common shares to three investors at $1.00 per share for a total of $300,000. Gross proceeds from the sale were reduced by $49,000 representing placement agent fees paid to Boustead Securities, LLC in accordance with the agreement disclosed in Note 7, resulting in net proceeds of $251,000. In addition, $125,000 of proceeds were received into escrow for 125,000 shares subscribed as of June 30, 2023. These shares are reflected in Common shares – Class B to be issued on the accompanying consolidated balance sheet. As of June 30, 2023, we had received a subscription agreement for 25,000 Class B common shares at $1,00 per share, but funds had not yet been received. The shares are subject to the same lockup provisions described above.
Issuance of Advisor Shares
In May 2023, we issued a total of 175,000 Class B common shares to seven individuals. The shares were issued under the 2023 Equity Incentive Plan described below. We valued the shares at $175,000, or $1.00 per share, which represents the most recent sale price for our Class B common shares. We recorded a general and administrative expense for that amount in connection with these issuances.
Transfer of Shares
In January 2023, our CEO transferred 500,000 of his Class A common shares to an individual, at which time the shares were converted to Class B common shares. In March 2023, a shareholder transferred 100,000 of his Class A common shares to a company, at which time the shares were converted to Class B common shares.
F-13
Warrants
In connection with the sales of Class B common shares described above, we issued Boustead 5-year warrants to purchase a total of 21,000 Class B common shares which is equal to seven percent (7%) of the transaction share amounts. The warrants expire 5 years from the date of issuance. We valued the warrants using the Black-Scholes option pricing model at a value of $21,000. The assumptions used in determining the fair value of the warrants were as follows:
| June 30, 2023 | ||||
| Expected term in years | 5 years | |||
| Risk-free interest rate | 3.29% to 4.26% | |||
| Annual expected volatility | 300.0% | |||
| Dividend yield | 0.00% | |||
Risk-free interest rate: We use the risk-free interest rate of a U.S. Treasury Bill with a similar term on the date of the option grant.
Volatility: We estimate the expected volatility of the stock price based on the corresponding volatility of our historical stock price.
Dividend yield: We use a 0% expected dividend yield as we have not paid dividends to date and do not anticipate declaring dividends in the near future.
Remaining term: The remaining term is based on the remaining contractual term of the warrant.
Activity related to the warrants for the period November 29, 2022 through June 30, 2023 is as follows:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, beginning | — | $ | ||||||||||||||
| Granted during the period November 29, 2022 through June 30, 2023 | 21,000 | $ | 1.00 | |||||||||||||
| Outstanding, June 30, 2023 | 21,000 | $ | 1.00 | |||||||||||||
| Exercisable, end of period | 21,000 | $ | 1.00 | 4.8 | $ | 0 | ||||||||||
Equity Incentive Plan
In February 2023, we adopted the 2023 Equity Incentive Plan under which 2,000,000 Class B common shares are reserved for issuance of grants, awards and options.
PREDECESSOR
As stated in Note 1, OAPLT was formed on November 24, 2017 and at which time 400 shares of its share capital were issued to each of its two owners for a total of 800 shares issued and outstanding. Each share has a nominal value of $11.93 (ten euros). Under French law, 5% of net income must be transferred to the legal reserve until the legal reserve reaches 10% of the nominal value of the share capital. This reserve cannot be distributed to the shareholders other than upon liquidation but can be used to offset losses.
| 7. | Agreements |
On May 1, 2022, our wholly owned subsidiary RoyaLand Company entered into an agreement with Boustead Securities, LLC (“Boustead”) under which Boustead agreed to provide certain services to us with respect to corporate financing transactions, including the private placement of securities and the IPO of our common shares that will be applied for listing on NASDAQ/NYSE, and any post-IPO financings we may complete from time to time. Under the agreement, we agreed to pay certain other fees and warrants as described in the agreement. For financing transactions, we agreed to pay a success fee equal to seven percent (7%) of the transaction amount and a non-accountable expense allowance equal to one percent (1%) of the transaction amount. In addition, we agreed to issue warrants equal to seven percent (7%) of the transaction amount. On August 10, 2023, we entered into an amendment to the agreement removing all references to “IPO” or “initial public offering” in the agreement and stating that Boustead would not serve or act as a managing underwriter or in any similar capacity with the IPO, either as underwriter or otherwise, and will not, and has not, be engaged to “participate” in connection with the IPO. Additionally, Boustead acknowledged that Revere Securities, LLC with whom the Company entered into an engagement letter on November 29, 2022 would act as the exclusive agent, advisor or underwriter in connection with the IPO.
F-14
| 8. | Income Taxes |
SUCCESSOR
Our consolidated tax provision includes tax provisions for RoyaLand Ltd. and each of its wholly owned subsidiaries, RoyaLand Company and OAPLT.
RoyaLand Ltd. is a corporation formed under the laws of Bermuda which currently levies no taxes on individuals or corporations based upon profits. OAPLT is a French joint stock company (société par actions simplifiée) which is subject to the tax laws of France. For the period November 29, 2022 to June 30, 2023, OAPLT reported a loss. For the tax year ended June 30, 2022, OAPLT reported a tax loss and owed no income tax. Accordingly, as in prior periods, no income tax provision was recorded for OAPLT.
A portion of our net loss was generated by RoyaLand Company which is a U.S. company subject to income taxes in the United States. The RoyaLand Company tax return for tax year ended December 31, 2022 reflected losses as start-up costs since the company had not yet begun operation. The start-up costs will be amortized over 15 years once operations commence. As such, RoyaLand Company has no operating loss carryovers.
The following table presents the current income tax provision for federal and state income taxes for the period November 29, 2022 through June 30, 2023:
| November 29, 2022 Through June 30, 2023 | ||||
| Current tax provision (benefit): | ||||
| U.S. federal | $ | – | ||
| U.S. state | – | |||
| Total current tax provision (benefit) | – | |||
| Deferred tax provision (benefit): | ||||
| U.S. federal | (4,240 | ) | ||
| U.S. state, net of federal benefit | – | |||
| Increase in valuation allowance | 4,240 | |||
| Total deferred tax provision (benefit) | – | |||
| Total provision (benefit) for income taxes | $ | – | ||
Reconciliation of the U.S. federal statutory rate to the actual tax rate for the period ended June 30, 2023:
| 2023 | ||||
| U.S. federal statutory income tax rate | 21.0 | % | ||
| U.S. state income tax, net of federal benefit | 0.0 | % | ||
| Increase in valuation reserve | -21.0 | % | ||
| Total provision for income taxes | – | % | ||
The components of our deferred tax assets as of June 30, 2023, all of which arises from RoyaLand Company, consisted of the following:
| 2023 | ||||
| Start-up costs | $ | 93,332 | ||
| Less: valuation allowance | (93,332 | ) | ||
| Net deferred tax assets | $ | – | ||
The valuation allowance increased $57,397 since June 30, 2022.
F-15
PREDECESSOR
OAPLT is a French joint stock company (société par actions simplifiée) which is subject to the tax laws of France. For the tax year ended June 30, 2022, OAPLT reported a tax loss and owed no income tax. As such OAPLT has not recorded an income tax provision for either the period July 1, 2022 to November 28, 2022 or for the twelve months ended June 30, 2022.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences will become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company has recorded a full valuation allowance against its net deferred tax assets because management has determined that it is more likely than not that these assets will not be realized.
| 9. | Subsequent Events |
Private Placements
Subsequent to June 30, 2023, proceeds of $25,000 for shares subscribed as of June 30, 2023 were received in escrow, and the entire $150,000, net of issuance costs, was transferred to our Company.
Subsequent to June 30, 2023, we conducted private placements of our Class B common shares and entered into certain subscription agreements with a number of investors. Pursuant to the agreements, we issued 375,000 Class B common shares at $1.00 per share for gross proceeds in the total of $375,000. The shares are subject to the same lockup provisions described in Note 6.
Also subsequent to June 30, 2023, we conducted private placements of units of securities, consisting of (i) one Class B common share and (ii) a three-year-term warrant to purchase 2.5 Class B common shares (the “Units”), and entered into certain subscription agreements with a number. Pursuant to the agreements, we issued 500,000 Units at $1.00 per Unit for a total of $500,000. The shares are subject to the same lockup provisions described in Note 6.
Boustead Securities, LLC acted as placement agent in these private placements. As discussed in Note 7, we paid Boustead a placement agent fee totaling $82,000 representing 8% of the gross proceeds received (7% success fee and 1% non-accountable expense allowance). In addition, we paid Boustead an additional $91,000 in reimbursement of direct expenses incurred in connection with the private placements.
Neosperience Agreement
In July 2023, we signed an agreement with Neosperience S.p.A. under which Neosperience agreed to provide consulting and development services (the “Project”) with respect to our MMORPG, called TheRoyal.Land. As compensation for their services, we agreed to pay Neosperience a total amount ranging from €625,000 to €675,000, the exact amount to be determined after partial completion of the Project. The agreement specifies that €250,000 shall be paid on certain dates through September 5, 2023, of which €100,000 has been paid, and that the remaining amount will be split into five milestones, payable on the completion of each milestone.
F-16
INTERIM CONSOLIDATED BALANCE SHEETS
| (Successor) | ||||||||
December
31, (Unaudited) | June 30, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 254,688 | $ | 9,543 | ||||
| Cash in escrow | — | 125,000 | ||||||
| Other receivables | 2,696 | — | ||||||
| Deferred offering costs | 78,526 | 57,690 | ||||||
| Total current assets | 335,910 | 192,233 | ||||||
| Total assets | $ | 335,910 | $ | 192,233 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Shareholders’ deficit: | ||||||||
| Preference shares (Successor), par value $0.0002 per share, 50,000,000 shares authorized; no shares issued and outstanding at December 31, 2023 and June 30, 2023 | $ | — | $ | — | ||||
| Common shares – Class A (Successor), par value $0.0002 per share, 20,000,000 shares authorized; 9,400,000 shares issued and outstanding at December 31, 2023 and June 30, 2023 | 1,880 | 1,880 | ||||||
| Common shares – Class B (Successor), par value $0.0002 per share, 430,000,000 shares authorized; 4,175,000 and 3,150,000 shares issued and outstanding at December 31, 2023 and June 30, 2023, respectively | 835 | 630 | ||||||
| Common shares – Class B to be issued (Successor), zero and 125,000 shares at December 31, 2023 and June 30, 2023 | — | 25 | ||||||
| Additional paid-in capital | 1,801,762 | 1,086,122 | ||||||
| Subscription receivable | (200 | ) | (200 | ) | ||||
| Other comprehensive loss | (771 | ) | (183 | ) | ||||
| Accumulated deficit | (1,810,088 | ) | (1,071,997 | ) | ||||
| Total shareholders’ equity (deficit) | (6,582 | ) | 16,277 | |||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | 35,194 | 13,274 | ||||||
| Accrued legal and accounting | 294,590 | 132,036 | ||||||
| Other current liabilities | 2,153 | 18,216 | ||||||
| Due to related parties | 10,555 | 12,430 | ||||||
| Total current liabilities | 342,492 | 175,956 | ||||||
| Total liabilities | 342,492 | 175,956 | ||||||
| Total liabilities and shareholders’ equity (deficit) | $ | 335,910 | $ | 192,233 | ||||
See accompanying Notes to the Interim Consolidated Financial Statements
F-17
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| (Successor) | (Predecessor) | |||||||||||
For
the | For
the Period November 29, 2022 to December 31, 2022 | For
the Period July 1, 2022 to November 28, 2022 | ||||||||||
| Net revenues | $ | — | $ | — | $ | 4,869 | ||||||
| Operating expenses: | ||||||||||||
| Impairment of goodwill | — | 149,369 | — | |||||||||
| Legal and accounting | 258,831 | 19,730 | 3,483 | |||||||||
| Consulting | 422,096 | — | — | |||||||||
| Filing fees | 27,372 | — | — | |||||||||
| Bad debts | 520 | — | 1,240 | |||||||||
| All other | 29,272 | 790 | 2,421 | |||||||||
| Total operating expenses | 738,091 | 169,889 | 7,144 | |||||||||
| Operating loss | (738,091 | ) | (169,889 | ) | (2,275 | ) | ||||||
| Other income (expense): | ||||||||||||
| Interest expense, net | — | — | (37 | ) | ||||||||
| Total other income (expense) | — | — | (37 | ) | ||||||||
| Loss before provision for income taxes | (738,091 | ) | (169,889 | ) | (2,312 | ) | ||||||
| Provision (benefit) for income taxes | — | — | — | |||||||||
| Net loss | $ | (738,091 | ) | $ | (169,889 | ) | $ | (2,312 | ) | |||
| Other comprehensive income (loss): | ||||||||||||
| Currency translation adjustment | (587 | ) | — | 115 | ||||||||
| Comprehensive loss | $ | (738,678 | ) | $ | (169,889 | ) | $ | (2,197 | ) | |||
| Weighted average shares outstanding: | ||||||||||||
| Capital shares – basic and diluted | — | — | 800 | |||||||||
| Common shares – basic and diluted | 13,478,533 | 12,075,000 | — | |||||||||
| Weighted average net loss per share: | ||||||||||||
| Per capital share – basic and diluted | $ | — | $ | — | $ | (2.89 | ) | |||||
| Per common share – basic and diluted | $ | (0.05 | ) | $ | (0.01 | ) | $ | — | ||||
See accompanying Notes to the Interim Consolidated Financial Statements
F-18
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
Successor
Preference Shares | Common Shares Class A | Common Shares Class B | Common Shares Class B To Be Issued | Additional Paid-In | Subscription | Other Comprehensive | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Receivable | Loss | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance – June 30, 2023 | – | $ | – | 9,400,000 | $ | 1,880 | 3,150,000 | $ | 630 | 125,000 | $ | 25 | $ | 1,086,122 | $ | (200 | ) | $ | (183 | ) | $ | (1,071,997 | ) | $ | 16,277 | |||||||||||||||||||||||||||
| Gross proceeds from sale of shares | – | – | – | – | 1,025,000 | 205 | (125,000 | ) | (25 | ) | 899,820 | – | – | – | 900,000 | |||||||||||||||||||||||||||||||||||||
| Cost of shares issued | – | – | – | – | – | – | (184,180 | ) | (184,180 | ) | ||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | – | – | – | – | – | – | – | – | (588 | ) | – | (588 | ) | |||||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | – | – | (738,091 | ) | (738,091 | ) | |||||||||||||||||||||||||||||||||||||||
| Balance – December 31, 2023 | – | $ | – | 9,400,000 | $ | 1,880 | 4,175,000 | $ | 835 | – | $ | – | $ | 1,801,762 | $ | (200 | ) | $ | (771 | ) | $ | (1,810,088 | ) | $ | (6,582 | ) | ||||||||||||||||||||||||||
Successor
Preferred | Common
Shares Class A | Common
Shares Class B | Additional Paid-In | Subscription | Accumulated | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Amount | Capital | Receivable | Deficit | (Deficit) | |||||||||||||||||||||||||||||||
| Balance – November 29, 2022 (Unaudited) | – | $ | – | 10,000,000 | $ | 2,000 | 2,000,000 | $ | 400 | $ | 497,800 | $ | (200 | ) | $ | (424,246 | ) | $ | 75,754 | |||||||||||||||||||||
| Exercise of stock options | – | – | – | – | 75,000 | 15 | 37,442 | – | 37,457 | |||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (169,889 | ) | (169,889 | ) | |||||||||||||||||||||||||||||
| Balance – December 31, 2022 (Unaudited) | – | $ | – | 10,000,000 | $ | 2,000 | 2,075,000 | $ | 415 | $ | 535,242 | $ | (200 | ) | $ | (594,135 | ) | $ | (56,678 | ) | ||||||||||||||||||||
Predecessor
| Share Capital | Legal | Other Comprehensive | Retained Earnings | Total Shareholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Reserves | Loss | (Deficit) | (Deficit) | |||||||||||||||||||
| Balance – June 30, 2022 | 800 | $ | 9,545 | $ | 955 | $ | (173 | ) | $ | (24,564 | ) | $ | (14,237 | ) | ||||||||||
| Currency translation adjustment | — | — | — | 115 | — | 115 | ||||||||||||||||||
| Net loss | — | — | — | — | (2,312 | ) | (2,312 | ) | ||||||||||||||||
| Balance – November 28, 2022 (Unaudited) | 800 | $ | 9,545 | $ | 955 | $ | (58 | ) | $ | (26,876 | ) | $ | (16,434 | ) | ||||||||||
See accompanying Notes to the Interim Consolidated Financial Statements
F-19
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| (Successor) | (Predecessor) | |||||||||||
For
the Period | For the Period November 29, 2022 to December 31, 2022 | For the Period July 1, 2022 to November 28, 2022 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (738,091 | ) | $ | (169,889 | ) | $ | (2,312 | ) | |||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Changes in operating assets/liabilities: | ||||||||||||
| Accounts receivable | — | — | 3,652 | |||||||||
| Other accounts receivable | (2,696 | ) | — | — | ||||||||
| Accounts payable and accrued liabilities | 168,411 | 48,062 | (4,670 | ) | ||||||||
| All other | — | 54 | — | |||||||||
| Net cash used in operating activities | (572,376 | ) | (121,773 | ) | (3,330 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Gross proceeds from sale of common shares | 900,000 | — | — | |||||||||
| Cost of common share issuances | (184,180 | ) | — | — | ||||||||
| Cash proceeds from exercise of share options | — | 37,457 | — | |||||||||
| Deferred offering costs | (20,835 | ) | (10,971 | ) | — | |||||||
| Repayments to related parties | (1,876 | ) | — | (19 | ) | |||||||
| Net cash provided (used in) financing activities | 693,109 | 26,486 | (19 | ) | ||||||||
| Net change in cash | 120,733 | (95,287 | ) | (3,349 | ) | |||||||
| Currency translation adjustment | (588 | ) | — | 119 | ||||||||
| Cash, beginning of period | 134,543 | 146,130 | 5,292 | |||||||||
| Cash, end of period | $ | 254,688 | $ | 50,843 | $ | 2,062 | ||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Cash paid during the period for: | ||||||||||||
| Interest | $ | — | $ | — | $ | — | ||||||
| Taxes | $ | — | $ | — | $ | — | ||||||
See accompanying Notes to the Interim Consolidated Financial Statements
F-20
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Organization and Business |
Organization and Business
The RoyaLand Company Ltd. (“RoyaLand Ltd.”, “we” and “Successor”), an exempted company limited by shares, was incorporated on October 18, 2022 under the laws of Bermuda. Under our Articles of Incorporation, we are authorized to issue 50,000,000 preference shares, 20,000,000 Class A common shares and 430,000,000 Class B common shares. Concurrent with our formation, we issued 650,000 Class A common shares to our CEO, the majority owner, and 350,000 Class B common shares to two other individuals.
On November 28, 2022, we entered into a share exchange agreement (the “SEA”) with RoyaLand Company (“RoyaLand Company”), a United States company incorporated in the state of Nevada. At the time of the SEA, the majority of our shares were owned by our CEO and, as a result, we determined this to be a common control acquisition.
On November 29, 2022, we acquired 100% of the issued and outstanding shares of OAPLT (the “Acquisition”). OAPLT (the “Predecessor”) is a French joint stock company formed on November 24, 2017, whose main activities consist of the conception, development and management of a digital and artistic creation studio, and include the creation of apps, websites, the hosting of web products and the provision of services in relation thereto.
The accompanying interim condensed consolidated financial statements are presented for two periods: Successor (RoyaLand Ltd.), relating to the period succeeding the Acquisition, and Predecessor (OAPLT), relating to the periods preceding the Acquisition with a black line differentiating periods that are not comparable.
RoyaLand Ltd. is a company focused on creating an online and offline immersive, fantasy-based royalty-themed experience called myRoyal.World, primarily centered around the mobile-first massively multiplayer online role-playing game, or MMORPG, called TheRoyal.Land. We intend for TheRoyaLand to be a novel interactive, immersive game based on a player-empowered design. The plan is to build proprietary digital avatars, provide opportunities to players to earn in-game reward currency, build virtual Land in the metaverse to empower users to own their online assets and enhance all of these features with premium incremental in-game content. TheRoyaLand game is currently in development.
See Notes 3 and 4 for further information regarding the SEA and the Acquisition.
| 2. | Summary of Significant Accounting Policies |
Basis of Presentation and Consolidation
These interim condensed consolidated financial statements, including comparatives, have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and interpretations issued by the International Financial Reporting Interpretations Committee (“IFRIC”). Our year-end is June 30.
These interim condensed consolidated financial statements include the accounts of the registrant, RoyaLand Ltd., RoyaLand Company and OAPLT. All intercompany transactions and balances have been eliminated. As stated in Note 1, the SEA resulted in a common control acquisition while the acquisition of OAPLT resulted in a business combination.
Functional and Presentation Currency
These interim condensed consolidated financial statements are prepared in the US Dollar, which is the RoyaLand Ltd.’s functional currency. RoyaLand Company’s functional currency is the USD, the same as RoyaLand Ltd.’s functional currency and OAPLT’s functional currency is the Euro. All financial information has been rounded to the nearest dollar except where indicated otherwise.
Going Concern Considerations
The accompanying interim condensed consolidated financial statements contemplate continuation of our Company as a going concern. We have incurred net losses since our inception and we have an accumulated deficit of $1,810,088 at December 31, 2023. The continuation of our Company as a going concern is dependent upon our ability to raise additional funds and/or through the attainment of profitable operations. There are no assurances that we will be successful in obtaining sufficient capital to continue as a going concern. If our working capital needs are not met and we are unable to obtain adequate capital, we could be forced to cease operations. The accompanying financial statements do not include any adjustments that might be necessary if our Company is unable to continue as a going concern.
F-21
Use of Estimates
The preparation of the interim condensed consolidated financial statements in conformity with IFRS requires management to make estimates, judgements and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues, and expenses during the period. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Areas in which management has made critical judgments in the process of applying accounting policies and that have the most significant effect on the amounts recognized in the interim condensed consolidated financial statements include the determination of our Company’s functional currencies and the collectability of our accounts receivable and deferred offering costs. Information about key assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year are included in the following notes to the financial statements for the periods presented.
Cash and Cash Equivalents
We consider all short-term investments readily convertible to cash, without notice or penalty, with an initial maturity of 90 days or less to be cash equivalents.
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors that market participants would use in valuing the asset or liability. The fair value hierarchy consists of the following three levels of inputs that may be used to measure fair value:
| Level 1 | — | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| Level 2 | — | Inputs other than quoted prices included in Level 1 that are observable in the marketplace either directly (i.e., as prices) or indirectly (i.e., derived from prices). | |
| Level 3 | — | Unobservable inputs which are supported by little or no market activity. |
For assets and liabilities, such as cash and accounts payable/accrued liabilities maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Fair Value Hierarchy of liabilities that are recognized and measured at fair value in the interim condensed consolidated financial statements as of December 31, 2023 and June 30, 2023 (level 3 inputs are not applicable):
| Fair Value Measurement Using | ||||||||
| Level 1 | Level 2 | |||||||
| LIABILITIES | ||||||||
| December 31, 2023 (Successor): | ||||||||
| Due to related party – recognized at fair value (1) | $ | — | $ | 10,555 | ||||
| June 30, 2023 (Successor): | ||||||||
| Due to related party – recognized at fair value (1) | $ | — | $ | 12,430 | ||||
| (1) | The amounts due to related party contain no interest provision. Any imputed interest is immaterial. |
During the periods presented, there were no transfers between Levels 1, 2 or 3.
Financial Risk Factors
Our activities expose us to a variety of financial risks: market risk, credit risk and liquidity risk. Our primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on our financial performance.
The primary market risk to the Company is foreign exchange risk. Given the stability of the markets in which we operate, we believe our exposure to be minimal. Our exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. Given that our customer agreements generally consist of one performance obligation, we are paid based on milestones reached, typically within a short timeframe. As such, we believe that our exposure to credit risk is also not significant. With respect to liquidity, our ability to meet our obligations on time is dependent on the success of our operation and the support of our related party partners, which to date have given us adequate liquidity to meet our obligations.
F-22
Deferred Offering Costs
Deferred offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to our investor offering described in Note 7. Deferred offering costs will be charged to shareholders’ equity upon the completion of the offering. Should the offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations.
Income Taxes
Income tax expense comprises current and deferred taxes. Current taxes and deferred taxes are recognized in profit or loss except to the extent that they relate to a business combination, or items recognized directly in equity or in other comprehensive loss.
Current taxes are the expected tax receivable or payable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax receivable or payable in respect of previous years. Deferred taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred taxes are not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future.
In addition, deferred taxes are not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred taxes are measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the tax laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Net Income/Loss Per Share
Under the provisions of IAS 33, Earnings per Share, basic loss per common share is computed by dividing net loss available to each class of common shareholders by the weighted average number of shares of common shares outstanding for the period presented for their respective class. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares or resulted in the issuance of common shares that would then share in the income of our Company, subject to anti-dilution limitations. As of December 31, 2023 and 2022, we had no potentially dilutive shares.
The table below presents the computation of the Successor’s basic and diluted loss per share for the periods July 1, 2023 to December 31, 2023 and November 29, 2022 to December 31, 2022:
| Period July
1, 2023 to December 31, 2023 | Period November
29, 2022 to December 31, 2022 | |||||||||||||||
| Class A Common Shares | Class B Common Shares | Class A Common Shares | Class
B Common Shares | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss | $ | (738,091 | ) | $ | (738,091 | ) | $ | (169,889 | ) | $ | (169,889 | ) | ||||
| Net loss allocated between Class A and Class B common shares | (514,749 | ) | (223,342 | ) | $ | (140,695 | ) | $ | (29,194 | ) | ||||||
| Denominator: | ||||||||||||||||
| Weighted average common shares outstanding—basic | 9,400,000 | 4,078,533 | 10,000,000 | 2,075,000 | ||||||||||||
| Dilutive common share equivalents | - | - | - | - | ||||||||||||
| Weighted average common shares outstanding—diluted | 9,400,000 | 4,078,533 | 10,000,000 | 2,075,000 | ||||||||||||
| Net loss per share: | ||||||||||||||||
| Basic | $ | (0.05 | ) | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
| Diluted | $ | (0.05 | ) | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.01 | ) | ||||
F-23
The table below presents the computation of the Predecessor’s basic and diluted loss per share for the periods July 1, 2022 to November 28, 2022 and for the six months ended December 31, 2021:
| For the Period July 1, 2022 to November 28, 2022 | For
the Six | |||||||
| Numerator: | ||||||||
| Net loss | $ | (2,312 | ) | $ | (26,325 | ) | ||
| Denominator: | ||||||||
| Weighted average capital shares outstanding—basic | 800 | 800 | ||||||
| Dilutive common share equivalents | - | - | ||||||
| Weighted average common shares outstanding—diluted | 800 | 800 | ||||||
| Net loss per share: | ||||||||
| Basic | $ | (2.89 | ) | $ | (32.91 | ) | ||
| Diluted | $ | (2.89 | ) | $ | (32.91 | ) | ||
New Accounting Pronouncements
We have reviewed all accounting pronouncements recently issued by the IAS and have determined that they are either not applicable or are not believed to have a material impact on our present or future consolidated financial statements.
| 3. | SEA with RoyaLand Nevada |
As discussed in Note 1, on November 28, 2022, we entered into a share exchange agreement (the “SEA”) with RoyaLand Company (“RoyaLand Company”), a United States company incorporated in the state of Nevada. At the time of the SEA, RoyaLand Company had the following shares issued and outstanding: 6,500,000 Class A common shares, all of which were owned by our CEO, and 5,500,000 Class B shares owned by 9 different shareholders. Under the SEA, the shareholders of RoyaLand Company exchanged 100% of their Class A and Class B common shares for a total of 9,000,000 Class A common shares and 2,000,000 Class B common shares of RoyaLand Ltd. As a result of the SEA, the issued and outstanding share of RoyaLand Ltd. consisted of 10,000,000 Class A common shares, 6,500,000 of which is owned by our Chief Executive Officer (“CEO”), and 2,000,000 Class B common shares. RoyaLand Company is in the process of being dissolved.
The SEA with RoyaLand Company resulted in the following shares being exchanged:
| RoyaLand Ltd. (Registrant) | RoyaLand Company | |||||||||||||||
| Name of Shareholder | Class A Shares Received | Class B Shares Received | Class A Shares Exchanged | Class B Shares Exchanged | ||||||||||||
| CEO(1) | 5,850,000 | 6,500,000 | ||||||||||||||
| Shareholder #1(2) | 2,250,000 | 2,500,000 | ||||||||||||||
| Shareholder #2(3) | 900,000 | 1,000,000 | ||||||||||||||
| Shareholder #3 | 200,000 | 200,000 | ||||||||||||||
| Shareholder #4 | 100,000 | 100,000 | ||||||||||||||
| Shareholder #5 | 600,000 | 600,000 | ||||||||||||||
| Shareholder #6 | 200,000 | 200,000 | ||||||||||||||
| Shareholder #7 | 400,000 | 400,000 | ||||||||||||||
| Shareholder #8 | 200,000 | 200,000 | ||||||||||||||
| Shareholder #9 | 100,000 | 100,000 | ||||||||||||||
| Shareholder #10 | 200,000 | 200,000 | ||||||||||||||
| Total | 9,000,000 | 2,000,000 | 6,500,000 | 5,500,000 | ||||||||||||
| (1) | The CEO was issued 650,000 Class A common shares of RoyaLand Ltd upon its formation on October 18, 2022, resulting in total ownership of 6,500,000 Class A common shares after the completion of the SEA. |
| (2) | Shareholder #1 was issued 250,000 Class A common shares of RoyaLand Ltd upon its formation on October 18, 2022, resulting in total ownership of 2,500,000 Class A common shares after the completion of the SEA. |
| (3) | Shareholder #2 was issued 100,000 Class A common shares of RoyaLand Ltd upon its formation on October 18, 2022, resulting in total ownership of 1,000,000 Class A common shares after the completion of the SEA. |
F-24
| 4. | Acquisition of OAPLT |
As discussed in Note 1, on November 29, 2022, we acquired 100% of the issued and outstanding shares of OAPLT. The Acquisition was accounted for as a purchase business combination in accordance with IFRS 3, Business Combinations, whereby the purchase price paid to effect the Acquisition was allocated to recognize the acquired assets and liabilities at fair value. The allocation of purchase price is as follows:
| Purchase price | $ | 132,988 | ||
| Purchase price allocation at fair value: | ||||
| Cash | 2,055 | |||
| Accounts payable and accrued liabilities | (11,446 | ) | ||
| Other current liabilities | (6,990 | ) | ||
| Goodwill | 149,369 | |||
| Total purchase price | $ | 132,988 |
Goodwill consists primarily of intangible assets related to the knowhow, design and merchandising of OAPLT’s brands that do not qualify for separate recognition in accordance with IFRS 3. At December 31, 2022, we determined that it is unclear whether there is value to OAPLT’s knowhow and brand. As such, we recorded an operating expense of $149,369 in the period November 29, 2022 to December 31, 2022 as an impairment of the goodwill asset.
| 5. | Related Party Transactions |
From time to time, our officers and shareholders have made advances to us which we have recorded as Due to Related Parties in the amounts of $10,555 and $12,430 as of December 31, 2023 and June 30, 2023, respectively. During the six months ended December 31, 2023, we repaid $1,876 in advance. The amounts due to related parties carry no interest and are due on demand. Imputed interest is immaterial.
| 6. | Share Capital |
SUCCESSOR
Preference Shares
We are authorized to issue 50,000,000 shares of our $0.0002 par value preferred shares. Our Board of Directors will have the authority to determine the rights, preferences and designations of each series of preference shares to be issued including voting powers, dividend rights, conversion rights, and redemption/liquidation privileges, all as permitted by the Nevada Revised Statutes. As of December 31, 2023, no series of preferred shares has been designated by our Board of Directors and no preferred shares have been issued.
Common Shares
We are authorized to issue 450,000,000 shares of our $0.0002 par value common stock and have designated two series of common shares whose rights are described below:
Class A Common Shares – we have designated and authorized 20,000,000 Class A common shares. Each Class A common share is entitled to 20 votes on all matters subject to a vote of shareholders and to such dividends as our Board may from time to time declare. Each Class A common share may be converted at any time into one (1) Class B common share. There are 9,400,000 Class A common shares issued and outstanding at December 31, 2023, 6,000,000 of which are owned by our CEO.
Class B Common Shares – we have designated 430,000,000 Class B common shares. Each Class B common share is entitled to one (1) vote on all matters subject to a vote of shareholders. There are 4,175,000 Class B common shares issued and outstanding at December 31, 2023.
Concurrent with our formation, we issued a total of 1,000,000 Class A common shares to three individuals, one of which was our CEO who received 650,000 shares. Under the SEA described in Note 3, we exchanged 9,000,000 additional Class A common shares. Our CEO is currently our largest shareholder owning 6,000,000 Class A common shares. The 9,400,000 Class A shares issued and outstanding as of December 31, 2023 resulted from the SEA (9,000,000 shares), the issuance of Founders’ shares (1,000,000 shares) and the transfer of 600,000 shares to two parties, at which time the shares were converted to Class B common shares.
F-25
Prior to the SEA, we sold 2,000,000 Class B common shares to various shareholders for $0.25 per share and received gross proceeds of $500,000.
Additional Class B share activity was as follows:
| 1. | During the period November 29, 2022 to December 31, 2022, we issued 75,000 shares to the former owners of OAPLT upon the exercise of their share options. |
| 2. | During the period January 1, 2023 to June 30, 2023, we conducted private placements of our Class B common shares and issued 300,000 Class B common shares to investors at $1.00 per share for gross proceeds totaling $300,000. Gross proceeds from the sale were reduced by $49,000 representing placement agent fees paid to Boustead Securities, LLC in accordance with the agreement disclosed in Note 7, resulting in net proceeds of $251,000. In addition, $125,000 of proceeds were received into escrow for 125,000 shares subscribed as of June 30, 2023. These shares are reflected in Common shares – Class B to be issued on the accompanying June 30, 2023 consolidated balance sheet. |
| 3. | During the period January 1, 2023 to June 30, 2023, we issued a total of 175,000 Class B common shares to seven individuals. The shares were issued under the 2023 Equity Incentive Plan described below. We valued the shares at $175,000, or $1.00 per share, which represents the most recent sale price for our Class B common shares. We recorded a general and administrative expense for that amount in connection with these issuances. |
| 4. | As noted above, during the period January 1, 2023 to June 30, 2023, our CEO transferred 500,000 of his Class A common shares to an individual, at which time the shares were converted to Class B common shares. In addition, a shareholder transferred 100,000 of his Class A common shares to a company, at which time the shares were converted to Class B common shares. |
| 5. | During the period July 1, 2023 to December 31, 2023, we conducted private placements of our Class B common shares and issued 900,000 Class B common shares to investors at $1.00 per share for gross proceeds of $900,000. Gross proceeds from the sales were reduced by $184,180 representing placement agent fees paid to Boustead Securities, LLC in accordance with the agreement disclosed in Note 7, resulting in net proceeds of $715,820. In addition, we issued five-year warrants to Boustead to purchase 71,750 Class B common shares at $1.00 per share. The shares issued to investors were the result of the following private placements: |
| a. | Private placements of Class B common shares with a number of investors under which we issued 400,000 shares at $1.00 per share. |
| b. | Private placements of units of securities, consisting of (i) one Class B common share and (ii) a three-year warrant to purchase 2.5 Class B common shares (the “Units”), with three investors under which we issued 500,000 Units at $1.00 per Unit for gross proceeds of $500,000 along with three-year warrants to purchase 1,250,000 Class B common shares at $1.00 per share. |
The Class B common shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B common shares, subject to certain exceptions.
Warrants
In connection with the sales of Class B common shares during the six months ended December 31, 2023, we issued Boustead 5-year warrants to purchase a total of 71,750 Class B common shares which is equal to seven percent (7%) of the transaction share amounts (including the 125,000 which were to be issued shares as of June 30, 2023). In addition, we issued certain private placement investors 3-year warrants to purchase a total of 1,250,000 Class B common shares. All warrants are immediately exercisable at $1.00 per share. We valued the warrants issued during this period using the Black-Scholes option pricing model at a value of $1,321,750. The assumptions used in determining the fair value of the warrants issued during the six months ended December 31, 2023 were as follows:
| December 31, 2023 | ||
| Expected term in years | 3 to 5 years | |
| Risk-free interest rate | 4.00% to 4.44% | |
| Expected annual volatility | 300.0% | |
| Dividend yield | 0.00% |
Risk-free interest rate: We use the risk-free interest rate of a U.S. Treasury Bill with a similar term on the date of the option grant.
Volatility: We estimate the expected volatility of the share price based on the corresponding volatility of our historical share price and the share price volatilities of comparable companies.
Dividend yield: We use a 0% expected dividend yield as we have not paid dividends to date and do not anticipate declaring dividends in the near future.
Remaining term: The remaining term is based on the remaining contractual term of the warrant.
F-26
Activity related to the warrants for the period July 1, 2023 through December 31, 2023 is as follows:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, June 30, 2023 | 21,000 | $ | 1.00 | |||||||||||||
| Granted to Boustead during the period July 1, 2023 to December 31, 2023 | 71,750 | $ | 1.00 | |||||||||||||
| Granted to private placement investors during the period July 1, 2023 to December 31, 2023 | 1,250,000 | $ | 1.00 | |||||||||||||
| Outstanding, December 31, 2023 | 1,342,750 | $ | 1.00 | |||||||||||||
| Exercisable, December 31, 2023 | 1,342,750 | $ | 1.00 | 2.7 | $ | 0 | ||||||||||
Equity Incentive Plan
In February 2023, we adopted the 2023 Equity Incentive Plan under which 2,000,000 Class B common shares are reserved for issuance of grants, awards and options.
PREDECESSOR
As stated in Note 1, OAPLT was formed on November 24, 2017 and at which time 400 shares of its share capital were issued to each of its two owners for a total of 800 shares issued and outstanding. Each share has a nominal value of $11.93 (ten euros). Under French law, 5% of net income must be transferred to the legal reserve until the legal reserve reaches 10% of the nominal value of the share capital. This reserve cannot be distributed to the shareholders other than upon liquidation but can be used to offset losses.
| 7. | Agreements |
Boustead Agreement
On May 1, 2022, our wholly owned subsidiary RoyaLand Company entered into an agreement with Boustead Securities, LLC (“Boustead”) under which Boustead agreed to provide certain services to us with respect to corporate financing transactions, including the private placement of securities and the IPO of our common shares that will be applied for listing on NASDAQ/NYSE, and any post-IPO financings we may complete from time to time. Under the agreement, we agreed to pay certain other fees and warrants as described in the agreement. For financing transactions, we agreed to pay a success fee equal to seven percent (7%) of the transaction amount and a non-accountable expense allowance equal to one percent (1%) of the transaction amount. In addition, we agreed to issue warrants equal to seven percent (7%) of the transaction amount. On August 10, 2023, we entered into an amendment to the agreement removing all references to “IPO” or “initial public offering” in the agreement and stating that Boustead would not serve or act as a managing underwriter or in any similar capacity with the IPO, either as underwriter or otherwise, and will not, and has not, be engaged to “participate” in connection with the IPO. Additionally, Boustead acknowledged that Revere Securities, LLC with whom the Company entered into an engagement letter on November 29, 2022 would act as the exclusive agent, advisor or underwriter in connection with the IPO.
Neosperience Agreement
In July 2023, we signed an agreement with Neosperience S.p.A. under which Neosperience agreed to provide consulting and development services (the “Project”) with respect to our MMORPG, called TheRoyal.Land. The Project is to be accomplished in five phases. The first four phases of the Project are the research phase with the final phase being the development phase. As compensation for their services, we agreed to pay Neosperience a total amount ranging from €625,000 to €675,000, the exact amount to be determined after completion of phase four of the Project. The agreement specifies that €275,000, which represents payments for the research phase of the Project, shall be paid on certain dates through September 5, 2023, and that the remaining amount will be split into five milestones, payable on the completion of each milestone.
As of December 31, 2023, we have paid Neosperience €275,000, which translates to $301,617, for the research phase of the Project. Neosperience has informed us that the remaining amount due for phase five of the Project, the development phase, will be €375,000, or $413,925 using the December 31, 2023 exchange rate of 1.1038. As of December 31, 2023, we have not received any billings for the development phase of the Project.
Under the guidance of IAS 38 Intangible Assets, all expenditures in the research phase for intangible assets should be expensed since it is impossible to demonstrate whether or not a product at this stage will generate any probable future economic benefit. As such, during the six months ended December 31, 2023, we have recorded a general and administrative expense of $301,617 related to this Project.
F-27
Skyline Agreement
In July 2023, we entered into an Investor Relations Services Agreement with Skyline Corporate Communications Group. The agreement has a term of twelve (12) months and is automatically renewable unless cancelled within 60 days of the termination date. Under the agreement, Skyline will provide corporate communications advisory services as well as other investor relations services described in the agreement. We agreed to compensate Skyline based on the types of services provided. During the six months ended December 31, 2023, we recorded a general and administrative expense totaling $30,000 in connection with this agreement.
| 8. | Subsequent Events |
Private Placements
Subsequent to December 31, 2023, we conducted private placements of our Class B common shares and entered into certain subscription agreements with a number of investors. Pursuant to the subscription agreements, we issued 300,000 Class B common shares at $1.00 per share for gross proceeds in the total of $300,000. The shares are subject to the same lockup provisions described in Note 6. Pursuant to our engagement letter agreement with Boustead Securities, LLC disclosed in Note 7, in addition to payments of a success fee of $21,000, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $3,000, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 21,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
F-28
4,765,000 Shares
The Royaland company LTD.
Class B Common Shares
PROSPECTUS
, 2024
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 6. Indemnification of Directors and Officers.
Section 98 of the Companies Act provides generally that a Bermuda company may exempt or indemnify its directors, officers and auditors against any liability which by virtue of any rule of law would otherwise be imposed on them in respect of any negligence, default, breach of duty or breach of trust, except in cases where such liability arises from fraud or dishonesty of which such director, officer or auditor may be guilty in relation to the company. Section 98 further provides that a Bermuda company may indemnify its directors, officers and auditors against any liability incurred by them in defending any proceedings, whether civil or criminal, in which judgment is awarded in their favor or in which they are acquitted or granted relief by the Supreme Court of Bermuda pursuant to section 281 of the Companies Act.
Provisions in the Company bye-laws provide that it shall indemnify its officers and directors in respect of their actions and omissions, except in respect of their fraud or dishonesty. The Company bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually or in right of the Company, against any of the Company’s directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. However, these bye-law provisions will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Section 98A of the Companies Act permits the Company to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust, whether or not the Company may otherwise indemnify such officer or director.
The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of the Company bye-laws, agreement, vote of shareholders or disinterested directors or otherwise.
The Company expects to maintain standard policies of insurance that provide coverage (1) to its directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act and (2) to the Company with respect to indemnification payments that it may make to such directors and officers.
The Company will enter into indemnification agreements with its directors and executive officers. These agreements require the Company to indemnify these individuals to the fullest extent permitted under Bermuda law against liabilities that may arise by reason of their service to the Company, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors or executive officers, the Company has been informed that, in the opinion of the SEC, such indemnification is against public policy and is therefore unenforceable.
Item 7. Recent Sales of Unregistered Securities.
In the past three years, we have issued and sold the securities described below without registering the securities under the Securities Act.
On August 12, 2022 and September 30, 2022, RoyaLand Company conducted private placements of shares of Class B Common Stock, and entered into certain subscription agreements with a number of (i) “accredited investors” as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, RoyaLand Company issued 2,000,000 shares of Class B Common Stock at $0.25 per share for a total of $500,000. The shares were subsequently exchanged for Class B Common Shares as described below. The Class B Common Shares that the private placement investors now hold as a result of these transactions are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”.
On January 28, 2022, RoyaLand Company issued 100,000 shares of common stock in connection with the incorporation of the RoyaLand Company, at an issue price of $0.001 per share, for a total consideration of $100. On March 1, 2022, the RoyaLand Company amended its articles of incorporation to authorize 300,000,000 shares of stock, consisting of (i) 250,000,000 shares of Common Stock, $0.001 par value per share, of which, 20,000,000 shares were designated Class A Common Stock, par value $0.001 per share, or the Class A Common Stock, and 230,000,000 shares were designated as Class B Common Stock, $0.001 par value per share, or the Class B Common Stock, and (ii) 50,000,000 shares of Preferred Stock, $0.001 par value per share; and effected a 100 to 1 forward stock split resulting in issued and outstanding shares of 6,500,000 of Class A Common Stock and 3,500,000 shares of Class B Common Stock.
II-1
The following table presents all of the shares owned before and after the forward stock split.
Shareholder | Common Stock Before Split | Class A Common Stock After Split | Class B Common Stock After Split | Aggregate
Purchase Price Paid | ||||||||||||
| Emanuele Filiberto di Savoia, Chief Executive Officer and Director | 65,000 | 6,500,000 | - | $ | 65 | |||||||||||
| Pinehurst Partners LLC (1) | 25,000 | - | 2,500,000 | $ | 25 | |||||||||||
| Jean-Claude Sindres, Chief Strategy and Creative Officer | 10,000 | - | 1,000,000 | $ | 10 | |||||||||||
| (1) | Pinehurst Partners LLC is a Colorado limited liability company, 100% owned by the Roth individual retirement account of Daniel Joseph McClory. Pinehurst Partners LLC’s managing member is Daniel Joseph McClory, our Executive Chairman and director. Daniel Joseph McClory is deemed to beneficially own the Class A Common Shares owned by Pinehurst Partners LLC and has sole voting and dispositive powers over its shares. Pinehurst Partners LLC’s business address is 6525 Gunpark Drive, Suite 370-103, Boulder, CO 80301. |
On October 25, 2022, we issued 1,000,000 Class A Common Shares in connection with the incorporation of The RoyaLand Company Ltd., at an issue price of $0.0002 per share, for a total consideration of $200. All of the shares were sold to members of our board of directors, executive officers or their affiliates and beneficial owners of more than 5% of our outstanding share capital.
The following table presents the amounts of Class A Common Shares issued and aggregate purchase prices paid by the members of our board of directors, executive officers or their affiliates and beneficial owners of more than 5% of our outstanding share capital. The terms of these purchases were the same for all purchasers of our common shares.
Shareholder | Class A Common Shares | Aggregate
Purchase Price Paid | ||||||
| Emanuele Filiberto di Savoia, Chief Executive Officer and Director | 650,000 | $ | 130 | |||||
| Pinehurst Partners LLC (1) | 250,000 | $ | 50 | |||||
| Jean-Claude Sindres, Chief Strategy and Creative Officer | 100,000 | $ | 20 | |||||
| (1) | Pinehurst Partners LLC is a Colorado limited liability company, 100% owned by the Roth individual retirement account of Daniel Joseph McClory. Pinehurst Partners LLC’s managing member is Daniel Joseph McClory, our Executive Chairman and director. Daniel Joseph McClory is deemed to beneficially own the Class A Common Shares owned by Pinehurst Partners LLC and has sole voting and dispositive powers over its shares. Pinehurst Partners LLC’s business address is 6525 Gunpark Drive, Suite 370-103, Boulder, CO 80301. |
On November 28, 2022, we entered into a share exchange agreement with RoyaLand Company and its stockholders, pursuant to which all the stockholders of RoyaLand Company exchanged their shares for an equal number of shares in the Company, except for Emanuele Filiberto di Savoia, Pinehurst Partners, LLC, and Jean-Claude Sindres, who received the amount of shares they had in RoyaLand Company minus the amount of Company shares they subscribed for on October 25, 2022. As a result, the share exchange became effective under Nevada and Bermuda law, and RoyaLand Company became our wholly-owned subsidiary.
II-2
On November 29, 2022, we entered into a share purchase agreement as buyer with the shareholders of OAPLT as sellers, pursuant to which we purchased all of OAPLT’s share capital for cash of $132,988 and the option for the sellers to subscribe for up to 75,000 Class B Common Shares of the Company at a maximum price of $0.50 per share. As a result, the share purchase became effective under French law, and OAPLT became our wholly-owned subsidiary. On November 29, 2022, the sellers exercised their option to subscribe for 75,000 Class B Common Shares for $0.50 per share in reliance upon the provisions of Regulation S promulgated under the Securities Act.
On March 3, 2023, March 28, 2023, May 4, 2023, June 30, 2023, July 14, 2023 and July 18, 2023, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 825,000 Class B Common Shares at $1.00 per share for a total of $825,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead Securities, LLC, or Boustead, acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $57,750, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $8,250, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 57,750 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
On May 31, 2023, we entered into advisor agreements with seven consultants, pursuant to which we issued 25,000 Class B Common Shares under the 2023 Plan as compensation for services, for a total issuance of 175,000 Class B Common Shares.
On July 21, 2023, we conducted a private placement of units of securities, consisting of (i) one Class B Common Share and (ii) a three-year-term warrant to purchase 2.5 Class B Common Shares (the “Units”), and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 500,000 Units at $1.00 per Unit for a total of $500,000. The Units are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in this private placement. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $35,000, or 7% of the gross amount actually received by the Company in the private placement, and a non-accountable expense allowance of $5,000, or 1% of the gross amount actually received by the Company in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 35,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
On March 8, 2024, April 17, 2024, and April 24, 2024, we conducted private placements of Class B Common Shares and entered into certain subscription agreements with a number of (i) accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act. Pursuant to the agreements, we issued 300,000 Class B Common Shares at $1.00 per share for a total of $300,000. The shares are subject to certain lockup provisions until 180 days after the commencement of trading of our Class B Common Shares, subject to certain exceptions. See “Shares Eligible For Future Sale—Lock-Up Agreements”. Boustead acted as placement agent in these private placements. Pursuant to our engagement letter agreement with Boustead, in addition to payments of a success fee of $21,000, or 7% of the total purchase price of the shares sold in the private placement, and a non-accountable expense allowance of $3,000, or 1% of the total purchase price of the shares sold in the private placement, we agreed to issue Boustead five-year warrants to purchase up to 21,000 Class B Common Shares in aggregate, exercisable on a cashless basis, with an exercise price of $1.00 per share, subject to adjustment.
No underwriters were involved in these issuances. Unless otherwise stated above, the above issuances were exempt from registration under the Securities Act as they were issued to (i) “accredited investors” as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder, in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, and/or Rule 506(b) of Regulation D promulgated thereunder, or (ii) non-U.S. persons made in compliance with the provisions of Regulation S promulgated under the Securities Act.
II-3
Item 8. Exhibits and Financial Statement Schedules.
(a) Exhibits
| † | Executive compensation plan or arrangement. |
| (b) | Financial Statement Schedules |
Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or the notes thereto.
II-4
Item 9. Undertakings.
| (a) | The undersigned registrant hereby undertakes: |
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the “Act”); |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement. |
| (2) | That, for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| (4) | That, for the purpose of determining liability under the Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
| (5) | That, for the purpose of determining liability of the registrant under the Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (b) | Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Monte Carlo, Monaco on April 26, 2024.
|
The RoyaLand Company Ltd. | |
| By: | /s/ Emanuele Filiberto di Savoia | |
| Name: | Emanuele Filiberto di Savoia | |
| Title: | Chief Executive Officer | |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Emanuele Filiberto di Savoia | Chief Executive Officer (Principal Executive Officer) and Director | April 26, 2024 | ||
| Emanuele Filiberto di Savoia | ||||
| * | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
April 26, 2024 | ||
| Bryan Elbez | ||||
| * | Executive Chairman and Director | April 26, 2024 | ||
| Daniel Joseph McClory | ||||
| * | Director | April 26, 2024 | ||
| Alberto Libanori |
| *By: | /s/ Emanuele Filiberto di Savoia | |
| Emanuele Filiberto di Savoia | ||
| Attorney-In-Fact |
II-6
SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant to the Securities Act of 1933, the undersigned, the duly authorized representative in the United States of The RoyaLand Company Ltd. has signed this registration statement or amendment thereto in New York on April 26, 2024.
Cogency Global Inc. Authorized U.S. Representative | ||
| By: | /s/ Colleen A. De Vries | |
| Name: | Colleen A. De Vries | |
| Title: | Senior Vice President on behalf of Cogency Global Inc. | |
II-7
Exhibit 4.2
NEITHER THIS WARRANT NOR THE SECURITIES INTO WHICH THIS WARRANT IS EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.
THE ROYALAND COMPANY LTD.
COMMON SHARES PURCHASE WARRANT
| Warrant No. __________ | Original Issue Date: ________________, 2023 |
| Initial Holder: | No. of Shares Subject to Warrant: _________ |
| Initial Exercise Price Per Share: US$1.00 (subject to the adjustment pursuant to Section 9) | |
| Expiration Time: 5:00 p.m., Eastern time, on __________________, 2026 |
The RoyaLand Company Ltd., an exempted company incorporated in Bermuda with limited liability (the “Company”), hereby certifies that, for value received, the Initial Holder shown above, or its permitted registered assigns (the “Holder”), is entitled to purchase from the Company up to the number of Class B Common Shares, US$0.0002 par value per share (the “Common Shares”), shown above (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at the exercise price shown above (as may be adjusted from time to time as provided herein, the “Exercise Price”), at any time and from time to time on or after the original issue date indicated above (the “Original Issue Date”) and through and including the expiration time shown above (the “Expiration Time”), and subject to the following terms and conditions:
This Warrant is being issued pursuant to a Subscription Agreement, dated ___________, 2023 (the “Subscription Agreement”), by and among the Company, the Initial Holder and the other parties thereto.
1. Definitions. In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Subscription Agreement.
2. List of Warrant Holders. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder (which shall include the Initial Holder or, as the case may be, any registered assignee to which this Warrant is permissibly assigned hereunder from time to time). The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
3. List of Transfers; Restrictions on Transfer. The Company shall register any transfer of all or any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified herein. Upon any such registration or transfer, a new Warrant to purchase Common Shares, in substantially the form of this Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations in respect of the New Warrant that the Holder has in respect of this Warrant.
4. Exercise and Duration of Warrant.
(a) All or any part of this Warrant shall be exercisable by the registered Holder in any manner permitted by this Section 4 at any time and from time to time on or after the Original Issue Date and through and including the Expiration Time. At the Expiration Time, the portion of this Warrant not exercised prior thereto shall be and become void and of no value and this Warrant shall be terminated and shall no longer be outstanding.
(b) The Holder may exercise this Warrant by delivering to the Company: (i) an exercise notice, in the form attached hereto (the “Exercise Notice”), completed and duly signed, and (ii) if such Holder is not utilizing the cashless exercise provisions set forth in this Warrant, payment by wire transfer of immediately available funds to an account designated by the Company of the Exercise Price for the number of Warrant Shares as to which this Warrant is being exercised. The Holder shall be required to deliver the original Warrant in order to effect an exercise hereunder. The date such items are delivered to the Company (as determined in accordance with the notice provisions hereof) is an “Exercise Date.” Execution and delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant Shares.
(c) Cashless Exercise. In lieu of exercising this Warrant by making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Exercise Price, the Holder may elect to receive the number of Common Shares equal to the value of this Warrant (or the portion thereof being exercised), by surrender of this Warrant to the Company, together with the exercise form attached hereto, in which event the Company will issue to the Holder the number of Common Shares in accordance with the following formula (a “Cashless Exercise”):
| X | = | Y(A-B) | |
| A |
| Where, | |||
| X | = | The number of Common Shares to be issued to the Holder; | |
| Y | = | The number of Common Shares for which the Warrant is being exercised; | |
| A | = | The fair market value of one Common Share; and | |
| B | = | The Exercise Price. |
For purposes of Section 4(c), the fair market value means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Shares are then listed or quoted on an Eligible Market, the value shall be deemed to be the highest daily price on any trading day on such Eligible Market on which the Common Shares are then listed or quoted as reported by Bloomberg L.P. (based on New York City time) during the five trading days preceding the exercise, (b) if the OTCQB Venture Market (“OTCQB”) service or the OTCQX Best Market (“OTCQX”) service of OTC Markets Group Inc. (or a similar organization or agency succeeding to its functions of reporting prices, the “OTC Markets Group”) is not an Eligible Market, the value shall be deemed to be the highest daily price on any trading day on the OTCQB or the OTCQX on which the Common Shares are then quoted as reported by Bloomberg L.P. (based on New York City time) during the five trading days preceding the exercise, as applicable, (c) if the Common Shares are not then listed or quoted for trading on the OTCQB or the OTCQX and if prices for the Common Shares are then quoted on the Pink Open Market service of OTC Markets (or a similar organization or agency succeeding to its functions of reporting prices) (the “Pink Sheets”), the value shall be deemed to be the highest daily price on any trading day on the Pink Sheets on which the Common Shares then quoted as reported by OTC Markets Group (based on New York City time) during the five trading days preceding the exercise, or (d) in all other cases, the fair market value of a Common Share as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company. “Eligible Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, any Electronic Communication Network or any Alternative Trade Facility.
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For purposes of Rule 144(d) promulgated under the Securities Act, as in effect on the date hereof, assuming the Holder is not an affiliate of the Company, it is intended that the Warrant Shares issued in a Cashless Exercise shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the closing date of the Offering pursuant to which the Company was obligated to issue this Warrant.
(d) The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant pursuant to the terms hereof.
5. Delivery of Warrant Shares.
(a) Upon exercise of this Warrant, the Company shall promptly (but in no event later than ten (10) business days after the Exercise Date) issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate for the Warrant Shares issuable upon such exercise, free of restrictive legends. The Holder, or any Person permissibly so designated by the Holder to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant Shares as of the Exercise Date. The Company shall, upon the written request of the Holder, use its best efforts to deliver, or cause to be delivered, Warrant Shares hereunder electronically through the Depository Trust and Clearing Corporation or another established clearing corporation performing similar functions, if available; provided, that, the Company may, but will not be required to, change its transfer agent if its current transfer agent cannot deliver Warrant Shares electronically through the Depository Trust and Clearing Corporation. If as of the time of exercise the Warrant Shares constitute restricted or control securities, the Holder, by exercising, agrees not to resell them except in compliance with all applicable securities laws.
(b) To the extent permitted by law, the Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance that might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Common Shares upon exercise of the Warrant as required pursuant to the terms hereof.
(c) If the Company fails to cause its transfer agent to transmit to the Holder a certificate or the certificates (either physical or electronic) representing the Warrant Shares pursuant to the terms hereof by applicable delivery date, then, the Holder will have the right to rescind such exercise.
6. Charges, Taxes and Expenses. Issuance and delivery of certificates for Common Shares upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or the Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.
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7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.
8. Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Shares, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares that are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.
9. Certain Adjustments to Exercise Price. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.
(a) Adjustments for Share Splits and Combinations and Share Dividends. If the Company shall at any time or from time to time after the date hereof, effect a share split or combination of the outstanding Common Shares or pay a share dividend in Common Shares, then the Exercise Price shall be proportionately adjusted. Any adjustments under this Section 9(a) shall be effective at the close of business on the date the share split or combination becomes effective or the date of payment of the share dividend, as applicable.
(b) Merger Sale, Reclassification, etc. In case of any: (i) consolidation or merger (including a merger in which the Company is the surviving entity), (ii) sale or other disposition of all or substantially all of the Company’s assets or distribution of property to shareholders (other than distributions payable out of earnings or retained earnings), or reclassification, change or conversion of the outstanding securities of the Company or of any reorganization of the Company (or any other corporation the shares or securities of which are at the time receivable upon the exercise of this Warrant) or any similar corporate reorganization on or after the date hereof, then and in each such case the Holder of this Warrant, upon the exercise hereof at any time thereafter shall be entitled to receive, in lieu of the shares or other securities and property receivable upon the exercise hereof prior to such consolidation, merger, sale or other disposition, reclassification, change, conversion or reorganization, the shares or other securities or property to which such Holder would have been entitled upon such consummation if such Holder had exercised this Warrant immediately prior thereto.
10. No Fractional Shares. No fractional Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares that would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the closing price of one Warrant Share as reported by the applicable Trading Market on the Exercise Date.
11. Notices. Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be delivered in accordance with the procedures set forth in the Subscription Agreement.
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12. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.
13. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder, or their successors and assigns.
(b) All questions concerning the construction, validity, enforcement and interpretation of this Warrant and the Transaction Documents shall be governed by and construed and enforced solely and exclusively in accordance with the laws of the state of New York without regard to any statutory or common-law provision pertaining to conflicts of laws. The Company and Holder agree that courts of competent jurisdiction in New York County, New York and the United States District Court for the Southern District of New York shall have jurisdiction with regard to any action arising out of any breach or alleged breach of this Agreement. The Company and Holder agree to submit to the personal jurisdiction of such courts and any other applicable court within the state of New York. The Company and Holder further agree that the mailing of any process shall constitute valid and lawful process against each Party hereto. The Company and Holder waive any claim that any of the foregoing courts is an inconvenient forum. EACH PARTY HERETO (INCLUDING ITS AFFILIATES, AGENTS, OFFICERS, DIRECTORS AND EMPLOYEES) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(c) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.
(d) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefore, and upon so agreeing, shall incorporate such substitute provision in this Warrant.
(e) Prior to exercise of this Warrant, the Holder hereof shall not, by reason of being a Holder, be entitled to any rights of a shareholder with respect to the Warrant Shares.
(f) No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Shares or as a shareholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
5
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.
| THE ROYALAND COMPANY LTD. | ||
| By: | ||
| Name: | Emanuele Filiberto di Savoia | |
| Title: | Chief Executive Officer | |
6
THE ROYALAND COMPANY LTD.
EXERCISE NOTICE
Ladies and Gentlemen:
(1) The undersigned hereby elects to exercise the above-referenced Warrant with respect to ______________ Class B Common Shares. Capitalized terms used herein and not otherwise defined herein have their respective meanings set forth in the Warrant.
(2) The Holder intends that payment of the Exercise Price shall be made as (check one):
| ☐ | Cash Exercise under Section 4(b) | |
| ☐ | Cashless Exercise under Section 4(c) (assuming conditions precedent are met) |
(3) If the Holder has elected a Cash Exercise, the holder shall pay the sum of $ ______________ to the Company in accordance with the terms of the Warrant.
(4) Pursuant to this Exercise Notice, the Company shall deliver to the Holder ________________ Warrant Shares determined in accordance with the terms of the Warrant.
| Dated: | HOLDER: | |||
| Print name | ||||
| By: | ||||
| Title: | ||||
7
THE ROYALAND COMPANY LTD.
FORM OF ASSIGNMENT
To be completed and signed only upon transfer of Warrant
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto _________________ the right represented by the within Warrant to purchase _________________ Class B Common Shares to which the within Warrant relates and appoints __________________ attorney to transfer said right on the books of the Company with full power of substitution in the premises.
| Dated: | TRANSFEROR: | |||
| Print name | ||||
| By: | ||||
| Title: | ||||
| TRANSFEREE: | |||
| Print name | |||
| By: | |||
| Title: | |||
| WITNESS: | |||
| Address of Transferee: | |||
| Print name | |||
8
Exhibit 5.1
 |
CONYERS DILL & PEARMAN
29th Floor One Exchange Square 8 Connaught Place Central Hong Kong T +852 2524 7106 | F +852 2845 9268
conyers.com |
26 April 2024
Matter No.: 817121
852 2842 9530
Richard.Hall@conyers.com
The RoyaLand Company Ltd.
Clarendon House, 2 Church Street
Hamilton HM 11
Bermuda
Dear Sir/Madam,
Re: The RoyaLand Company Ltd. (the “Company”)
We have acted as special Bermuda legal counsel to the Company in connection with a registration statement on Form F-1 (File No. 333-273097) to be filed with the U.S. Securities and Exchange Commission (the “Commission”) on or about the date hereof (the “Registration Statement”, which term does not include any other document or agreement whether or not specifically referred to therein or attached as an exhibit or schedule thereto) under the U.S. Securities Act of 1933, as amended (the “Securities Act”), relating to the resale from time to time of up to an aggregate of 4,765,000 class B common shares par value US$0.0002 each (the “Class B Common Shares”) of the Company, including (i) 3,515,000 Class B Common Shares (the “Resale Shares”) issued to the selling shareholders listed in the Registration Statement (the “Selling Shareholders”), and (ii) 1,250,000 Class B Common Shares (the “Investor Warrant Shares”) issuable upon the exercise of warrants (“Investor Warrants”) issued to the Selling Shareholders.
| 1. | DOCUMENTS REVIEWED |
For the purposes of giving this opinion, we have examined the following documents:
| 1.1. | a copy of the Registration Statement. |
We have also reviewed:
| 1.2. | copies of the memorandum of association and the bye-laws of the Company, each certified by the Secretary of the Company on 26 April 2024; |
| 1.3. | copies of written resolutions of the directors of the Company dated 28 November 2022, 1 March 2023, 30 June 2023, 20 July 2023, 15 August 2023, 20 October 2023, 29 November 2023, 22 February 2024, 18 April 2024, 23 April 2024 and written resolutions of the shareholders of the Company dated 28 November 2022, 6 February 2023, 17 August 2023 (the “Resolutions”); |
| 1.4. | a Certificate of Compliance issued by the Registrar of Companies in relation to the Company on 25 April 2024 (the “Certificate Date”); |
| 1.5. | a copy of the register of members of the Company as at 25 April 2024; |
| 1.6. | the Investor Warrants; and |
| 1.7. | such other documents and made such enquiries as to questions of law as we have deemed necessary in order to render the opinion set forth below. |
| 2. | ASSUMPTIONS |
We have assumed:
| 2.1. | the genuineness and authenticity of all signatures and the conformity to the originals of all copies (whether or not certified) examined by us and the authenticity and completeness of the originals from which such copies were taken; |
| 2.2. | that where a document has been examined by us in draft form, it will be or has been executed in the form of that draft, and where a number of drafts of a document have been examined by us all changes thereto have been marked or otherwise drawn to our attention; |
| 2.3. | the accuracy and completeness of all factual representations made in the Registration Statement and other documents reviewed by us; |
| 2.4. | that the Resolutions were passed at one or more duly convened, constituted and quorate meetings or by unanimous written resolutions, remain in full force and effect and have not been rescinded or amended; |
| 2.5. | that the Company is issuing the Registration Statement and undertaking the matters referred to therein pursuant to its business of being a holding company; |
| 2.6. | that there is no provision of the law of any jurisdiction, other than Bermuda, which would have any implication in relation to the opinions expressed herein; and |
| 2.7. | the validity and binding effect under the laws of the United States of America of the Registration Statement and the Investor Warrants and that the Registration Statement will be duly filed with the Commission. |
| 3. | QUALIFICATIONS |
| 3.1. | We have made no investigation of and express no opinion in relation to the laws of any jurisdiction other than Bermuda. This opinion is to be governed by and construed in accordance with the laws of Bermuda and is limited to and is given on the basis of the current law and practice in Bermuda. This opinion is issued solely for your benefit and use in connection with the matter described herein and is not to be relied upon by any other person, firm or entity or in respect of any other matter. |
conyers.com | 2
| 4. | OPINION |
On the basis of and subject to the foregoing, we are of the opinion that:
| 4.1. | The Company is duly incorporated and existing under the laws of Bermuda in good standing (meaning solely that it has not failed to make any filing with any Bermuda governmental authority under the Companies Act 1981, or to pay any Bermuda government fee or tax, which would make it liable to be struck off the Register of Companies and thereby cease to exist under the laws of Bermuda). |
| 4.2. | Based on our review of the register of members of the Company as at 25 April 2024, the Resale Shares registered in the name of the Selling Shareholders are validly issued, fully paid and non-assessable (which term when used herein means that no further sums are required to be paid by the holders thereof in connection with the issue thereof). |
| 4.3. | When issued and paid for in accordance with the terms of the Investor Warrants, the Investor Warrant Shares will be validly issued, fully paid and non-assessable (which term when used herein means that no further sums are required to be paid by the holders thereof in connection with the issue thereof). |
| 5. | CONSENT |
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to our firm under the captions “Legal Matters” and “Item 8. Exhibits” in the Registration Statement. In giving this consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations of the Commission promulgated thereunder.
Yours faithfully,
/s/ Conyers, Dill & Pearman
Conyers Dill & Pearman
conyers.com | 3
Exhibit 10.3
INDEPENDENT DIRECTOR AGREEMENT
INDEPENDENT DIRECTOR AGREEMENT (this “Agreement”), dated April 23, 2024, by and between The RoyaLand Company Ltd., an exempted company incorporated in Bermuda with limited liability (the “Company”), and the undersigned (the “Director”).
RECITALS
A. The Company is filing a registration statement on Form F-1 relating to a resale offering of its securities (the “Resale”).
B. The Director currently serves on the Company’s board of directors (the “Board”).
C. The Company desires to enter into this Agreement with the Director to define the terms of the Director’s service on the Board, which may include membership on one or more committees of the Board, and the Director desires to accept such terms to continue to serve on the Board.
AGREEMENT
NOW THEREFORE, in consideration of the mutual promises contained herein, the adequacy and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Company and the Director hereby agree as follows:
1. Duties. From and after the effective date of the registration statement for the Resale (the “Effective Date”), the Company requires that the Director be available to perform the duties of an independent director customarily related to this function as may be determined and assigned by the Board and as may be required by the Company’s constituent instruments, including its bye-laws, as amended, and its corporate governance and board committee charters, each as amended or modified from time to time, and by applicable law, including the Bermuda Companies Act. The Director agrees to devote as much time as is necessary to perform completely the duties as a Director of the Company, including duties as a member of one or more committees of the Board, to which the Director may hereafter be appointed. The Director will perform such duties described herein in accordance with the general fiduciary duty of directors.
2. Term. The term of this Agreement shall commence as of the Effective Date and shall continue until the Director’s removal or resignation. In addition to a termination of this Agreement pursuant to Section 8, the Company shall have the right to terminate this Agreement upon written notice to the Director at any time without liability prior to the Effective Date.
3. Compensation.
(a) Following the Effective Date and the commencement of the term of this Agreement, for all services to be rendered by the Director in any capacity hereunder, the Company agrees to compensate the Director a fee of $1,000 per year in cash (the “Annual Fee”), which Annual Fee shall be paid to the Director in four equal installments no later than the fifth business day of each calendar quarter commencing in the first quarter following the Effective Date. The Director shall be responsible for his or her own individual income tax payment on the Annual Fee in jurisdictions where the Director resides.
(b) Equity Compensation. Following the Effective Date and the commencement of the term of this Agreement, the Director shall be granted a share option, with an exercise price equal to $2.00, to purchase 50,000 Class B Common Shares (the “Option”). The Option will vest over a three (3) year period beginning at the Effective Date at a rate of 1/3 per year provided that the Director remains in Continuous Service over the vesting period. If this Agreement is terminated by the Company or the Director prior to the Effective Date, then the Option shall automatically terminate in accordance with its terms and the Director shall have no rights thereunder.
4. Independence. The Director acknowledges that his appointment hereunder is contingent upon the Board’s determination that he is “independent” with respect to the Company, in accordance with the listing requirements of The Nasdaq Stock Market LLC and NYSE American LLC stock exchanges, and that his appointment may be terminated by the Company in the event that the Director does not maintain such independence standard.
5. Expenses. The Company shall reimburse the Director for pre-approved reasonable business-related expenses incurred in good faith in connection with the performance of the Director’s duties for the Company. Such reimbursement shall be made by the Company upon submission by the Director of a signed statement itemizing the expenses incurred, which shall be accompanied by sufficient documentation to support the expenditures.
6. Other Agreements.
(a) Confidential Information and Insider Trading. The Company and the Director each acknowledge that, in order for the intentions and purposes of this Agreement to be accomplished, the Director shall necessarily be obtaining access to certain confidential information concerning the Company and its affairs, including, but not limited to, business methods, information systems, financial data and strategic plans which are unique assets of the Company (as further defined below, the “Confidential Information”) and that the communication of such Confidential Information to third parties could irreparably injure the Company and its business. Accordingly, the Director agrees that, during his association with the Company and thereafter, he will treat and safeguard as confidential and secret all Confidential Information received by him at any time and that, without the prior written consent of the Company, he will not disclose or reveal any of the Confidential Information to any third party whatsoever or use the same in any manner except in connection with the business of the Company and in any event in no way harmful to or competitive with the Company or its business, subject to Section 5(f) of this Agreement. For purposes of this Agreement, “Confidential Information” includes any information not generally known to the public or recognized as confidential according to standard industry practice, any trade secrets, know-how, development, manufacturing, marketing and distribution plans and information, inventions, formulas, methods or processes, whether or not patented or patentable, pricing policies and records of the Company (and such other information normally understood to be confidential or otherwise designated as such in writing by the Company), all of which the Director expressly acknowledges and agrees shall be confidential and proprietary information belonging to the Company. Upon termination of his association with the Company, the Director shall return to the Company all documents and papers relating to the Company, including any Confidential Information, together with any copies thereof, or certify that he or she has destroyed all such documents and papers. Furthermore, the Director recognizes that the Company has received and, in the future, will receive confidential or proprietary information from third parties subject to a duty on the Company’s part to maintain the confidentiality of such information and, in some cases, to use it only for certain limited purposes. The Director agrees that the Director owes the Company and such third parties, both during the term of the Director’s association with the Company and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to, except as is consistent with the Company’s agreement with the third party, disclose it to any person or entity or use it for the benefit of anyone other than the Company or such third party, unless expressly authorized to act otherwise by an officer of the Company. In addition, the Director acknowledges and agrees that the Director may have access to “material non-public information” for purposes of the federal securities laws (“Insider Information”) and that the Director will abide by all securities laws relating to the handling of and acting upon such Insider Information.
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(b) Disparaging Statements. At all times during and after the period in which the Director is a member of the Board and at all times thereafter, the Director shall not either verbally, in writing, electronically or otherwise: (i) make any derogatory or disparaging statements about the Company, any of its affiliates, any of their respective officers, directors, shareholders, employees and agents, or any of the Company’s current or past customers or employees, or (ii) make any public statement or perform or do any other act prejudicial or injurious to the reputation or goodwill of the Company or any of its affiliates or otherwise interfere with the business of the Company or any of its affiliates; provided, however, that nothing in this paragraph shall preclude the Director from complying with all obligations imposed by law or legal compulsion, and provided, further, however, that nothing in this paragraph shall be deemed applicable to any testimony given by the Director in any legal or administrative proceedings and further provided that the foregoing shall be subject to Section 5(f) of this Agreement.
(c) Work Product. Director agrees that any and all Work Product (as defined below) shall be the Company’s sole and exclusive property. Director hereby irrevocably assigns to the Company all right, title and interest worldwide in and to any deliverables resulting from the Director’s services as a director to the Company (“Deliverables”), and to any ideas, concepts, processes, discoveries, developments, formulae, information, materials, improvements, designs, artwork, content, software programs, other copyrightable works, and any other work product created, conceived or developed by you (whether alone or jointly with others) for the Company during or before the term of this Agreement, including all copyrights, patents, trademarks, trade secrets, and other intellectual property rights therein (the “Work Product”). Director retains no rights to use the Work Product and agrees not to challenge the validity of our ownership of the Work Product. Director agrees to execute, at Company’s request and expense, all documents and other instruments necessary or desirable to confirm such assignment. In the event that Director does not, for any reason, execute such documents within a reasonable time after the Company’s request, Director hereby irrevocably appoint the Company as Director’s attorney-in-fact for the purpose of executing such documents on your behalf, which appointment is coupled with an interest. Director will deliver to the Company any Deliverables and disclose promptly in writing to us all other Work Product.
(d) Enforcement. The Director acknowledges and agrees that the covenants contained herein are reasonable, that valid consideration has been and will be received and that the agreements set forth herein are the result of arms-length negotiations between the parties hereto. The Director recognizes that the provisions of this Section 6 are vitally important to the continuing welfare of the Company and its affiliates and that any violation of this Section 6 could result in irreparable harm to the Company and its affiliates for which money damages would constitute a totally inadequate remedy. Accordingly, in the event of any such violation by the Director, the Company and its affiliates, in addition to any other remedies they may have, shall have the right to institute and maintain a proceeding to compel specific performance thereof or to obtain an injunction or other equitable relief restraining any action by the Director in violation of this Section 6 without posting any bond therefore or demonstrating actual damages, and the Director will not claim as a defense thereto that the Company has an adequate remedy at law or require the posting of a bond. If any of the restrictions or activities contained in this Section 6 shall for any reason be held by an arbitrator to be excessively broad as to duration, geographical scope, activity or subject, such restrictions shall be construed so as thereafter to be limited or reduced to be enforceable to the extent compatible with the applicable law; it being understood that by the execution of this Agreement the parties hereto regard such restrictions as reasonable and compatible with their respective rights. The Director acknowledges that injunctive relief may be granted immediately upon the commencement of any such action without notice to the Director and in addition Company may recover monetary damages.
(e) Separate Agreement. The parties hereto further agree that the provisions of Section 6 are separate from and independent of the remainder of this Agreement and that Section 6 is specifically enforceable by the Company notwithstanding any claim made by the Director against the Company. The terms of this Section 6 shall survive termination of this Agreement.
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(f) Certain Communications with the Securities and Exchange Commission. Any communications directly with the U.S. Securities and Exchange Commission required or permitted pursuant to Rule 21F-17(a) under the Securities Exchange Act of 1934, as amended, or other applicable law, legal process or government regulation, shall be permitted under this Agreement, provided, however, that prior to any disclosure of Confidential Information otherwise prohibited under Section 5(a) of this Agreement or communication of statements otherwise prohibited under Section 5(b) of this Agreement under such rule, the Director shall, to the extent such rule so permits, use the Director’s best efforts to advise the Company in advance of making any such permitted or required disclosure or statement and cooperate with the Company in order to afford the Company a reasonable opportunity to take any legally-permissible actions to contest, limit, remove the basis for, or otherwise address such disclosure or statement.
7. Market Stand-Off Agreement. In the event of a public or private offering of the Company’s securities, including in connection with an initial public offering, and upon request of the Company, the underwriters or placement agents placing the offering of the Company’s securities, the Director agrees not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company that the Director may own, other than those included in the registration, without the prior written consent of the Company or such underwriters, as the case may be, for such period of time from the effective date of such registration as may be requested by the Company or such placement agent or underwriter.
8. Termination. With or without cause, the Company and the Director may each terminate this Agreement at any time upon ten (10) days written notice, and the Company shall be obligated to pay to the Director the compensation and expenses due up to the date of the termination. Nothing contained herein or omitted herefrom shall prevent the directors and/or shareholder(s) of the Company from removing the Director with immediate effect at any time for any reason in accordance with the applicable provisions of the Company’s memorandum of association and bye-laws. For the avoidance of doubt, if the Company terminates this Agreement prior to the Effective Date in accordance with Section 2 hereof, then the Company shall not have any liability whatsoever to the Director and the share option granted to the Director shall automatically terminate in accordance with its terms.
9. Indemnification. The Company shall indemnify, defend and hold harmless the Director, to the fullest extent permitted by the law of Bermuda, and as provided by, or granted pursuant to, any bye-law provision, agreement (including, without limitation, the Indemnification Agreement previously executed attached hereto as Exhibit A), vote of shareholders or disinterested directors or otherwise, both as to action in the Director’s official capacity and as to action in another capacity while holding such office.
10. Effect of Waiver. The waiver by either party of the breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof.
11. Notice. Any and all notices referred to herein shall be sufficient if furnished in writing at the addresses specified on the signature page hereto or, if to the Company, to the Company’s address as specified in filings made by the Company with the U.S. Securities and Exchange Commission.
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12. Governing Law; Arbitration. This Agreement shall be interpreted in accordance with, and the rights of the parties hereto shall be determined by, the laws of Bermuda without reference to conflicts of laws principles. In the event of any dispute, controversy or claim arising out of or in relation to this agreement or the breach, termination or invalidity thereof including in respect of its formation, the parties agree to have such dispute determined by arbitration. The number of arbitrators shall be 1 to be appointed, in the absence of the parties’ agreement, by the Appointments Committee of the Chartered Institute of Arbitrators Bermuda Branch. The Bermuda International Conciliation and Arbitration Act 1993 shall apply, and the procedure shall be as set out in the UNCITRAL Arbitration Rules presently in force. The place of arbitration shall be Bermuda and the language shall be English. The governing law of the arbitration agreement is the law of Bermuda and the substantive law of the contract is also that of Bermuda. Any Award of the arbitral tribunal shall be final and binding on the parties and the parties agree to cooperate in any enforcement of the Award. The arbitration shall be conducted in Hamilton, Bermuda. The arbitrator shall supply a written opinion supporting any award, and judgment may be entered on the award in any court of competent jurisdiction. Each party hereto shall pay its own fees and expenses for the arbitration, except that any costs and charges imposed by the Institute and any fees of the arbitrator for his services shall be assessed against the losing party by the arbitrator. In the event that preliminary or permanent injunctive relief is necessary or desirable in order to prevent a party from acting contrary to this Agreement or to prevent irreparable harm prior to a confirmation of an arbitration award, then any party hereto is authorized and entitled to commence a lawsuit solely to obtain equitable relief against the other such parties pending the completion of the arbitration in a court having jurisdiction over those parties.
13. Assignment. The rights and benefits of the Company under this Agreement shall be transferable, and all the covenants and agreements hereunder shall inure to the benefit of, and be enforceable by or against, its successors and assigns. The duties and obligations of the Director under this Agreement are personal and therefore the Director may not assign any right or duty under this Agreement without the prior written consent of the Company.
14. Miscellaneous. If any provision of this Agreement shall be declared invalid or illegal, for any reason whatsoever, then, notwithstanding such invalidity or illegality, the remaining terms and provisions of this Agreement shall remain in full force and effect in the same manner as if the invalid or illegal provision had not been contained herein. The article headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which taken together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. Except as provided elsewhere herein, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Independent Director Agreement to be duly executed and signed as of the day and year first above written.
| COMPANY: | ||
| The RoyaLand Company Ltd. | ||
| By: | ||
| Name: Emanuele Filiberto di Savoia | ||
| Title: Chief Executive Officer | ||
| Address: | Clarendon House, 2 Church Street | |
| Hamilton, Pembroke, HM11 | ||
| Bermuda | ||
| DIRECTOR: | ||
| (Signature) | ||
| Alberto Libanori | ||
| Name (Please Print) | ||
| Address: | 10969 Wellworth Avenue #303 | |
| Los Angeles, CA, 90024 | ||
| USA | ||
Signature Page to Independent Director Agreement
EXHIBIT A
Indemnification Agreement
(See Attached)
Exhibit 10.12
THE SECURITIES TO BE ISSUED PURSUANT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
SUBSCRIPTION AGREEMENT
(This “Agreement”)
The RoyaLand Company Ltd.
Clarendon House, 2 Church Street
Hamilton, Pembroke, HM11
Bermuda
Attn: Chief Executive Officer
Ladies and Gentlemen:
Subscription. The undersigned (sometimes referred to herein as the “Investor” or “I” or “me”) hereby subscribes for and agrees to purchase the Securities (as defined below) of The RoyaLand Company Ltd., an exempted company incorporated in Bermuda with limited liability (the “Company”), for the purchase price (the “Purchase Price”) set forth on the signature page hereto, on the terms and conditions described herein, in the investor package of which this Agreement forms a part (the “Investor Package”) and in the other exhibits to the Investor Package (collectively, the “Offering Documents”). Terms not defined herein are as defined elsewhere in the Offering Documents. The Company is seeking to raise a minimum of US$100,000 (the “Minimum Offering Amount”) and maximum of US$500,000 (the “Maximum Offering Amount”) in this Offering. The minimum amount of investment required from any one investor in the Offering (as defined below) to participate in this Offering is US$25,000, however, the Company reserves the right, in its sole discretion, to accept subscriptions in an amount less than this amount. Boustead Securities, LLC (“Boustead”) and the Company, in their sole discretion, may accept subscriptions in excess of the Maximum Offering Amount. All references to “US$” means United States dollars. The undersigned acknowledges that the Company has engaged Boustead as its exclusive placement agent in connection with this Offering.
1. Description of Securities; Risk Factors.
| a. | Description of Securities. The Company is offering (the “Offering”) to the Investor units of securities of the Company (the “Units”), with each Unit consisting of (i) one class B common share of the Company, US$0.0002 par value per share (the “Class B Common Shares”) and (ii) a three-year-term warrant (the “Warrant”) to purchase 2.5 Class B Common Shares (the “ Warrant Shares”) at a purchase price of US$1.00 per Unit. The Class B Common Shares, the Warrants and the Warrant Shares are sometimes referred to herein as the “Securities.” |
The Company is authorized to issue two classes of common shares, class A common shares, US$0.0002 par value per share (“Class A Common Shares”) and Class B Common Shares, and any number of classes of preference shares. Class A Common Shares are entitled to twenty votes per share on resolutions requiring or requesting shareholder approval, and Class B Common Shares are entitled to one vote on any such matter. For a more detailed description of the Securities see the Term Sheet attached as Exhibit C to the Subscription Package.
This Offering is being conducted in advance of the Company’s intended initial public offering (“IPO”) of its Class B Common Shares and listing of its Class B Common Shares for trading on the Nasdaq Capital Market or other national securities exchange.
Under the engagement letter between the Company’s subsidiary, RoyaLand Company, a Nevada corporation, and Boustead, dated May 1, 2022, as amended on November 24, 2022 (the “Engagement Letter”), Boustead has been engaged as our exclusive financial advisor for the 18-month term of the Engagement Letter other than with respect to any initial public offering. On November 29, 2022, the Company entered into an engagement letter with Revere Securities, LLC (“Revere”) in relation to the IPO and Revere has expressed its intent to enter into an Underwriting Agreement with the Company to act as the lead underwriter for the IPO on a “firm commitment” basis. There can be no assurance that the Company and Revere will be able to agree on the terms of such Underwriting Agreement or that our IPO will be successfully consummated.
| b. | Risks Related to the Investment in the Securities. Investing in the Securities involves a high degree of risk. Before investing, Investors should carefully consider the Business Summary of the Company (Exhibit E to the Investor Package), the Risk Factors related to the Company’s business (Exhibit F to the Investor Package), and the Company Investor Presentation (Exhibit G to the Investor Package), together with the other information contained in Offering Documents. |
2. Purchase.
| a. | I hereby agree to tender to Sutter Securities Inc. (the “Escrow Agent”), (i) by check or wire transfer of immediately available funds (to a bank account and related wire instructions provided in the Investor Package or otherwise provided to me upon my request) made payable to “Sutter Securities Inc., as Agent for the Investors in The RoyaLand Company Ltd.”, for such number of Units indicated on the signature page hereto, (ii) an executed copy of this Agreement, and (iii) an executed copy of my Investor Representation and Suitability Questionnaire, attached as Exhibit B to the Investor Package. Funds will be held in an escrow account maintained by the Escrow Agent (the “Escrow Account”), as set forth in more detail below pending the initial Closing of the Offering. |
| b. | The Offering is for a minimum offering amount of US$100,000 (the “Minimum Offering Amount”) and a maximum offering of US$500,000 (the “Maximum Offering Amount”). All subscriptions to purchase Securities will be held in the Escrow Account, which is a noninterest-bearing account maintained by the Escrow Agent. The subscriptions will remain in the Escrow Account until subscriptions for the Minimum Offering Amount are raised. Boustead and the Company, in their sole discretion, may accept subscriptions in excess of the Maximum Offering Amount. |
| c. | This Offering will continue until the earlier of (a) the sale of 500,000 Units for US$500,000 of gross proceeds being the Maximum Offering Amount, or (b) November 30, 2023, unless such date is extended by the Company and Boustead in their sole discretion (the “Termination Date”). Upon the earlier of a Closing (defined below) on my subscription or completion of the Offering, I will be notified promptly by the Company as to whether my subscription has been accepted by the Company. |
3. Acceptance or Rejection of Subscription.
| a. | I understand and agree that the Company reserves the right to reject this subscription for the Securities, in whole or in part, for any reason and at any time prior to the Closing (as defined below) of my subscription. |
| b. | In the event the Company rejects this subscription, my subscription payment will be promptly returned to me without interest or deduction and this Agreement shall be of no force or effect. In the event my subscription is accepted, and the Offering is completed, the subscription funds submitted by me shall be released to the Company. |
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4. Closing. The closing (“Closing”) of this Offering may occur at any time and from time to time on or before the Termination Date. The Company must achieve the US$500,000 Minimum Offering Amount prior to conducting an initial Closing (the “Initial Closing”). Upon receipt of the Minimum Amount, an Initial Closing will be held, and all funds will be released from the Escrow Account and paid to the Company, less professional fees and compensation paid to Boustead and syndicate members, if any. Thereafter, additional Closings will be held as funds are received up to the earlier to occur of receipt of the US$500,000 Maximum Offering Amount (or increased amount agreed to by the Company and Boustead) or the Termination Date. Boustead and the Company, in their sole discretion, may accept subscriptions in excess of the Maximum Offering Amount. Pending receipt of the Minimum Offering Amount, all subscription funds will be placed in escrow with the Escrow Agent. If, for any reason, the Minimum Offering Amount of subscriptions are not received by the Termination Date (as the same may be extended by Boustead and the Company), all escrowed funds will be returned to investors in the Offering, without interest or deduction. The Securities subscribed for herein shall not be deemed issued to or owned by me until one copy of this Agreement has been executed by me and countersigned by the Company and the Closing with respect to such Securities has occurred. Affiliates of the Company or Boustead, including officers, directors and existing shareholders of the Company and representatives of Boustead, may invest in this Offering and their funds will be counted toward the Company achieving the Minimum Amount. In addition, the Company may allow affiliates of the Company, Boustead or other investors in the Offering to pay the subscription price through the cancellation of indebtedness or other obligations owed to such investors by the Company and such investment amount would also be counted toward achieving the Minimum Amount. I acknowledge and agree that Boustead and the Company may unilaterally, without my consent, agree to extend the Termination Date by which the Minimum Offering Amount must be raised for an Initial Closing to occur and Boustead and the Company shall not be required to return the escrowed funds to me if there is any such extension.
5. Disclosure. Because this Offering is limited to accredited investors as defined in Section 2(a)(15) of the U.S. Securities Act of 1933, as amended (the “Securities Act”), and Rule 501 promulgated thereunder (subject to the Company’s election to include purchasers outside the United States in accordance with the rules of Regulation S promulgated under the Securities Act, and/or in accordance with such other rules and regulations as may be applicable under the circumstances), and in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, Rule 506(b) under Regulation D promulgated under the Securities Act and applicable state securities laws, the Securities are being sold without registration under the Securities Act. I acknowledge receipt of the Offering Documents and represent that I have carefully reviewed and understand the Offering Documents, including all exhibits attached hereto. I have received all the information and materials regarding the Company that I have requested. I fully understand that the Company has a limited financial and operating history and that the Securities are speculative investments which involve a high degree of risk, including the potential loss of my entire investment. I fully understand the nature of the risks involved in purchasing the Securities and I am qualified to make such investment based on my knowledge of and experience in investing in securities of this type. I have carefully considered the potential risks relating to the Company and purchase of its Securities and have, in particular, reviewed each of the risks set forth in the Offering Documents. Both my advisors and I have had the opportunity to ask questions of and receive answers from representatives of the Company or persons acting on its behalf concerning the Company and the terms and conditions of a proposed investment in the Company and my advisors and I have also had the opportunity to obtain additional information necessary to verify the accuracy of information furnished about the Company. Accordingly, I have independently evaluated the risks of purchasing the Securities.
6. Investor Representations and Warranties. I acknowledge, represent and warrant to, and agree with, the Company as follows:
| a. | I am aware that my investment involves a high degree of risk as disclosed herein and in the other Offering Documents and have carefully read this Agreement and the other Offering Documents, and I understand that by signing this Agreement I am agreeing to be bound by all of the terms and conditions of the Offering Documents. |
| b. | I acknowledge and am aware that there is no assurance as to the future performance of the Company. |
| c. | Although the Company has expressed an interest in pursuing the IPO; I acknowledge and am aware that: (i) as market conditions fluctuate, the Company’s plan may change such that the IPO is no longer a business objective of the Company; or (ii) the Company may be unable to complete the IPO on acceptable commercial terms, if at all; in either of which cases, the Company would be caused to remain privately held and unable to develop a public market for its shares. |
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| d. | I acknowledge that there may be certain adverse tax consequences to me in connection with my purchase of Securities, and the Company has advised me to seek the advice of experts in such areas prior to making this investment. |
| e. | I am purchasing the Securities for my own account for investment purposes only and not with a view to or for sale in connection with the distribution of the Securities, nor with any present intention of selling or otherwise disposing of all or any part of the foregoing securities. I agree that I must bear the entire economic risk of my investment for an indefinite period of time because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under applicable securities laws of certain states or an exemption from such registration is available. I hereby authorize the Company to place a restrictive legend on the Securities that are issued to me. |
| f. | I recognize that the Securities, as an investment, involve a high degree of risk including, but not limited to, the risk of economic losses from operations of the Company and the total loss of my investment. I believe that the investment in the Securities is suitable for me based upon my investment objectives and financial needs, and I have adequate means for providing for my current financial needs and contingencies and have no need for liquidity with respect to my investment in the Company. |
| g. | I have been given access to full and complete information regarding the Company and have utilized such access to my satisfaction for the purpose of obtaining information in addition to, or verifying information included in, the Offering Documents, and I have either met with or been given reasonable opportunity to meet with officers of the Company for the purpose of asking questions of, and receiving answers from, such officers concerning the terms and conditions of the Offering and the business and operations of the Company and to obtain any additional information, to the extent reasonably available. |
| h. | I have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities and have obtained, in my judgment, sufficient information from the Company to evaluate the merits and risks of an investment in the Company. I have not utilized any person as my purchaser representative as defined in Regulation D under the Securities Act in connection with evaluating such merits and risks. |
| i. | I have relied solely upon my own investigation in deciding to invest in the Company. |
| j. | I have received no representation or warranty from the Company or any of its officers, directors, employees or agents in respect of my investment in the Company and I have received no information (written or otherwise) from them relating to the Company or its business other than as set forth in the Offering Documents. I am not participating in the offer as a result of or subsequent to (but not limited to): (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or on the Internet or broadcast over television, radio or the Internet or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. |
| k. | I have had full opportunity to ask questions and to receive satisfactory answers concerning the Offering and other matters pertaining to my investment and all such questions have been answered to my full satisfaction. |
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| l. | I have been provided an opportunity to obtain any additional information concerning the Offering and the Company and all other information to the extent the Company possesses such information or can acquire it without unreasonable effort or expense. |
| m. | I am an “accredited investor” as defined in Section 2(a)(15) of the Securities Act and in Rule 501 promulgated thereunder and have attached the completed Accredited Investor Questionnaire to indicate my “accredited investor” status. I can bear the entire economic risk of the investment in the Securities for an indefinite period of time and I am knowledgeable about and experienced in making investments in the equity securities of non-publicly traded companies, including early stage companies. I am not acting as an underwriter or a conduit for sale to the public or to others of unregistered securities, directly or indirectly, on behalf of the Company or any person with respect to such securities. |
| n. | I understand that (1) the Securities have not been registered under the Securities Act, or the securities laws of certain states, in reliance on specific exemptions from registration, (2) no securities administrator of any state or the federal government has recommended or endorsed this Offering or made any finding or determination relating to the fairness of an investment in the Company, and (3) the Company is relying on my representations and agreements for the purpose of determining whether this transaction meets the requirements of certain exemptions from registration afforded by the Securities Act and certain state securities laws. |
| o. | I understand that since neither the offer nor sale of the Securities has been registered under the Securities Act or the securities laws of any state, the Securities may not be sold, assigned, pledged or otherwise disposed of unless they are so registered or an exemption from such registration is available. |
| p. | I have had the opportunity to seek independent advice from my professional advisors relating to the suitability of an investment in the Company in view of my overall financial needs and with respect to the legal and tax implications of such investment. |
| q. | If the Investor is a corporation, company, trust, employee benefit plan, individual retirement account, Keogh Plan, or other tax-exempt entity, it is authorized and qualified to become an Investor in the Company and the person signing this Agreement on behalf of such entity has been duly authorized by such entity to do so. |
| r. | The information contained in my Investor Questionnaire, as well as any information which I have furnished to the Company with respect to my financial position and business experience, is correct and complete as of the date of this Agreement and, if there should be any material change in such information prior to the Closing of the Offering, I will furnish such revised or corrected information to the Company. I hereby acknowledge and am aware that except for any rescission rights that may be provided under applicable laws, I am not entitled to cancel, terminate or revoke this subscription and any agreements made in connection herewith shall survive my death or disability. |
7. Placement Agent. The Company has engaged Boustead, a broker-dealer licensed with FINRA, as placement agent for the Offering on a reasonable best-efforts basis. The Company anticipates that Boustead and its sub-agents or syndicate members will be paid at each Closing from the proceeds in the Escrow Account, fees including and not to exceed: a cash commission of seven percent (7%) of the gross Purchase Price paid by Investors in the Offering, a non-accountable expense allowance equal to one percent (1%) of the gross proceeds raised in the Offering, and warrants (“Placement Agent Warrants”) to acquire a number of Class B Common Shares sold in the Offering in an amount equal to seven percent (7%) of the gross amount actually received by the Company divided by US$1.00 (the price per Unit paid by investors in the Offering), at an exercise price of US$1.00, subject to cashless exercise and certain registration rights. Any sub-agent or syndicate member of Boustead that introduces investors to the Offering will be entitled to share in the cash fees and Placement Agent Warrants attributable to those investors as described above, pursuant to the terms of an executed sub-agent or selected dealer agreement. The Company will also pay certain expenses of Boustead.
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8. Representations and Warranties of the Company. When used in this Section 8, unless the context indicates otherwise, all references to the “Company” also mean and include the direct and indirect subsidiaries of the Company. The Company hereby represents and warrants to the Investor, as of the date hereof and on each Closing Date, the following:
| a. | Incorporation, Organization and Qualification. The Company and each of its subsidiaries, if any, is a company or other business entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its formation (to the extent such concept exists in such jurisdiction) and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company and each of its subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a material adverse effect on the assets, business, financial condition, results of operations or future prospects of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”). |
| b. | Authorization, Enforcement, Compliance with Other Instruments. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, and each of the Offering Documents and to issue the Securities, Placement Agent Warrants and the Class B Common Shares underlying the same in accordance with the terms hereof and thereof, (ii) the execution and delivery by the Company of each of the Offering Documents and Placement Agent Warrants and the consummation by it of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Securities, Placement Agent Warrants and the Class B Common Shares underlying the same have been, or will be at the time of execution of such Offering Document, duly authorized by the Company’s Board of Directors, and no further consent or authorization is, or will be at the time of execution of such Offering Document and Placement Agent Warrants, required by the Company, its respective Board of Directors or its shareholders, (iii) each of the Offering Documents and Placement Agent Warrants will be duly executed and delivered by the Company, (iv) the Offering Documents and Placement Agent Warrants when executed and delivered by the Company and each other party thereto will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their 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. |
| c. | Capitalization. Immediately prior to the Initial Closing, the authorized share capital of the Company consists of 450,000,000 common shares, consisting of 20,000,000 Class A Common Shares and 430,000,000 Class B Common Shares, and 50,000,000 preference shares of par value US$0.0002 each. Immediately prior to the Initial Closing, the Company will have (i) 9,400,000 Class A Common Shares issued and outstanding, (ii) 3,675,000 Class B Common Shares issued and outstanding, and (iii) no preference shares issued and outstanding. Class A Common Shares are entitled to twenty votes per share on proposals requiring or requesting shareholder approval, and Class B Common Shares are entitled to one vote on any such matter. Class A Common Shares may be voluntarily converted into Class B Common Shares on a one-to-one basis. A transfer of Class A Common Shares will result in their automatic conversion into Class B Common Shares upon such transfer, except that the transfer of Class A Common Shares to another holder of Class A Common Shares will not result in such automatic conversion. Class B Common Shares are not convertible. Other than as to voting and conversion rights, Class A Common Shares and Class B Common Shares have the same rights and preferences and rank equally. The Company has adopted The RoyaLand Company Ltd. 2023 Equity Incentive Plan and reserved 2,000,000 Class B Common Shares for issuance thereunder. The Company has not otherwise reserved any shares for issuance to officers, directors, employees and consultants of the Company pursuant to any equity incentive plan and, except as aforesaid, no securities are outstanding that are exercisable or exchangeable for, or convertible into, any common shares of the Company. Except as aforesaid, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any person any right to subscribe for or acquire, any common shares, or contracts, commitments, understandings or arrangements by which the Company or any subsidiary is or may become bound to issue additional common shares, or securities or rights convertible or exchangeable into common shares. All of the outstanding common shares of the Company and of any of its subsidiaries have been or will be, as of the Initial Closing, duly authorized, validly issued and are fully paid and non-assessable. At the Initial Closing, (i) no shares of the Company or any of its subsidiaries will be subject to pre-emptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there will be no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the Securities Act, and (iii) there are no securities or instruments of the Company or any of its subsidiaries containing anti-dilution or similar provisions, including the right to adjust the exercise, exchange or reset price under such securities, that will be triggered by the issuance of the Securities as described in this Agreement. Upon request, the Company will make available to the Investor true and correct copies of the Company’s Certificate of Incorporation, as in effect on the date hereof (the “Certificate of Incorporation”), the Company’s Memorandum of Association, and as in effect on the date hereof (the “Memorandum of Association”), and the Company’s Bye-laws, as in effect on the date hereof (the “Bye-laws”), and the terms of all securities exercisable for common shares and the material rights of the holders thereof in respect thereto outstanding as of the date hereof. |
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| d. | Subsidiaries. The Company currently has two subsidiaries: (1) OAPLT, a French joint stock company, initially formed on November 24, 2017, and wholly owned by the Company, and (2) RoyaLand Company, a Nevada corporation, initially formed on January 28, 2022, and wholly owned by the Company. Except for the above-described subsidiaries, the Company does not currently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity. The Company is not a participant in any joint venture, partnership or similar arrangement. |
| e. | Issuance of Securities. The Securities are duly authorized and the Class B Common Shares issuable upon exercise of the Warrants and in accordance with the terms hereof and the Warrants, shall be duly authorized, validly issued, fully paid and nonassessable, and will be free and clear of all taxes, liens and charges with respect to the issue thereof. |
| f. | No Conflicts. The execution, delivery and performance of each of the Offering Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Certificate of Incorporation, Memorandum of Association or the Bye-laws of the Company or equivalent constitutive document of any of its subsidiaries or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any subsidiary is a party, except for those which would not reasonably be expected to have a Material Adverse Effect, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including U.S. federal and state securities laws and regulations) applicable to the Company or any subsidiary or by which any property or asset of the Company or any subsidiary is bound or affected except for those which could not reasonably be expected to have a Material Adverse Effect. Except those which could not reasonably be expected to have a Material Adverse Effect, neither the Company nor any subsidiary is in violation of any term of or in default under its constitutive documents. Except those which could not reasonably be expected to have a Material Adverse Effect, neither the Company nor any subsidiary is in violation of any term of or in default under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or any subsidiary. The business of the Company and its subsidiaries is not being conducted and shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity, except for any violation which could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable state securities laws, neither the Company nor any of its subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the other Offering Documents in accordance with the terms hereof or thereof. Neither the execution and delivery by the Company of the Offering Documents, nor the consummation by the Company of the transactions contemplated hereby or thereby, will require any notice, consent or waiver under any contract or instrument to which the Company or any subsidiary is a party or by which the Company or any subsidiary is bound or to which any of their assets is subject, except for any notice, consent or waiver the absence of which would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect and would not adversely affect the consummation of the transactions contemplated hereby or thereby. All consents, authorizations, orders, filings and registrations which the Company or any of its subsidiaries is required to obtain pursuant to the preceding two sentences have been or will be obtained or effected on or prior to the Closing. |
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| g. | Absence of Litigation. There is no action, suit, claim, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation before or by any court, public board, governmental or administrative agency, self-regulatory organization, arbitrator, regulatory authority, stock market, stock exchange or trading facility (an “Action”) now pending or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, wherein an unfavorable decision, ruling or finding would (i) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under this Agreement or any of the other Offering Documents, or (ii) reasonably be expected to have a Material Adverse Effect. |
| h. | Acknowledgment Regarding Investors’ Purchases of the Securities. The Company acknowledges and agrees that the Investor and each other investor in the Offering is acting solely in the capacity of an arm’s length purchaser with respect to the Offering Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that each such investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Offering Documents and the transactions contemplated hereby and thereby and any advice given by such investor or any of their respective representatives or agents in connection with the Offering Documents and the transactions contemplated hereby and thereby is merely incidental to such investor’s purchase of the Securities. |
| i. | No General Solicitation. Neither the Company, nor any of its “affiliates” (as defined in Rule 144 under the Securities Act), nor, to the knowledge of the Company, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. |
| j. | No Integrated Offering. Neither the Company, nor any of its affiliates, nor to the knowledge of the Company, any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the Securities under the Securities Act or cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act. |
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| k. | Employee Relations. Neither the Company nor any subsidiary is involved in any labor dispute nor, to the knowledge of the Company, is any such dispute threatened. Neither the Company nor any subsidiary is party to any collective bargaining agreement. The Company’s and/or its subsidiaries’ employees are not members of any union, and the Company believes that its and its subsidiaries’ relationship with their respective employees is good. |
| l. | Permits. The Company and its subsidiaries have all authorizations, approvals, clearances, licenses, permits, certificates or exemptions issued by any regulatory authority or governmental agency (collectively, “Permits”) required to conduct their respective businesses as currently conducted except to the extent that the failure to have such Permits would not have, either singularly or in the aggregate, a Material Adverse Effect. The Company or its subsidiaries have fulfilled and performed in all material respects their obligations under each Permit, and, as of the date hereof, to the knowledge of the Company, no event has occurred or condition or state of facts exists which would constitute a breach or default or would cause revocation or termination of any such Permit except to the extent that such breach, default, revocation or termination would not, either singularly or in the aggregate, have a Material Adverse Effect. |
| m. | Title. Each of the Company and its subsidiaries has good and marketable title to all of its real and personal property and assets, free and clear of any material restriction, mortgage, deed of trust, pledge, lien, security interest or other charge, claim or encumbrance which would have a Material Adverse Effect. With respect to properties and assets it leases, each of the Company and its subsidiaries is in material compliance with such leases and holds a valid leasehold interest free of any liens, claims or encumbrances which would have a Material Adverse Effect. |
| n. | Rights of First Refusal. The Company is not obligated to offer the Securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents or other third parties. |
| o. | Brokers’ Fees. The Company does not have any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement, except for the payment of fees to Boustead as described above. |
| p. | Investment Company. Each of the Company and its subsidiaries is not required to be registered as, and is not an affiliate of, and immediately following the Closing will not be required to register as, an “investment company” within the meaning of the U.S. Investment Company Act of 1940, as amended. |
| q. | Patents and Trademarks. The Company and its subsidiaries, if any, have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the Investor Package and which the failure to so have could reasonably be expected to have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any subsidiary violates or infringes upon the rights of any person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another person of any of the Intellectual Property Rights. |
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| r. | Transactions With Affiliates and Employees. Except as set forth in the Investor Package, none of the executive officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any executive officer, director or such employee or, to the knowledge of the Company, any entity in which any executive officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of US$120,000. |
| s. | Investor Package; Disclosure. The Company has made the Investor Package available to each investor in the Offering. As of the date set forth on the Investor Package, the Investor Package did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has made available to you all the information reasonably available to the Company that you have requested for deciding whether to acquire the Securities. No representation or warranty of the Company contained in this Agreement and no certificate furnished or to be furnished to you at the Closing contains any untrue statement of a material fact or, to the Company’s knowledge, omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. |
| t. | Reliance. The Company acknowledges that the Investor is relying on the representations and warranties made by the Company hereunder and that such representations and warranties are a material inducement to the Investor purchasing the Securities. The Company further acknowledges that without such representations and warranties of the Company made hereunder, the Investors would not enter into this Agreement. |
9. Other Covenants and Agreements of the Parties.
| a. | Indemnification. |
I hereby agree to indemnify and hold harmless the Company and its officers, directors, shareholders, employees, agents, advisors and counsel, and Boustead and its officers, directors, shareholders, employees, agents, advisors and counsel, against any and all losses, claims, demands, liabilities and expenses (including reasonable legal or other expenses, including reasonable attorneys’ fees) incurred by each such person in connection with defending or investigating any such claims or liabilities, whether or not resulting in any liability to such person, to which any such indemnified party may become subject under the Securities Act, under any other statute, at common law or otherwise, insofar as such losses, claims, demands, liabilities and expenses (a) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact made by me and contained in this Agreement or my Investor Questionnaire, or (b) arise out of or are based upon any breach by me of any representation, warranty, or agreement made by me contained herein or therein.
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| b. | Lock-Up. |
In connection with this Offering, the Investor agrees to the following lock-up agreement with respect to the Securities:
1. From and after the date hereof and until the 180th day after the date the Class B Common Shares are first listed for trading on a national securities exchange (such first trading day, the “Lock-Up Trigger Date”), the Investor agrees not to sell, transfer or otherwise dispose of the Class B Common Shares.
2. Between the 181st and 270th day after the Lock-Up Trigger Date, the Investor agrees not to sell, transfer or otherwise dispose of more than one-third of the Class B Common Shares purchased hereunder, subject to a maximum sale on any trading day of 3% of the daily volume.
3. Between the 271st and 365th day after the Lock-Up Trigger Date, the Investor agrees not to sell, transfer or otherwise dispose of more than one-third of the Class B Common Shares purchased hereunder, subject to a maximum sale on any trading day of 3% of the daily volume.
4. After the 365th day after the Lock-Up Trigger Date, the Investor will be entitled to sell the remaining Class B Common Shares purchased hereunder without contractual restriction, but subject to any restrictions arising under applicable law, including the Securities Act.
5. Notwithstanding the above, commencing 90 days after the Lock-Up Trigger Date, if the price per share of the Company’s Class B Common Shares is at least 50% higher than the IPO Price (as defined below) per share and trades at least 100,000 shares daily, both for ten (10) consecutive trading days, the Investor may sell one-third of its shares subject to a maximum sale on any trading day of 3% of the daily volume; and if the Company’s Class B Common Shares price is at least 100% higher than the IPO Price per share and trades at least 100,000 shares daily, both for ten (10) consecutive trading days, the Investor may sell up to an additional one-third of its Class B Common Shares subject to a maximum sale on any trading day of 3% of the daily volume; and if the Company’s Class B Common Shares price is at least 150% higher than the IPO Price per share and trades at least 100,000 shares daily, both for ten (10) consecutive trading days, the Investor may sell an additional one-third constituting a maximum total of all of its shares subject to a maximum sale on any trading day of 3% of the daily volume. For purposes of this term, the “IPO Price” shall mean the price the Company’s Class B Common Shares is first sold to the public pursuant to an underwritten registered offering resulting in a listing of its Class B Common Shares on the Nasdaq Stock Market or another national stock exchange.
10. Severability. In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same force and effect as though the void parts were deleted.
11. Choice of Law and Jurisdiction. This Agreement shall be governed by the laws of the State of New York regardless of any choice of law principles. Any action arising out of this Agreement shall be brought exclusively in a court of competent jurisdiction in New York County, New York and the parties hereby irrevocably waive any objections they may have to the venue in New York County, New York.
12. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY. THE PARTIES HERETO HEREBY AGREE THAT THE PROVISIONS CONTAINED HEREIN HAVE BEEN FAIRLY NEGOTIATED ON AN ARM’S-LENGTH BASIS, WITH BOTH SIDES AGREEING TO THE SAME KNOWINGLY AND BEING AFFORDED THE OPPORTUNITY TO HAVE THEIR RESPECTIVE LEGAL COUNSEL CONSENT TO THE MATTERS CONTAINED HEREIN. ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY AND THE AGREEMENTS CONTAINED HEREIN REGARDING THE APPLICATION OF JUDICIAL REFERENCE IN THE EVENT OF THE INVALIDITY OF SUCH JURY TRIAL WAIVER.
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13. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.
14. Third Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of the parties hereto. Boustead is an intended third-party beneficiary of this Agreement, including the representations and warranties made by both the Company and the Investor herein and the indemnification provided by the Investor herein and may directly enforce this Agreement and its rights hereunder.
15. Notices and Addresses. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addresses in person, by Federal Express or similar courier delivery or by electronic facsimile delivered to the party’s email address, as follows:
| Investor: | At the address designated on the signature page of this Agreement. |
| The Company: | Chief Executive Officer The RoyaLand Company Ltd. Clarendon House, 2 Church Street Hamilton, Pembroke, HM11 Bermuda |
or to such other address as any of them, by notice to the others may designate from time to time. The transmission confirmation receipt from the sender’s facsimile machine shall be conclusive evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing.
16. Entire Agreement. This Agreement, together with the Offering Documents, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. This Agreement may not be changed, waived, discharged, or terminated orally but, rather, only by a statement in writing signed by the party or parties against which enforcement or the change, waiver, discharge, or termination is sought.
17. Section Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement.
18. Survival of Representations, Warranties and Agreements. The representations, warranties and agreements contained herein shall survive the delivery of, and the payment for, the Securities.
19. Acceptance of Subscription. The Company may reject this Agreement at any time or accept this Agreement at any time for all or any portion of the Securities subscribed for by executing a copy hereof as provided and notifying me within a reasonable time thereafter.
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RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
SALES IN FLORIDA: THE SECURITIES OFFERED HEREBY WILL BE SOLD, AND ACQUIRED, IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. PURSUANT TO SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, WHEN SALES ARE MADE TO FIVE (5) OR MORE PERSONS IN THE STATE OF FLORIDA, ANY SALE IN THE STATE OF FLORIDA MADE PURSUANT TO SECTION 517.061(11) OF SUCH ACT IS VOIDABLE BY THE INVESTOR IN SUCH SALE (WITHOUT INCURRING ANY LIABILITY TO THE COMPANY OR TO ANY OTHER PERSON OR ENTITY) EITHER WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH INVESTOR TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH INVESTOR, WHICHEVER OCCURS LATER. TO VOID HIS OR HER PURCHASE, THE INVESTOR NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS INDICATED HEREIN. ANY SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED THREE (3) DAY PERIOD. IT IS PRUDENT TO SEND ANY SUCH LETTER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ASSURE THAT IT IS RECEIVED AND ALSO TO HAVE EVIDENCE OF THE TIME THAT IT WAS MAILED. SHOULD AN INVESTOR MAKE THIS REQUEST ORALLY, THAT INVESTOR MUST ASK FOR WRITTEN CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED. IF NOTICE IS NOT RECEIVED WITHIN THE TIME LIMIT SPECIFIED HEREIN, THE FOREGOING RIGHT TO VOID THE PURCHASE SHALL BE NULL AND VOID.
(Remainder of Page left intentionally blank.)
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THE AGGREGATE AMOUNT SUBSCRIBED FOR HEREBY IS:
US$__________ principal amount of Units
Manner in Which Title is to be Held. (check one)
| — Individual Ownership | — Community Property |
| — Joint Tenant with Right of Survivorship (both parties must sign) | |
| — Partnership | — Tenants in common |
| — Corporation or Trust | — IRA or Keogh |
| — Other (please indicate) | |
| INDIVIDUAL INVESTORS | ENTITY INVESTORS | ||
| By: | |||
| Signature (Individual) | *Signature | ||
| Its: | |||
| Signature (Joint) | (Title of Authorized Signatory) | ||
| (all record holders must sign) | |||
| Name(s) Typed or Printed | Entity Name Typed or Printed | ||
| Address to Which Correspondence Should be Directed | Address to Which Correspondence Should be Directed | ||
| City, State and Zip Code | City, State and Zip Code | ||
| Email Address for Notification | Email Address for Notification | ||
| Tax Identification or Social Security Number | Tax Identification or Social Security Number | ||
| * | If Securities are being subscribed for by any entity, the Certificate of Signatory must also be completed. |
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The foregoing subscription is accepted and the Company hereby agrees to be bound by its terms on _____ day of _________________, 2023.
| The RoyaLand Company Ltd. | |||
| By: | |||
| Name: | Emanuele Filiberto di Savoia | ||
| Its: | Chief Executive Officer | ||
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CERTIFICATE OF SIGNATORY
(To be completed if Securities are being subscribed for by an entity)
| I, _____________________________, the _____________________________________ | |
| (name of signatory) | (title) |
| of ______________________________________________(“Entity”), a _____________________________ | |
| (name of entity) | (type of entity) |
Organized under the laws of _______________, hereby certify that I am empowered and duly authorized by the Entity to execute the Subscription Agreement and to purchase the Securities, and certify further that the Subscription Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this ______ day of ___________, 2023.
| (Signature) |
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Exhibit 10.13
THE SECURITIES TO BE ISSUED PURSUANT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED THEREUNDER OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
SUBSCRIPTION AGREEMENT
(This “Agreement”)
The RoyaLand Company Ltd.
Clarendon House, 2 Church Street
Hamilton, Pembroke, HM11
Bermuda
Attn: Chief Executive Officer
Ladies and Gentlemen:
Subscription. The undersigned (sometimes referred to herein as the “Investor” or “I” or “me”) hereby subscribes for and agrees to purchase the Securities (as defined below) of The RoyaLand Company Ltd., an exempted company incorporated in Bermuda with limited liability (the “Company”), for the purchase price (the “Purchase Price”) set forth on the signature page hereto, on the terms and conditions described herein, in the investor package of which this Agreement forms a part (the “Investor Package”) and in the other exhibits to the Investor Package (collectively, the “Offering Documents”). Terms not defined herein are as defined elsewhere in the Offering Documents. The Company is seeking to raise up to US$500,000 (the “Maximum Offering Amount”) in this Offering. The minimum amount of investment required from any one investor in the Offering (as defined below) to participate in this Offering is US$20,000, however, the Company reserves the right, in its sole discretion, to accept subscriptions in an amount less than this amount. All references to “US$” means United States dollars. The undersigned acknowledges that the Company has engaged Boustead as its exclusive placement agent in connection with this Offering.
| 1. | Description of Securities; Risk Factors. |
| a. | Description of Securities. The Company is offering (the “Offering”) to the Investor class B common shares of the Company, US$0.0002 par value per share (“Class B Common Shares” or “Securities”) at a purchase price of US$1.00 per share. |
The Company is authorized to issue two classes of common shares, class A common shares, US$0.0002 par value per share (“Class A Common Shares”) and Class B Common Shares, and any number of classes of preference shares. Class A Common Shares are entitled to twenty votes per share on resolutions requiring or requesting shareholder approval, and Class B Common Shares are entitled to one vote on any such matter. For a more detailed description of the Shares see the Term Sheet attached as Exhibit C to the Investor Package.
Under the engagement letter between the Company’s subsidiary, RoyaLand Company, a Nevada corporation, and Boustead, dated May 1, 2022, as amended on November 24, 2022 (the “Engagement Letter”), Boustead has been engaged as our exclusive financial advisor for the 18-month term of the Engagement Letter other than with respect to any initial public offering.
| b. | Risks Related to the Investment in the Shares. Investing in the Shares involves a high degree of risk. Before investing, Investors should carefully consider the Business Summary of the Company (Exhibit D to the Investor Package), the Risk Factors related to the Company’s business (Exhibit E to the Investor Package), and the Company Investor Presentation (Exhibit F to the Investor Package), together with the other information contained in Offering Documents. |
| 2. | Purchase. |
| a. | I hereby agree to tender to Sutter Securities Inc. (the “Escrow Agent”), (i) by check or wire transfer of immediately available funds (to a bank account and related wire instructions provided in the Investor Package or otherwise provided to me upon my request) made payable to “Sutter Securities Inc., as Agent for the Investors in The RoyaLand Company Ltd.”, for such number of Class B Common Shares indicated on the signature page hereto, (ii) an executed copy of this Agreement, and (iii) an executed copy of my Investor Representation and Suitability Questionnaire, attached as Exhibit B to the Investor Package. Funds will be held in an escrow account maintained by the Escrow Agent (the “Escrow Account”), as set forth in more detail below pending the initial Closing of the Offering. |
| b. | The Offering is for up to US$500,000 (the “Maximum Offering Amount”). All subscriptions to purchase Securities will be held in the Escrow Account, which is a noninterest-bearing account maintained by the Escrow Agent. |
| c. | This Offering will continue until the earlier of (a) the sale of 500,000 Class B Common Shares for US$500,000 of gross proceeds being the Maximum Offering Amount, or (b) October 31, 2024, unless such date is extended by the Company and Boustead in their sole discretion (the “Termination Date”). Upon the earlier of a Closing (defined below) on my subscription or completion of the Offering, I will be notified promptly by the Company as to whether my subscription has been accepted by the Company. |
| 3. | Acceptance or Rejection of Subscription. |
| a. | I understand and agree that the Company reserves the right to reject this subscription for the Shares, in whole or in part, for any reason and at any time prior to each Closing (as defined below) of my subscription. |
| b. | In the event the Company rejects this subscription, my subscription payment will be promptly returned to me without interest or deduction and this Agreement shall be of no force or effect. In the event my subscription is accepted, and the Offering is completed, the subscription funds submitted by me shall be released to the Company. |
4. Closing. The closing (“Closing”) of this Offering may occur at any time and from time to time on or before the Termination Date, unless such date is extended by the Company and Boustead in their sole discretion. All funds will be released from the Escrow Account and paid to the Company, less professional fees and compensation paid to Boustead and syndicate members, if any. Thereafter, additional Closings will be held as funds are received up to the earlier to occur of receipt of the US$500,000 Maximum Offering Amount or the Termination Date. All subscription funds will be placed in escrow with the Escrow Agent. The Shares subscribed for herein shall not be deemed issued to or owned by me until one copy of this Agreement has been executed by me and countersigned by the Company and the Closing with respect to such Securities has occurred. If, for any reason, at the Company’s sole discretion, an investor’s subscription is rejected, the escrowed funds will be returned to investors, without interest or deduction. Affiliates of the Company or Boustead, including officers, directors and existing shareholders of the Company and representatives of Boustead, may invest in this Offering In addition, the Company may allow affiliates of the Company, Boustead or other investors in the Offering to pay the subscription price through the cancellation of indebtedness or other obligations owed to such investors by the Company.
5. Disclosure. Because this Offering is limited to accredited investors as defined in Section 2(a)(15) of the Securities Act, and Rule 501 promulgated thereunder (subject to the Company’s election to include purchasers outside the United States in accordance with the rules of Regulation S promulgated under the Securities Act, and/or in accordance with such other rules and regulations as may be applicable under the circumstances), and in reliance upon the exemption contained in Section 4(a)(2) of the Securities Act, Rule 506(b) under Regulation D promulgated under the Securities Act and applicable state securities laws, the Shares are being sold without registration under the Securities Act. I acknowledge receipt of the Offering Documents and represent that I have carefully reviewed and understand the Offering Documents, including all exhibits attached hereto. I have received all the information and materials regarding the Company that I have requested. I fully understand that the Company has a limited financial and operating history and that the Shares are speculative investments which involve a high degree of risk, including the potential loss of my entire investment. I fully understand the nature of the risks involved in purchasing the Shares and I am qualified to make such investment based on my knowledge of and experience in investing in securities of this type. I have carefully considered the potential risks relating to the Company and purchase of its Securities and have, in particular, reviewed each of the risks set forth in the Offering Documents. Both my advisors and I have had the opportunity to ask questions of and receive answers from representatives of the Company or persons acting on its behalf concerning the Company and the terms and conditions of a proposed investment in the Company and my advisors and I have also had the opportunity to obtain additional information necessary to verify the accuracy of information furnished about the Company. Accordingly, I have independently evaluated the risks of purchasing the Shares.
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6. Investor Representations and Warranties. I acknowledge, represent and warrant to, and agree with, the Company as follows:
| a. | I am aware that my investment involves a high degree of risk as disclosed herein and in the other Offering Documents and have carefully read this Agreement and the other Offering Documents, and I understand that by signing this Agreement I am agreeing to be bound by all of the terms and conditions of the Offering Documents. |
| b. | I acknowledge and am aware that there is no assurance as to the future performance of the Company. |
| c. | I acknowledge that the Company may never pursue an initial public offering and may be unable to develop a market for the Shares. |
| d. | I acknowledge that there may be certain adverse tax consequences to me in connection with my purchase of Securities, and the Company has advised me to seek the advice of experts in such areas prior to making this investment. |
| e. | I am purchasing the Shares for my own account for investment purposes only and not with a view to or for sale in connection with the distribution of the Shares, nor with any present intention of selling or otherwise disposing of all or any part of the foregoing securities. I agree that I must bear the entire economic risk of my investment for an indefinite period of time because, among other reasons, the Shares have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under applicable securities laws of certain states or an exemption from such registration is available. I hereby authorize the Company to place a restrictive legend on the Shares that are issued to me. |
| f. | I recognize that the Shares, as an investment, involve a high degree of risk including, but not limited to, the risk of economic losses from operations of the Company and the total loss of my investment. I believe that the investment in the Shares is suitable for me based upon my investment objectives and financial needs, and I have adequate means for providing for my current financial needs and contingencies and have no need for liquidity with respect to my investment in the Company. |
| g. | I have been given access to full and complete information regarding the Company and have utilized such access to my satisfaction for the purpose of obtaining information in addition to, or verifying information included in, the Offering Documents, and I have either met with or been given reasonable opportunity to meet with officers of the Company for the purpose of asking questions of, and receiving answers from, such officers concerning the terms and conditions of the Offering and the business and operations of the Company and to obtain any additional information, to the extent reasonably available. |
| h. | I have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and have obtained, in my judgment, sufficient information from the Company to evaluate the merits and risks of an investment in the Company. I have not utilized any person as my purchaser representative as defined in Regulation D under the Securities Act in connection with evaluating such merits and risks. |
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| i. | I have relied solely upon my own investigation in deciding to invest in the Company. |
| j. | I have received no representation or warranty from the Company or any of its officers, directors, employees or agents in respect of my investment in the Company and I have received no information (written or otherwise) from them relating to the Company or its business other than as set forth in the Offering Documents. I am not participating in the offer as a result of or subsequent to (but not limited to): (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or on the Internet or broadcast over television, radio or the Internet or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. |
| k. | I have had full opportunity to ask questions and to receive satisfactory answers concerning the Offering and other matters pertaining to my investment and all such questions have been answered to my full satisfaction. |
| l. | I have been provided an opportunity to obtain any additional information concerning the Offering and the Company and all other information to the extent the Company possesses such information or can acquire it without unreasonable effort or expense. |
| m. | I am an “accredited investor” as defined in Section 2(a)(15) of the Securities Act and in Rule 501 promulgated thereunder and have attached the completed Accredited Investor Questionnaire to indicate my “accredited investor” status. I can bear the entire economic risk of the investment in the Shares for an indefinite period of time and I am knowledgeable about and experienced in making investments in the equity securities of non-publicly traded companies, including early stage companies. I am not acting as an underwriter or a conduit for sale to the public or to others of unregistered securities, directly or indirectly, on behalf of the Company or any person with respect to such securities. |
| n. | I understand that (1) the Shares have not been registered under the Securities Act, or the securities laws of certain states, in reliance on specific exemptions from registration, (2) no securities administrator of any state or the federal government has recommended or endorsed this Offering or made any finding or determination relating to the fairness of an investment in the Company, and (3) the Company is relying on my representations and agreements for the purpose of determining whether this transaction meets the requirements of certain exemptions from registration afforded by the Securities Act and certain state securities laws. |
| o. | I understand that since neither the offer nor sale of the Shares has been registered under the Securities Act or the securities laws of any state, the Shares may not be sold, assigned, pledged or otherwise disposed of unless they are so registered or an exemption from such registration is available. |
| p. | I have had the opportunity to seek independent advice from my professional advisors relating to the suitability of an investment in the Company in view of my overall financial needs and with respect to the legal and tax implications of such investment. |
| q. | If the Investor is a corporation, company, trust, employee benefit plan, individual retirement account, Keogh Plan, or other tax-exempt entity, it is authorized and qualified to become an Investor in the Company and the person signing this Agreement on behalf of such entity has been duly authorized by such entity to do so. |
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| r. | The information contained in my Investor Questionnaire, as well as any information which I have furnished to the Company with respect to my financial position and business experience, is correct and complete as of the date of this Agreement and, if there should be any material change in such information prior to the Closing of the Offering, I will furnish such revised or corrected information to the Company. I hereby acknowledge and am aware that except for any rescission rights that may be provided under applicable laws, I am not entitled to cancel, terminate or revoke this subscription and any agreements made in connection herewith shall survive my death or disability. |
7. Placement Agent. The Company has engaged Boustead, a broker-dealer licensed with the Financial Industry Regulatory Authority, Inc., as placement agent for the Offering on a reasonable best-efforts basis. The Company anticipates that Boustead and its sub-agents or syndicate members will be paid at each Closing from the proceeds in the Escrow Account, fees including and not to exceed: a cash commission of seven percent (7%) of the gross Purchase Price paid by Investors in the Offering, a non-accountable expense allowance equal to one percent (1%) of the gross proceeds raised in the Offering, and warrants (“Placement Agent Warrants”) to acquire Class B Common Shares in an amount equal to seven percent (7%) of the gross amount actually received by the Company divided by US$1.00 (the price per share of Class B Common Shares paid by investors in the Offering), at an exercise price of US$1.00, subject to cashless exercise and certain registration rights. Any sub-agent or syndicate member of Boustead that introduces investors to the Offering will be entitled to share in the cash fees and Placement Agent Warrants attributable to those investors as described above, pursuant to the terms of an executed sub-agent or selected dealer agreement. The Company will also pay certain expenses of Boustead.
8. Representations and Warranties of the Company. When used in this Section 8, unless the context indicates otherwise, all references to the “Company” also mean and include the direct and indirect subsidiaries of the Company. The Company hereby represents and warrants to the Investor, as of the date hereof and on each Closing Date, the following:
| a. | Incorporation, Organization and Qualification. The Company and each of its subsidiaries, if any, is a company or other business entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its formation (to the extent such concept exists in such jurisdiction) and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company and each of its subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a material adverse effect on the assets, business, financial condition, results of operations or future prospects of the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”). |
| b. | Authorization, Enforcement, Compliance with Other Instruments. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, and each of the Offering Documents and to issue the Shares, Placement Agent Warrants and the Class B Common Shares underlying the same in accordance with the terms hereof and thereof, (ii) the execution and delivery by the Company of each of the Offering Documents and Placement Agent Warrants and the consummation by it of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Shares, Placement Agent Warrants and the Class B Common Shares underlying the same have been, or will be at the time of execution of such Offering Documents, duly authorized by the Company’s Board of Directors, and no further consent or authorization is, or will be at the time of execution of such Offering Documents and Placement Agent Warrants, required by the Company, its respective Board of Directors or its shareholders, (iii) each of the Offering Documents and Placement Agent Warrants will be duly executed and delivered by the Company, (iv) the Offering Documents and Placement Agent Warrants when executed and delivered by the Company and each other party thereto will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their 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. |
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| c. | Capitalization. Immediately prior to the Initial Closing, the authorized share capital of the Company consists of 450,000,000 common shares, consisting of 20,000,000 Class A Common Shares and 430,000,000 Class B Common Shares, and 50,000,000 preference shares, US$0.0002 par value per share. Immediately prior to the Initial Closing, the Company will have (i) 9,400,000 Class A Common Shares issued and outstanding, (ii) 4,175,000 Class B Common Shares issued and outstanding, and (iii) no preference shares issued and outstanding. Class A Common Shares are entitled to twenty votes per share on proposals requiring or requesting shareholder approval, and Class B Common Shares are entitled to one vote on any such matter. Class A Common Shares may be voluntarily converted into Class B Common Shares on a one-to-one basis. A transfer of Class A Common Shares will result in their automatic conversion into Class B Common Shares upon such transfer, except that the transfer of Class A Common Shares to another holder of Class A Common Shares will not result in such automatic conversion. Class B Common Shares are not convertible. Other than as to voting and conversion rights, Class A Common Shares and Class B Common Shares have the same rights and preferences and rank equally. The Company has adopted The RoyaLand Company Ltd. 2023 Equity Incentive Plan and reserved 2,000,000 Class B Common Shares for issuance thereunder of which 1,825,000 remain available for issuance. Additionally, the Company has an aggregate of 1,342,750 Class B Common Shares issuable upon exercise of outstanding warrants issued to private placement investors and Boustead at an exercise price of US$1.00 per share. The Company has not otherwise reserved any shares for issuance to officers, directors, employees and consultants of the Company pursuant to any equity incentive plan and, except as aforesaid, no securities are outstanding that are exercisable or exchangeable for, or convertible into, any common shares of the Company. Except as aforesaid, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any person any right to subscribe for or acquire, any common shares, or contracts, commitments, understandings or arrangements by which the Company or any subsidiary is or may become bound to issue additional common shares, or securities or rights convertible or exchangeable into common shares. All of the outstanding common shares of the Company and of any of its subsidiaries have been or will be, as of the Initial Closing, duly authorized, validly issued and are fully paid and non-assessable. At the Initial Closing, (i) no shares of the Company or any of its subsidiaries will be subject to pre- emptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there will be no agreements or arrangements under which the Company or any of its subsidiaries is obligated to register the sale of any of their securities under the Securities Act, and (iii) there are no securities or instruments of the Company or any of its subsidiaries containing anti-dilution or similar provisions, including the right to adjust the exercise, exchange or reset price under such securities, that will be triggered by the issuance of the Shares as described in this Agreement. Upon request, the Company will make available to the Investor true and correct copies of the Company’s Certificate of Incorporation, as in effect on the date hereof (the “Certificate of Incorporation”), the Company’s Memorandum of Association, and as in effect on the date hereof (the “Memorandum of Association”), and the Company’s Bye-laws, as in effect on the date hereof (the “Bye-laws”), and the terms of all securities exercisable for common shares and the material rights of the holders thereof in respect thereto outstanding as of the date hereof. |
| d. | Subsidiaries. The Company currently has two subsidiaries: (1) OAPLT, a French joint stock company, initially formed on November 24, 2017, and wholly owned by the Company, and (2) RoyaLand Company, a Nevada corporation, initially formed on January 28, 2022, and wholly owned by the Company. Except for the above-described subsidiaries, the Company does not currently own or control, directly or indirectly, any interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity. The Company is not a participant in any joint venture, partnership or similar arrangement. |
| e. | Issuance of Securities. The Shares are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly authorized, validly issued, fully paid and nonassessable, and will be free and clear of all taxes, liens and charges with respect to the issue thereof. |
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| f. | No Conflicts. The execution, delivery and performance of each of the Offering Documents by the Company, and the consummation by the Company of the transactions contemplated hereby and thereby will not (i) result in a violation of the Certificate of Incorporation, Memorandum of Association or the Bye-laws or equivalent constitutive document of any of its subsidiaries or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any subsidiary is a party, except for those which would not reasonably be expected to have a Material Adverse Effect, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including U.S. federal and state securities laws and regulations) applicable to the Company or any subsidiary or by which any property or asset of the Company or any subsidiary is bound or affected except for those which could not reasonably be expected to have a Material Adverse Effect. Except those which could not reasonably be expected to have a Material Adverse Effect, neither the Company nor any subsidiary is in violation of any term of or in default under its constitutive documents. Except those which could not reasonably be expected to have a Material Adverse Effect, neither the Company nor any subsidiary is in violation of any term of or in default under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company or any subsidiary. The business of the Company and its subsidiaries is not being conducted and shall not be conducted in violation of any law, ordinance, or regulation of any governmental entity, except for any violation which could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable state securities laws, neither the Company nor any of its subsidiaries is required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the other Offering Documents in accordance with the terms hereof or thereof. Neither the execution and delivery by the Company of the Offering Documents, nor the consummation by the Company of the transactions contemplated hereby or thereby, will require any notice, consent or waiver under any contract or instrument to which the Company or any subsidiary is a party or by which the Company or any subsidiary is bound or to which any of their assets is subject, except for any notice, consent or waiver the absence of which would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect and would not adversely affect the consummation of the transactions contemplated hereby or thereby. All consents, authorizations, orders, filings and registrations which the Company or any of its subsidiaries is required to obtain pursuant to the preceding two sentences have been or will be obtained or effected on or prior to the Closing. |
| g. | Absence of Litigation. There is no action, suit, claim, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation before or by any court, public board, governmental or administrative agency, self-regulatory organization, arbitrator, regulatory authority, stock market, stock exchange or trading facility (an “Action”) now pending or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, wherein an unfavorable decision, ruling or finding would (i) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under this Agreement or any of the other Offering Documents, or (ii) reasonably be expected to have a Material Adverse Effect. |
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| h. | Acknowledgment Regarding Investors’ Purchases of the Shares. The Company acknowledges and agrees that the Investor and each other investor in the Offering is acting solely in the capacity of an arm’s length purchaser with respect to the Offering Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that each such investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Offering Documents and the transactions contemplated hereby and thereby and any advice given by such investor or any of their respective representatives or agents in connection with the Offering Documents and the transactions contemplated hereby and thereby is merely incidental to such investor’s purchase of the Shares. |
| i. | No General Solicitation. Neither the Company, nor any of its “affiliates” (as defined in Rule 144 under the Securities Act), nor, to the knowledge of the Company, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares. |
| j. | No Integrated Offering. Neither the Company, nor any of its affiliates, nor to the knowledge of the Company, any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the Shares under the Securities Act or cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of the Securities Act. |
| k. | Employee Relations. Neither the Company nor any subsidiary is involved in any labor dispute nor, to the knowledge of the Company, is any such dispute threatened. Neither the Company nor any subsidiary is party to any collective bargaining agreement. The Company’s and/or its subsidiaries’ employees are not members of any union, and the Company believes that its and its subsidiaries’ relationship with their respective employees is good. |
| l. | Permits. The Company and its subsidiaries have all authorizations, approvals, clearances, licenses, permits, certificates or exemptions issued by any regulatory authority or governmental agency (collectively, “Permits”) required to conduct their respective businesses as currently conducted except to the extent that the failure to have such Permits would not have, either singularly or in the aggregate, a Material Adverse Effect. The Company or its subsidiaries have fulfilled and performed in all material respects their obligations under each Permit, and, as of the date hereof, to the knowledge of the Company, no event has occurred or condition or state of facts exists which would constitute a breach or default or would cause revocation or termination of any such Permit except to the extent that such breach, default, revocation or termination would not, either singularly or in the aggregate, have a Material Adverse Effect. |
| m. | Title. Each of the Company and its subsidiaries has good and marketable title to all of its real and personal property and assets, free and clear of any material restriction, mortgage, deed of trust, pledge, lien, security interest or other charge, claim or encumbrance which would have a Material Adverse Effect. With respect to properties and assets it leases, each of the Company and its subsidiaries is in material compliance with such leases and holds a valid leasehold interest free of any liens, claims or encumbrances which would have a Material Adverse Effect. |
| n. | Rights of First Refusal. The Company is not obligated to offer the Shares offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents or other third parties. |
| o. | Brokers’ Fees. The Company does not have any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement, except for the payment of fees to Boustead as described above. |
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| p. | Investment Company. Each of the Company and its subsidiaries is not required to be registered as, and is not an affiliate of, and immediately following the Closing will not be required to register as, an “investment company” within the meaning of the U.S. Investment Company Act of 1940, as amended. |
| q. | Patents and Trademarks. The Company and its subsidiaries, if any, have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the Investor Package and which the failure to so have could reasonably be expected to have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any subsidiary violates or infringes upon the rights of any person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another person of any of the Intellectual Property Rights. |
| r. | Transactions With Affiliates and Employees. Except as set forth in the Investor Package, none of the executive officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any executive officer, director or such employee or, to the knowledge of the Company, any entity in which any executive officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of US$120,000. |
| s. | Investor Package; Disclosure. The Company has made the Investor Package available to each investor in the Offering. As of the date set forth on the Investor Package, the Investor Package did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has made available to you all the information reasonably available to the Company that you have requested for deciding whether to acquire the Shares. No representation or warranty of the Company contained in this Agreement and no certificate furnished or to be furnished to you at the Closing contains any untrue statement of a material fact or, to the Company’s knowledge, omits to state a material fact necessary in order to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. |
| t. | Reliance. The Company acknowledges that the Investor is relying on the representations and warranties made by the Company hereunder and that such representations and warranties are a material inducement to the Investor purchasing the Shares. The Company further acknowledges that without such representations and warranties of the Company made hereunder, the Investors would not enter into this Agreement. |
9. Other Covenants and Agreements of the Parties.
| a. | Indemnification. |
I hereby agree to indemnify and hold harmless the Company and its officers, directors, shareholders, employees, agents, advisors and counsel, and Boustead and its officers, directors, shareholders, employees, agents, advisors and counsel, against any and all losses, claims, demands, liabilities and expenses (including reasonable legal or other expenses, including reasonable attorneys’ fees) incurred by each such person in connection with defending or investigating any such claims or liabilities, whether or not resulting in any liability to such person, to which any such indemnified party may become subject under the Securities Act, under any other statute, at common law or otherwise, insofar as such losses, claims, demands, liabilities and expenses (a) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact made by me and contained in this Agreement or my Investor Questionnaire, or (b) arise out of or are based upon any breach by me of any representation, warranty, or agreement made by me contained herein or therein.
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| b. | Lock-Up. |
In connection with this Offering, the Investor agrees to the following lock-up agreement with respect to the Shares:
| 1. | From and after the date hereof and until the 180th day after the date the Class B Common Shares are first listed for trading on a national securities exchange (such first trading day, the “Lock-Up Trigger Date”), the Investor agrees not to sell, transfer or otherwise dispose of the Class B Common Shares. |
| 2. | Between the 181st and 270th day after the Lock-Up Trigger Date, the Investor agrees not to sell, transfer or otherwise dispose of more than one-third of the Class B Common Shares purchased hereunder, subject to a maximum sale on any trading day of 3% of the daily volume. |
| 3. | Between the 271st and 365th day after the Lock-Up Trigger Date, the Investor agrees not to sell, transfer or otherwise dispose of more than one-third of the Class B Common Shares purchased hereunder, subject to a maximum sale on any trading day of 3% of the daily volume. |
| 4. | After the 365th day after the Lock-Up Trigger Date, the Investor will be entitled to sell the remaining Class B Common Shares purchased hereunder without contractual restriction, but subject to any restrictions arising under applicable law, including the Securities Act. |
| 5. | Notwithstanding the above, commencing 90 days after the Lock-Up Trigger Date, if the price per share of the Company’s Class B Common Shares is at least 50% higher than the IPO Price (as defined below) per share and trades at least 100,000 shares daily, both for ten (10) consecutive trading days, the Investor may sell one- third of its shares subject to a maximum sale on any trading day of 3% of the daily volume; and if the Company’s Class B Common Shares price is at least 100% higher than the IPO Price per share and trades at least 100,000 shares daily, both for ten (10) consecutive trading days, the Investor may sell up to an additional one-third of its Class B Common Shares subject to a maximum sale on any trading day of 3% of the daily volume; and if the Company’s Class B Common Shares price is at least 150% higher than the IPO Price per share and trades at least 100,000 shares daily, both for ten (10) consecutive trading days, the Investor may sell an additional one-third constituting a maximum total of all of its shares subject to a maximum sale on any trading day of 3% of the daily volume. For purposes of this term, the “IPO Price” shall mean the price the Company’s Class B Common Shares is first sold to the public pursuant to an underwritten registered offering resulting in a listing of its Class B Common Shares on the Nasdaq Stock Market or another national stock exchange. |
10. Severability. In the event any parts of this Agreement are found to be void, the remaining provisions of this Agreement shall nevertheless be binding with the same force and effect as though the void parts were deleted.
11. Choice of Law and Jurisdiction. This Agreement shall be governed by the laws of the State of New York regardless of any choice of law principles. Any action arising out of this Agreement shall be brought exclusively in a court of competent jurisdiction in New York County, New York and the parties hereby irrevocably waive any objections they may have to the venue in New York County, New York.
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12. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY. THE PARTIES HERETO HEREBY AGREE THAT THE PROVISIONS CONTAINED HEREIN HAVE BEEN FAIRLY NEGOTIATED ON AN ARM’S-LENGTH BASIS, WITH BOTH SIDES AGREEING TO THE SAME KNOWINGLY AND BEING AFFORDED THE OPPORTUNITY TO HAVE THEIR RESPECTIVE LEGAL COUNSEL CONSENT TO THE MATTERS CONTAINED HEREIN. ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY AND THE AGREEMENTS CONTAINED HEREIN REGARDING THE APPLICATION OF JUDICIAL REFERENCE IN THE EVENT OF THE INVALIDITY OF SUCH JURY TRIAL WAIVER.
13. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.
14. Third Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of the parties hereto. Boustead is an intended third-party beneficiary of this Agreement, including the representations and warranties made by both the Company and the Investor herein and the indemnification provided by the Investor herein and may directly enforce this Agreement and its rights hereunder.
15. Notices and Addresses. All notices, offers, acceptance and any other acts under this Agreement (except payment) shall be in writing, and shall be sufficiently given if delivered to the addresses in person, by Federal Express or similar courier delivery or by electronic facsimile delivered to the party’s email address, as follows:
| Investor: | At the address designated on the signature page of this Agreement. | |
| The Company: |
Chief Executive Officer The RoyaLand Company Ltd. Clarendon House, 2 Church Street Hamilton, Pembroke, HM11 Bermuda |
or to such other address as any of them, by notice to the others may designate from time to time. The transmission confirmation receipt from the sender’s facsimile machine shall be conclusive evidence of successful facsimile delivery. Time shall be counted to, or from, as the case may be, the delivery in person or by mailing.
16. Entire Agreement. This Agreement, together with the Offering Documents, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior oral and written agreements between the parties hereto with respect to the subject matter hereof. This Agreement may not be changed, waived, discharged, or terminated orally but, rather, only by a statement in writing signed by the party or parties against which enforcement or the change, waiver, discharge, or termination is sought.
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17. Section Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part, any of the terms or provisions of this Agreement.
18. Survival of Representations, Warranties and Agreements. The representations, warranties and agreements contained herein shall survive the delivery of, and the payment for, the Shares.
19. Acceptance of Subscription. The Company may reject this Agreement at any time or accept this Agreement at any time for all or any portion of the Shares subscribed for by executing a copy hereof as provided and notifying me within a reasonable time thereafter.
RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING DOCUMENTS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
SALES IN FLORIDA: THE SECURITIES OFFERED HEREBY WILL BE SOLD, AND ACQUIRED, IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT. THE SECURITIES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. PURSUANT TO SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT, WHEN SALES ARE MADE TO FIVE (5) OR MORE PERSONS IN THE STATE OF FLORIDA, ANY SALE IN THE STATE OF FLORIDA MADE PURSUANT TO SECTION 517.061(11) OF SUCH ACT IS VOIDABLE BY THE INVESTOR IN SUCH SALE (WITHOUT INCURRING ANY LIABILITY TO THE COMPANY OR TO ANY OTHER PERSON OR ENTITY) EITHER WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH INVESTOR TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH INVESTOR, WHICHEVER OCCURS LATER. TO VOID HIS OR HER PURCHASE, THE INVESTOR NEED ONLY SEND A LETTER OR TELEGRAM TO THE COMPANY AT THE ADDRESS INDICATED HEREIN. ANY SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED THREE (3) DAY PERIOD. IT IS PRUDENT TO SEND ANY SUCH LETTER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ASSURE THAT IT IS RECEIVED AND ALSO TO HAVE EVIDENCE OF THE TIME THAT IT WAS MAILED. SHOULD AN INVESTOR MAKE THIS REQUEST ORALLY, THAT INVESTOR MUST ASK FOR WRITTEN CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED. IF NOTICE IS NOT RECEIVED WITHIN THE TIME LIMIT SPECIFIED HEREIN, THE FOREGOING RIGHT TO VOID THE PURCHASE SHALL BE NULL AND VOID.
(Remainder of Page left intentionally blank.)
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THE AGGREGATE AMOUNT SUBSCRIBED FOR HEREBY IS:
US$ Class B Common Shares at a per share Purchase Price of US$1.00 per share
Manner in Which Title is to be Held. (check one)
| — Individual Ownership | — Community Property |
| — Joint Tenant with Right of Survivorship (both parties must sign) | |
| — Partnership | — Tenants in common |
| — Corporation or Trust | — IRA or Keogh |
| — Other (please indicate) | |
| INDIVIDUAL INVESTORS | ENTITY INVESTORS | ||
| By: | |||
| Signature (Individual) | *Signature | ||
| Its: | |||
| Signature (Joint) | (Title of Authorized Signatory) | ||
| (all record holders must sign) | |||
| Name(s) Typed or Printed | Entity Name Typed or Printed | ||
| Address to Which Correspondence Should be Directed | Address to Which Correspondence Should be Directed | ||
| City, State and Zip Code | City, State and Zip Code | ||
| Email Address for Notification | Email Address for Notification | ||
| Tax Identification or Social Security Number | Tax Identification or Social Security Number | ||
| * | If Shares are being subscribed for by any entity, the Certificate of Signatory must also be completed. |
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The foregoing subscription is accepted and the Company hereby agrees to be bound by its terms on _____ day of _________________, 2024.
| The RoyaLand Company Ltd. | |||
| By: | |||
| Name: | Emanuele Filiberto di Savoia | ||
| Its: | Chief Executive Officer | ||
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CERTIFICATE OF SIGNATORY
(To be completed if Shares are being subscribed for by an entity)
| I, _____________________________, the _____________________________________ | |
| (name of signatory) | (title) |
| of ______________________________________________(“Entity”), a _____________________________ | |
| (name of entity) | (type of entity) |
Organized under the laws of _______________, hereby certify that I am empowered and duly authorized by the Entity to execute the Subscription Agreement and to purchase the Shares, and certify further that the Subscription Agreement has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.
IN WITNESS WHEREOF, I have set my hand this ______ day of ___________, 2024.
| (Signature) |
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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
To the Board of Directors of The RoyaLand Company Ltd.
We consent to the inclusion in this Registration Statement of The RoyaLand Company Ltd. (the “Company”) on Form F-1 of our report dated October 18, 2023, with respect to the consolidated financial statements of the Company as of June 30, 2023 and 2022 and for the Successor period November 29, 2022 through June 30, 2023 and the Predecessor periods July 1, 2022 through November 28, 2022, and year ended June 30, 2022, which appear in this Registration Statement on Form F-1. Our report dated October 18, 2023, relating to the consolidated financial statements includes an emphasis paragraph relating to an uncertainty as to the Company’s ability to continue as a going concern.
We also consent to the reference to us under the caption “Experts” in the Registration Statement.
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Diamond Bar, California |
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| April 26, 2024 |
