SHGI 8-K
Sparx Holdings Group, Inc. (SHGI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 29, 2022
|
Sparx Holdings Group, Inc.
|
| (Exact name of registrant as specified in its charter) |
| Nevada | 000-56315 | 00-0000000 | ||
| (state or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) |
|
780 Reservoir Avenue #123 Cranston, RI |
02910 | |
| (address of principal executive offices) | (zip code) |
| 774-250-2456 |
| (registrant’s telephone number, including area code) |
| N/A |
| (former name or former mailing address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ X ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
“We”, “Us”, “Our”, and or “The Company”, refer to Sparx Holdings Group, Inc., formerly known as, “Prime Time Holdings, Inc.”
Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements which involve risks and uncertainties. All statements other than statements of historical fact contained in this Current Report on Form 8-K, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates”, “believes”, “can”, “continue”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “potential”, “predicts”, or “should”, or the negative of these terms or other comparable terminology.
Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may appear in this Current Report on Form 8-K, which may cause our or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements to vary. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time, and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements, except as expressly required by law.
Item 1.01 Entry into a Material Definitive Agreement.
On August 29, 2022, we entered into and consummated a Patent License Agreement (“Agreement”) with Sparx Technologies, LLC, a limited liability company (“Licensor”). Licensor is solely owned and controlled by Ms. Cassandra DeNunzio, our CEO and director. Ms. DeNunzio is the sole and first named inventor under a provisional patent application with a Serial No. 63/304,302 filed with the United States Patent Office (“USPTO”) on January 28, 2022, relating to the fire protection industry and particularly a commercially available battery-operated wireless electronic fire sprinkler network. The Patent License Agreement is attached herein as Exhibit 10.1. As a result of the Agreement, we adopted the existing operations and business plan of Sparx Technologies, LLC pursuant to the terms and conditions of the patent licensing agreement and ceased to be a shell company.
In partial consideration for the exclusive license granted by Licensor to the Company, the Company paid Sparx Holdings, LLC, a limited liability company, controlled and solely owned by Ms. DeNunzio, a non-refundable license fee upon execution of the Agreement in the amount of One Hundred Million shares (100,000,000) of the Company’s common stock (the “Initial License Fee”). The Initial License Fee is consideration for the grant and continuation of the license pursuant to a five-year term. Licensor shall have no obligation or liability to return any portion of the Initial License Fee. The Company shall pay Licensor a royalty of fifty percent (50%) of Licensee’s Net Sales of all Licensed Products developed and sold by the Company. Ownership of the licensed technology prior to, during the course or as a result of the Agreement, will be the sole and exclusive property of Licensor.
The consummation of the Agreement is deemed to be a related party transaction given Cassandra DeNunzio serves as our sole officer, and as a member of our Board of Directors. She is also the sole member and controller of Sparx Technologies, LLC.
Our Chief Executive Officer and Director, Casandra DeNunzio has agreed to lend us equipment at no cost resulting in us having in-house capabilities to design and build innovative electronic fire protection products and solutions. Ms. DeNunzio has extensive industry knowledge, familiarity with local specifications and regulations, fire codes and expertise in the design and test engineering of fire detection, suppression, and extinguishment technology and their components and systems. We have available to us, the equipment, capabilities, and expertise to prototype electronic circuits, assemble simple printed circuit boards, benchtop test electrical assemblies with DC and AC power supplies, troubleshoot designs with multimeters, and create wiring harnesses.
The Company has now begun to finalize the advanced wireless sprinkler design and build a prototype to be utilized in wireless fire suppression technology. The prototype is scheduled for completion in the next few months. A utility patent is anticipated to be filed upon completion of the prototype. The Company plans to commercialize Licensor’s wireless fire suppression technology into a fire protection/fire safety product line and seek approval from regulators. We plan to offer our advanced proprietary wireless sprinkler technology in the design, installation, and system integration to protect a variety of premises including commercial buildings and industrial sites from highly challenging fires.
Summary of Risk Factors relating to our business.
Developing new products and technologies entails significant risks and uncertainties.
We are currently operating. However, we are finalizing the design and are in the early stage of building a prototype and it may take much longer than we think to build a prototype. Delays or cost overruns in the development of our fire sprinklers and fire protection products and failure of our products to meet our performance estimates may be caused by, among other things, unanticipated technological hurdles, difficulties in contract manufacturing, changes to design and regulatory hurdles. Any of these events could materially and adversely affect our operating performance and results of operations.
We may experience significant delays or other complications in the design, manufacture and launch of our fire sprinklers and fire protection products which could harm our brand, business, prospects, financial condition and operating results.
We may experience significant delays or other complications in bringing our fire sprinklers and fire protection products to market. Any significant delays or other complications in the development, manufacture and/or launch of our battery-powered wireless fire sprinkler system or future products, including, but not limited to, complications associated with launching our production or supply chain, or regulatory approvals, could materially damage our brand, business, prospects, financial condition and operating results.
We face significant barriers in our attempt to produce our fire sprinklers and fire protection products, and if we cannot successfully overcome those barriers, our business will be negatively impacted.
We face significant barriers as we attempt to produce our first fire sprinkler system. We do not yet have any fully completed prototypes and do not have a final design, a manufacturing facility or manufacturing processes. We will need to contract with external manufacturers to manufacture our products and certain components. In addition, the fire sprinkler industry has traditionally been characterized by significant barriers to entry, including large capital requirements, investment costs for testing and gaining certifications, listings, and/or approvals, regulatory requirements, establishing a brand name and image, and the need to establish sales and service locations. We must successfully overcome these and other manufacturing and regulatory barriers to be successful.
-1-
Our long-term success will be dependent upon our ability to achieve market acceptance of our fire sprinklers and fire protection products, and any subsequent new products.
There is no guarantee that our fire sprinklers and fire protection products or any of our future products will be successfully accepted by the general public. There is no guarantee that demand for our fire sprinklers and fire protection products will meet our expectations.
We expect competition.
While our CEO has been engaged in developing fire sprinkler products employing innovative technologies, we have not deployed large-scale commercial measurement-to-monetization operations such as those that the Company plans to undertake. While we are not aware of other companies that are developing similar technology on a commercial scale similar to the commercial scale we intend to achieve, new competitors may gain traction in the United States and abroad and potentially compete with our technology and services. These or new competitors may have more resources than us or may be better capitalized, which may give them a significant advantage, for example, in offering better pricing than the Company, surviving an economic downturn or in reaching profitability. We cannot assure you that we will be able to compete successfully against existing or emerging competitors.
We may need to defend ourselves against patent or other intellectual property infringement claims, which may be time-consuming and would cause us to incur substantial costs.
Companies, organizations or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with our ability to make, use, develop, sell or market our fire sprinklers and fire protection products or components, which could make it more difficult for us to operate our business. From time to time, we may receive communications from holders of patents or trademarks regarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights and urge us to take licenses. In addition, if we are determined to have infringed upon a third party's intellectual property rights, we may be required to do one or more of the following:
• Cease selling, incorporating certain components into, or offering goods or services that incorporate or use the challenged intellectual property;
• pay substantial damages;
• seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all;
• redesign our fire sprinklers and fire protection products or certain components; or
• establish and maintain alternative branding for our products and services.
We may also need to file lawsuits to protect our intellectual property rights from infringement from third parties, which lawsuits could be expensive, time consuming and distract management’s attention from our core operations.
We may not be able to protect our respective intellectual property rights throughout the world.
Filing, prosecuting and defending patents on all of our ideas and products throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not yet obtained patent protection to develop their own products and, further, may be able to export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents or other intellectual property protection, which could make it difficult for us to stop the infringement of any patents we obtain or the marketing of competing products in violation of our proprietary rights generally. As a result, proceedings to enforce our patent rights in certain foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business and could be unsuccessful.
We are unable to accurately predict the quantity of testing that our products will be subject to until we start engaging agencies capable of providing us with testing, listings, certifications, and/or approvals.
In order to gain market share and acceptance in the fire sprinkler and fire protection industries, we will need to test our products with renowned and trusted agencies such as United labs or FM Global. Our technology is relatively new in the fire suppression industry and as a result, our technology may be considered outside the scope of clearly defined testing standards that currently exist in the fire sprinkler industry. Agencies may need to evaluate the products we intend to commercialize and may decide, recommend, or require specific tests to be conducted on our products in order for us to gain necessary listings, certifications, and/or approvals for our products. Until we engage agencies with a viable, working product, there is uncertainty in the amount and rigor of testing that will be required to commercialize our products in specific markets, and as a result, there is some uncertainty in regard to our testing expenses.
We cannot guarantee that our products will pass or perform adequately in agency testing.
While we plan to perform extensive internal testing through design verification and validation for our products before we spend funds on agency testing, certifications, listings, and/or approvals, we cannot guarantee that our fire sprinklers and fire protection products will pass or achieve adequate results on each and every agency test. Design modifications may need to be made if we fail or do not perform adequately on a test, and we may need to re-conduct tests which could cause us to incur significant costs. If we cannot pass or achieve adequate results on agency testing, our ability to commercialize our products and our financial condition, operating results, and business prospects will be harmed.
Our products may require agency testing that we cannot perform internally or simulate effectively.
Agency testing for fire sprinklers and fire protection products often requires large-scale fire testing and other tests which are extremely expensive and difficult to perform given facilities restrictions, cost restrictions, and the ability to obtain permits and appropriate legal authorizations to conduct such testing. We intend to simulate and/or conduct modeling for tests that cannot be performed internally to understand how our products will behave in such agency testing. Because we may not be able to perform all required agency testing, our results and outcomes during agency testing may be unpredictable. Failing test results or inadequate performance may prompt us to make design modifications and we may need to re-conduct tests which could cause us to incur significant costs. If we cannot pass or achieve adequate results on agency testing, our ability to commercialize our products and our financial condition, operating results, and business prospects will be harmed.
-2-
If we are unable to adequately control the costs associated with operating our business, including our costs of manufacturing and sales, our business, financial condition, operating results and prospects will suffer.
If we are unable to maintain a sufficiently low level of costs for designing, manufacturing, marketing, selling and distributing and servicing our fire sprinklers and fire protection products relative to their selling prices, our operating results, gross margins, business and prospects could be materially and adversely impacted. We have made, and will be required to continue to make, significant investments for the design, manufacture, sale and the servicing of our fire sprinklers and fire protection products. There can be no assurances that our costs of producing and delivering our products will be less than the revenue we generate from sales at the time of the launch of our first fire sprinkler system or that we will ever achieve a positive gross margin on sales of any specific fire sprinkler or fire protection product.
We will incur significant costs related to contracting for the manufacture of our products, procuring the materials required to manufacture our products, assembling our products and compensating our personnel and consultants. Many of the factors that impact our operating costs are beyond our control. For example, the costs of our raw materials and components could increase due to shortages if global demand for these materials and components increases. In addition, we may experience increases in the cost or a sustained interruption in the supply or shortage of materials. Any such cost increase or supply interruption could materially negatively impact our business, prospects, financial condition and operating results. If we are unable to keep our operating costs aligned with the level of revenues we generate, our operating results, business and prospects will be harmed.
If our fire sprinklers and fire protection products fail to perform as expected, we may have to recall our products and our ability to develop, market and sell our products could be harmed.
Our products may contain defects in design and manufacture that may cause them not to perform as expected or that may require repair. While we intend to perform extensive internal and external testing, we will have a limited frame of reference by which to evaluate the performance of our fire sprinklers and fire protection products. There can be no assurances that we will not be required to recall products in the future. There can be no assurance that we will be able to detect and fix any defects in the products prior to their sale to consumers. In the future, we may at various times, voluntarily or involuntarily, initiate a recall if any of our fire sprinklers or fire protection products or their components prove to be defective. Any product defects or any other failure of our fire sprinklers or fire protection products to perform as expected could harm our reputation and result in adverse publicity, lost revenue, delivery delays, product recalls, product liability claims, harm to our brand and reputation, and significant warranty and other expenses, and could have a material adverse impact on our business, financial condition, operating results and prospects.
If we are unable to address the inspection, test, and maintenance requirements of our future customers our business will be materially and adversely affected.
If we are unable to successfully address the inspection, test, and maintenance requirements of our future customers our business and prospects will be materially and adversely affected. In addition, we anticipate the level and quality of the inspection, test, and maintenance we provide our customers will have a direct impact on the success of our future fire sprinklers and fire protection products. If we are unable to satisfactorily inspect, test, and maintain our products for our customers and per industry codes and standards, our ability to generate customer loyalty, grow our business and sell additional products could be impaired.
We will be dependent on our suppliers, some of which may be single or limited source suppliers, and the inability of these suppliers to continue to deliver, or their refusal to deliver, necessary components of our fire sprinklers and fire protection products at prices and volumes acceptable to us could have a material adverse effect on our business, prospects and operating results.
We will be dependent on our suppliers, some of which may be single or limited source suppliers, and the inability of these suppliers to continue to deliver, or their refusal to deliver, necessary components of our fire sprinklers and fire protection products at prices and volumes acceptable to us could have a material adverse effect on our business, prospects and operating results. In addition, we have not yet established relationships with suppliers for all of our components.
While we believe that we will be able to establish necessary supply relationships as well as alternate supply relationships, we may be unable to do so at prices or costs that are favorable to us. The inability to secure necessary suppliers or the future loss of any suppliers or any disruption in the supply of components from these suppliers could lead to delays in product deliveries to our customers, which could hurt our relationships with our customers and also materially adversely affect our business, prospects and operating results.
We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
The risk of product liability claims, product recalls, and associated adverse publicity is inherent in the manufacturing, marketing, and sale of fire sprinklers and fire protection products. We may become subject to product liability claims, which could harm our business, prospects, operating results and financial condition. The fire sprinkler and fire protection product industries experiences significant product liability claims and we face inherent risk of exposure to claims in the event our products do not perform as expected or malfunction resulting in personal injury or death. A successful product liability claim against us could require us to pay a substantial monetary award. In addition, a product liability claim could generate substantial negative publicity about our products and business and inhibit or prevent commercialization of other future fire sprinklers and fire protection product candidates which would have material adverse effect on our brand, business, prospects and operating results. Any lawsuit, regardless of its merit, may have a material adverse effect on our reputation, business and financial condition.
Termination of Agreement
The Agreement may be terminated at any time by Licensor, for any reason, with or without cause, and without any payment or liability to Licensee with immediate effect by notice given in writing to the Licensee via email or certified mail at the sole option of Licensor to terminate the Agreement. If, in the event Licensor decides to terminate the Agreement for any reason, we will no longer have a business plan or operations. The result could be that we become a shell company. Shell company status would result in making it difficult to borrow money and sell shares of our stock.
Additional Information:
Currently, we have begun beta testing of the following website to showcase our progress and business offerings: https://sparx-fire.com/
To date, we have relied on funding from our controlling shareholder, sole officer, and Directors. Such funding is more than likely to be insufficient to further our business agenda, and plans to manufacture, market, and sell products and other inventions relating to the fire protection industry. We may seek to raise additional funding through the sale of shares of our common stock and or by other measures our management deems fit. If we do not have sufficient funds available to further our business agenda, we may need to scale back, or curtail operations.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth in Item 1.01 to this Current Report is incorporated into this item by reference.
Item 5.06. Change in Shell Company Status.
As a result of the disclosure set forth in Item 1.01 to this Current Report relating to execution of the Agreement, we believe that we are no longer a shell company, as defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.
Item 8.01 Other Events.
As previously disclosed in our Form 10-K filed on August 1, 2022, the Company initiated a FINRA corporate action to effectuate a name change from Prime Time Holdings, Inc. to Sparx Holdings Group, Inc., and to change our ticker symbol. This corporate action remains pending.
We do not yet know what the Company’s ticker symbol will be changed to, and the ticker symbol chosen will be dependent on current availability and FINRA approval.
The legal date of our name change, July 19, 2022, will differ from the market release date when posted on FINRA’s daily list. A Form 8-K will be filed with the Commission after completion of our FINRA corporate action.
-3-
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
| 10.1 | Patent License Agreement |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.
| Sparx Holdings Group, Inc. | |
| Dated: August 29, 2022 | /s/ Cassandra DeNunzio |
|
By: Cassandra DeNunzio Chief Executive Officer | |
-4-
PATENT LICENSE AGREEMENT
This Patent License Agreement ("Agreement") is made effective on the 29th day of August 2022 (hereinafter the “Commencement Date”) by and between Sparx Holdings Group, Inc. fka Prime Time Holdings, Inc., a Nevada corporation ("Licensee"), Cassandra DeNunzio, a Rhode Island resident (“Inventor”), and Sparx Technologies, LLC, a Wyoming limited liability company (“Licensor”); (collectively, the “Parties”).
WITNESSETH:
WHEREAS, Inventor through sole ownership of Licensor is the indirect owner of all rights, title, and interest in United States Provisional Patent Application No. 63/304,302 ("Licensed Patent");
WHEREAS, Licensee wishes to exclusively license the Licensed Patent to manufacture, market, and sell products and other inventions relating to the fire protection industry including a commercially available battery-operated wireless electronic fire sprinkler network in the U.S. covered by the Licensed Patent;
WHEREAS, Licensor desires to license Licensed Patent to the Licensee on an exclusive basis in the United States;
WHEREAS, Licensor has the right to grant an exclusive license for use within the United States to Licensee under the Licensed Patent and is willing to do so on the terms and conditions recited in this Agreement; and
NOW, THEREFORE, in consideration of the foregoing and of the mutual terms and covenants hereinafter expressed, the Parties do mutually agree as follows:
1. Definitions
In this Agreement, except where the context otherwise requires, the following words and expressions shall have the following meanings:
1.1 “Licensed Patents” shall mean the Patent Rights and interests in or other intellectual property rights of any kind resulting from, or involving, United States Provisional Patent Application Serial No. 63/304,302 filed by Licensor on January 28, 2022 and any subsequent patents or patent applications filed in the United States which claim priority directly or indirectly to such patent application including all non-provisional, divisional, continuation, continuation-in-part, renewal or substitute applications.
1.2 “Licensed Know-How” shall mean any Know-How owned by the Licensor that (i) is necessary for practicing inventions claimed in patents and/or patent applications defined in “Licensed Patents”, (ii) directly relates to the testing, certification, manufacturing, or commercialization of the inventions claimed in patents and/or patent applications defined in “Licensed Patents”, or (iii) directly includes technical information, processes, procedures, compositions, devices, methods, formulas, protocols, techniques, designs, drawings, or data created by the Inventor as it relates to practicing inventions claimed in patents and/or patent applications defined in “Licensed Patents”.
1.3 “Licensed Technology” shall mean any and all technology disclosed in and/or subject of Licensed Patents and/or the Licensed Know-How.
1.4 “Licensed Product” shall mean any product which is based on, relates to, incorporates, uses or is covered by the Licensed Technology.
1.5 “Patent Rights” shall mean those very rights subject of the definition of “Licensed Patents” above and which are owned by Licensor or are subject to various applications applied, by Inventor or Licensor, in her or its name, with the U.S. Patent and Trademark Office or any state corollary intellectual property authority.
1.6 “Territory” as used in this Agreement shall mean the United States.
1.7 “Net Sales” shall mean the gross dollar amount collected by Licensee from its customers, whether such customer is a distributor, wholesaler, retailer, end-user, or any other third party, for Licensed Products sold, leased, or otherwise commercially transferred by Licensee, less: 1) any discounts or rebates actually applied; 2) any tax or governmental charge included in such gross dollar amount, which is imposed directly on, or measured by, the sale, lease or transfer, transportation, delivery or use of the Licensed Product, other than any taxes or charges on the seller’s net income, unless it is actually reimbursed; 3) actual allowances for returned Licensed Products.
1.8 “Confidential Information” shall mean all proprietary materials including the Licensed Know-How or other information (whether or not patentable) regarding a Party’s technology, products, business information or objectives, including technical information, processes, procedures, compositions, devices, methods, formulas, protocols, techniques, designs, drawings, or data created by the Inventor, manufacturing and marketing information that is identified as proprietary or confidential by the disclosing Party, or information disclosed by a Party that is not generally known to the public or, by its nature, would be reasonably understood to be the type of materials or information that should be treated as proprietary or confidential.
2. Grant of Rights
2.1 Licensor grants to Licensee a royalty bearing exclusive right and license to the Patent Rights in the United States. In this regard, the word “license” as used herein means the unfettered right or other ability to exploit, in any lawful way, the commercial viability of the Licensed Technology.
2.2 Licensor grants to Licensee a royalty bearing exclusive right and license to use and make derivative works of the Licensed Know-How to make, have made, use, have used, offer for sale, sell, import, export, and otherwise dispose of, develop, commercialize, and exploit, in any lawful way, the commercial viability of the Licensed Technology in the Territory.
2.3 Licensee shall not grant or purport to grant to any person any sublicense or subcontract of its rights or obligations under this Agreement without the express written consent of Licensor.
2.4 Licensee hereby agrees not to challenge the validity of any issued patent under the Patent Rights or cause a third party to challenge the validity of any such patent.
2.5 In no event shall this Agreement be construed to be an assignment of any actual ownership interest in or to the Patent Rights or Know-How other than what is necessary or consistent with the licensing thereof and Licensee’s license rights hereunder.
3. Ownership and No Assignment of Works
3.1 Licensee agrees that all right, title and interest in any and all ideas, Know-How, representations, textual material, illustrations, original works of authorship, developments, reduction to practice, improvements, inventions, concepts, discoveries, designs, trademarks, trade secrets, and other items developed and/or conceived by Inventor solely or jointly with another prior to, or during the course or as a result of this License Agreement, and which are related to the business or activities of Licensee (collectively "Works"), will be the sole and exclusive property of Licensor. Licensee understands and agrees that the decision whether or not to commercialize or market any Works developed by Inventor solely or jointly with others is within Inventor’s sole discretion and for Inventor’s sole benefit, and that no royalty will be due to Licensee as a result.
4. Consideration
4.1 In partial consideration for the exclusive license granted by Licensor, Licensee shall pay to Sparx Holdings, LLC, a Wyoming Limited Liability company solely owned by Inventor a non-refundable license fee upon execution of this Agreement in the amount of One Hundred Million shares (100,000,000) of common stock of Licensee (the “Initial License Fee”). The Initial License Fee described in this Section is consideration for the grant and continuation of the license hereunder, and Licensor shall have no obligation to return any portion of the Initial License Fee.
5. Royalties
5.1 Licensee shall pay Licensor a royalty of fifty percent (50%) of Licensee’s Net Sales of all Licensed Products sold by or for Licensee in the Territory.
5.2 The royalty on Net Sales shall accrue on the date when Licensee receives payment for sales of its Licensed Product(s) and shall be payable to Licensor no less than quarterly, within thirty (30) days following the end of each calendar quarter in which a royalty payment accrues covered by a statement specifying the gross sales and Net Sales including an accounting of deductions in the calculation of Net Sales in accordance with GAAP.
5.3 All royalties, if any, shall be paid to Licensor in U.S. dollars.
5.4 Licensee shall keep accurate and complete records in sufficient detail to enable royalties payable to Licensor hereunder to be verified. Licensee shall permit such records to be inspected at the sole option of Licensor semi-annually upon written notice by Licensor for the purpose of verifying the amount of royalties payable hereunder to Licensor. Such inspection shall be made during reasonable business hours and shall be performed by an independent auditor or accountant selected and appointed by Licensor.
6. Indemnification
6.1 Licensee Indemnification. Licensee shall at all times during the term of this Agreement and thereafter indemnify, defend, and hold Licensor, its directors, officers, employees, agents, and affiliates harmless against all claims, proceedings, demands, and liabilities of any kind whatsoever, including legal expenses and reasonable attorneys' fees, arising out of the death of or injury to any person or out of any damage to property, or resulting from the production, manufacture, sale, use, lease, or advertisement of Licensed Products or arising from any obligation of Licensee under this Agreement.
7. Duration of Agreement
7.1 Unless terminated sooner in accordance with the provisions of this Agreement, the term of this license is five years and shall expire when the last of the royalty obligations set forth has expired.
8. Warranty
8.1 Licensee agrees to and assumes all liability associated with any product generated by the processes covered by the Patent Rights and/or Licensed Know-How. Licensor offers no warranty, express or implied, regarding the suitability or viability of any products produced under the Patent Rights and/or Licensed Know-How.
8.2 Licensor offers no warranty, express or implied, regarding the patentability of the technology covered under the Patents Rights and/or Licensed Know-How.
8.3 Licensor offers no warranty regarding the non-infringement of any product covered by or developed under the Patent Rights and/or Licensed Know-How.
9. Patent Prosecution and Maintenance; Improvements
9.1 Discretionary Duty to Prosecute and Maintain: Licensor shall have the first right and discretion to bring any action to enforce any patent falling under the Patent Rights and shall further have the first right and discretion to defend any declaratory judgment or other action in which a cause of action is asserted challenging the validity, enforceability, use, and/or claim construction of any patent(s) or patent application(s) constituting the Patent Rights.
9.2 Abandonment of Prosecution: Licensor shall notify Licensee in the event Licensor decides at any time to abandon or discontinue prosecution of any patent application covered under the Patent Rights. Such notification will be given as early as possible which in no event will be less than thirty (30) days prior to the date on which said application(s) will become abandoned.
9.3 Maintenance: Licensor shall pay all official maintenance fees required to keep in force any patent which may issue included in the Patent Rights.
9.4 Improvements: If the Licensee shall at any time during the term of this Agreement devise any improvement in relation to the technology covered by the Patent Rights, Licensee shall promptly notify the Licensor in writing giving details of the improvement. Further, Licensee shall cooperate with Licensor in providing any information or explanations as the Licensor may reasonably require in order to be able to effectively assess, utilize, and protect the intellectual property rights of the same, including cooperation in filing, prosecuting, and assigning any patent application arising out of such an improvement. Any such improvement and the intellectual property rights associated with such improvement shall be owned by Licensor, but Licensee shall be granted an exclusive royalty-free license to utilize such improvement(s) in accordance with the terms of this Agreement.
10. Confidentiality
10.1 Parties shall hold each other's Confidential Information in confidence and shall not disclose Confidential Information to any third party without each other's prior written consent. The Parties acknowledge and agree that a breach of this section would cause irreparable harm and that either Party shall be entitled to seek equitable relief from such breach without the obligation of posting a bond or proving actual damages.
11. Termination
11.1 This Agreement may be terminated at any time by Licensor, for any reason, with or without cause, and without any payment or liability to Licensee with immediate effect by notice given in writing to the Licensee via email or certified mail at the sole option of Licensor to terminate the Agreement. In the event of bankruptcy proceedings by or against Licensee, the Agreement will automatically terminate without any action of any party.
11.2 This Agreement may be terminated with immediate effect by notice given in writing via email or by certified mail at the option of Licensee if the Licensor commits a breach of its obligations and/or any provision of the Agreement and fails or refuses to remedy such breach or default within sixty (60) days after being requested, by certified mail, to remedy such breach.
11.3 The termination of this Agreement, however arising, shall be without prejudice to any other express obligations in this Agreement of a continuing nature and to any rights of either party which may have accrued at or up to the date of termination.
11.4 All rights and licenses defined in the Grant of Rights section of this Agreement shall terminate immediately upon termination of this Agreement.
11.5 Licensee shall cease making, having made, distributing, having distributed, using, selling, offering to sell, leasing, loaning and importing any Licensed Products by the effective date of termination.
11.6 Licensee shall tender payment of all accrued royalties and other payments to Licensor as of the effective date of termination within sixty (60) days thereafter.
11.7 The provisions of section 1, 6, 8, 10 and 13.5 shall survive the termination or expiration of this Agreement and shall remain in full force and effect.
12. Assignment
12.1 Licensor may assign or transfer this Agreement without the express written consent of Licensee.
12.2 Licensee may not assign or transfer this Agreement without the express written consent of Licensor.
13. General
13.1 This Agreement sets forth the entire Agreement and understanding between the parties and supersedes all previous agreements and understandings, whether oral or written, between the parties with respect to the subject matter of this Agreement.
13.2 No variation of this Agreement shall be effective unless it is in writing signed by Licensor and a duly authorized officer of Licensee.
13.3 Nothing in this Agreement shall be deemed to constitute a partnership between the Parties nor shall either Party be taken to have any authority to bind or commit the other or be taken to have authority to act as the agent of the other or in any other capacity other than as expressly authorized in this Agreement.
13.4 The Parties agree that if any part, term, or provision of this Agreement shall be found illegal or in conflict with any valid controlling law, the validity of the remaining provisions shall not be affected thereby.
13.5 This Agreement shall be interpreted construed and enforced in accordance with the internal laws of the State of Wyoming, without reference to its conflicts of law principles.
IN WITNESS WHEREOF, the parties, by their duly authorized representative, have caused this Agreement to be executed on the 29th day of August 2022.
|
INVENTOR/LICENSOR:
/s/ Cassandra L. DeNunzio Cassandra L. DeNunzio, Individually
|
|
|
LICENSOR:
Sparx Technologies, LLC
/s/ Cassandra L. DeNunzio By: Cassandra L. DeNunzio, Managing Member
|
LICENSEE:
Sparx Holdings Group, Inc.
/s/ Cassandra L. DeNunzio Cassandra L. DeNunzio, Chief Executive Officer
|