Exhibit 14.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
Date of report (date of earliest event reported)
| (Exact Name of Registrant as Specified in Charter) | ||||
| Commission
File No. |
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(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| (Address of Principal Executive Offices) |
| (Registrant’s Telephone Number) |
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)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | None | None |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
TABLE OF CONTENTS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K (“Report”) contains forward-looking statements in the sections captioned “Description of Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Plan of Operations” and elsewhere. Any and all statements contained in this Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of these terms) may identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Report may include, without limitation, statements regarding the plans and objectives of management for future operations, projections of income or loss, earnings or loss per share, capital expenditures, dividends, capital structure or other financial items, our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), and the assumptions underlying or relating to any such statement.
The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the accuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation:
| ● | Market acceptance of our products and services; | |
| ● | Competition from existing products or new products that may emerge; | |
| ● | The implementation of our business model and strategic plans for our business and our products; | |
| ● | Estimates of our future revenue, expenses, capital requirements and our need for financing; | |
| ● | Our financial performance; | |
| ● | Current and future government regulations; | |
| ● | Developments relating to our competitors; and | |
| ● | Other risks and uncertainties, including those listed under the section titled “Risk Factors.” |
Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We disclaim any obligation to update the forward-looking statements contained in this Report to reflect any new information or future events or circumstances or otherwise, except as required by law. Readers should read this Report in conjunction with the discussion under the caption “Risk Factors,” our financial statements and the related notes thereto in this Report, and other documents which we may file from time to time with the SEC.
EXPLANATORY NOTE
On February 23, 2023 (the “Closing Date”), EKIMAS Corporation and Nordicus Partners A/S, a Danish stock corporation (“Nordicus”), consummated the transactions contemplated by that certain Contribution Agreement (the “Contribution Agreement”) made and entered into as of February 23, 2023 by and among EKIMAS Corporation, the Sellers (as defined below) and Nordicus.
Pursuant to the Contribution Agreement the Sellers contributed, transferred, assigned and conveyed to the Company all right, title and interest in and to one hundred percent (100%) of the issued and outstanding capital stock of Nordicus for an aggregate of 2,500,000 shares of EKIMAS Corporation’s common stock, par value $0.001 per share (the “Purchaser Common Stock”), (such transaction, the “Business Combination”). As a result of the Business Combination, Nordicus became a 100% wholly owned subsidiary of EKIMAS Corporation.
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As used in this Report, unless otherwise stated or the context clearly indicates otherwise, the terms “Registrant,” “Company,” “we,” “us” and “our” refer to EKIMAS Corporation and its subsidiaries on a consolidated basis, after giving effect to the Business Combination.
This Report contains summaries of the material terms of various agreements executed in connection with the Business Combination described herein. The summaries of these agreements are subject to, and are qualified in their entirety by reference to, these agreements, which are filed as exhibits hereto and incorporated herein by reference.
Prior to the Business Combination, EKIMAS Corporation was a “shell company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). As a result of the Business Combination, we have ceased to be a “shell company.” The information contained in this Report constitutes the information necessary to satisfy the conditions contained in Rule 144(i)(2) under the Securities Act of 1933, as amended (“Securities Act”).
| Item 1.01. | Entry into a Material Definitive Agreement |
The information contained in Item 2.01 below relating to the various agreements described therein is incorporated herein by reference.
| Item 2.01. | Completion of Acquisition or Disposition of Assets |
THE CONTRIBUTION AGREEMENT AND RELATED TRANSACTIONS
This section describes the material provisions of the Contribution Agreement but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of the Contribution Agreement, a copy of which is attached hereto as Exhibit 2.1. Unless otherwise defined herein, the capitalized terms used below are defined in the Contribution Agreement.
The Contribution Agreement
On the Closing Date, the Company consummated the transactions contemplated by the Contribution Agreement by and among EKIMAS Corporation, Nordicus, GK Partners ApS (“GK Partners”), Henrik Rouf and Life Science Power House ApS (“LSPH”). GK Partners, Rouf and LSPH are collectively referred to herein as the “Sellers”, and each individually as a “Seller”).
Pursuant to the Contribution Agreement the Sellers contributed, transferred, assigned and conveyed to the Company all right, title and interest in and to all of the issued and outstanding shares of capital stock of Nordicus for an aggregate of 2,500,000 shares of Purchaser Common Stock. As a result of the Business Combination, Nordicus became a 100% wholly owned subsidiary of the Company.
The Purchaser Common Stock being issued to the Sellers in connection with the Business Combination has not been registered under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2), which exempts transactions by an issuer not involving any public offering, and Regulation D and/or Regulation S promulgated by the SEC under that section. These shares may not be offered or sold in the United States absent registration or an applicable exemption from registration.
The foregoing description of the Contribution Agreement does not purport to be complete. For further information, please refer to the copy of the Contribution Agreement that is filed as Exhibit 2.1 to this Report. There are representations and warranties contained in the Contribution Agreement that were made by the parties to each other as of the date of execution. The assertions embodied in these representations and warranties were made solely for purposes of the Contribution Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating their terms. Moreover, some representations and warranties may not be accurate or complete as of any specified date because they are subject to a contractual standard of materiality that is different from certain standards generally applicable to shareholders or were used for the purpose of allocating risk between the parties rather than establishing matters as facts. For these reasons, investors should not rely on the representations and warranties in the Contribution Agreement as statements of factual information.
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DESCRIPTION OF BUSINESS
Our Corporate History
We were founded in 1993 as a subsidiary of PolyMedica Corporation (“PolyMedica”). In June 1996, PolyMedica distributed all of the shares of CardioTech International, Inc.’s common stock, par value $0.01 per share, which PolyMedica owned, to PolyMedica stockholders of record. We were engaged in the business of developing advanced polymer materials for use in medical devices designed for treating a broad range of anatomical sites and disease states. In July 1999, we acquired the assets of Tyndale-Plains-Hunter (“TPH”), a manufacturer of specialty hydrophilic polyurethanes.
In April 2001, we acquired Catheter and Disposables Technology, Inc. (“CDT”), a contract manufacturer of advanced disposable medical devices. In April 2003, we acquired Gish Biomedical, Inc. (“Gish”), a manufacturer of single use cardiopulmonary bypass products. In the development of our business model, we reviewed the strategic fit of our various business operations and determined that CDT and Gish did not fit our strategic direction. Gish was sold in July 2007 and CDT was sold in March 2008.
Effective October 26, 2007, pursuant to stockholder approval, we were reincorporated from a Massachusetts corporation to a Delaware corporation. We changed our name from CardioTech International, Inc. to AdvanSource Biomaterials Corporation, effective October 15, 2008.
On November 25, 2019, we entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation (“MCPP”) for the sale of substantially all of our assets for a total purchase price of $7,250,000. The Asset Purchase Agreement was approved by our stockholders on January 21, 2020. As a result, we ceased operating as a manufacturer and seller of advanced polymers on January 31, 2020 (the “Closing Date”). Subsequent to the Closing Date, we became engaged in efforts to identify an (i) operating company to acquire or merge with through an equity-based exchange transaction or (ii) investor interested in purchasing a majority interest in our common stock, whereby either transaction would likely result in a change in control. Although certain opportunities have been investigated to determine whether a potential merger or investment opportunity could add value for the benefit of our shareholders, we have not yet entered into any binding arrangements.
On March 3, 2020, we filed a Certificate of Amendment to the Company’s Certificate of Incorporation, which amendment was unanimously approved by our Board of Directors, to change our name AdvanSource Biomaterials Corporation to EKIMAS Corporation.
On October 12, 2021, we entered into a Stock Purchase Agreement (the “SPA”) with Reddington Partners LLC, a California limited liability company (“Reddington”) providing for the purchase of a total of 5,114,475 of our common stock, on a post-split basis, or approximately 90% of our total shares of common stock outstanding for total cash consideration of $400,000. Reddington purchased in two tranches on October 12, 2021 and March 15, 2022.
Our Business
We are a financial consulting company, specializing in providing Nordic companies with the best possible conditions to establish themselves on the U.S. market, taking advantage of management’s combined +90 years of experience in the corporate sector, serving in different capacities both domestically and globally.
Our core competencies lie in assisting Danish as well as other Nordic and international companies in different areas of corporate finance activities, such as:
| ● | Business valuation | |
| ● | Growth strategy – budgeting included | |
| ● | Investment Memorandum | |
| ● | Attracting capital for businesses | |
| ● | Reverse Take Overs (RTOs) | |
| ● | Company acquisitions and sales |
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The aforementioned areas of expertise are widely applicable in a lot of industries; however, the companies we service primarily operate in the following sectors:
| ● | Green Energy / Clean Tech, | |
| ● | Life Science | |
| ● | E-commerce, | |
| ● | Blockchain, and | |
| ● | SaaS |
Our mission going forward, is to assist the right Nordic companies realize their growth strategy, by fine tuning systems and processes, sharpening the commercial focus and providing companies with the best possible guidance and setup suited to successfully establish themselves on the U.S. market.
Through our business operations, we are being presented with numerous business opportunities and ventures. On occasion we view some of those businesses attractive enough to engage with ourselves and thus acquire an ownership stake in the company. Hence, potentially creating an added revenue stream – alongside the fees from our corporate finance services – if the company’s value increases over time.
Besides the value we provide through our direct involvement with the companies, we have a comprehensive network of business partners and associates, which spans across Europe and the U.S.
We also operate as a business incubator, in which we can provide added value by accelerating and smoothing companies’ transition to the U.S. through a number of support resources and services such as office space, lawyers, bookkeepers, marketing specialists, etc. with years of experience navigating through the U.S. marketplace. Hence, providing companies with the optimal conditions needed for their international expansion.
Market
There is a long tradition of U.S. consumers and companies adopting Nordic products, technology and designs into their everyday life and operational activities, such as, industrial machinery, furniture, pharmaceuticals and chemical products. As highlighted by data gathered from the U.S. Bureau of Economic Analysis, the Nordic-U.S. investment ties are extensive:
Table 1: Nordic-U.S. Economic Relations1,2
(direct investment [historical-cost basis] and employment)
| Nordic Country | Nordic Direct Investments in the U.S. (2021) |
Workers Employed in the U.S. by Nordic-owned Affiliates (2019) | ||
| Denmark | USD 34.6 bn. | 40,000 | ||
| Finland | USD 10.1 bn. | 37,100 | ||
| Iceland | N/A | 400 | ||
| Norway | USD 32.5 bn. | 7,300 | ||
| Sweden | USD 71.5 bn. | 226,700 |
| 1 | https://sgp.fas.org/crs/row/IF10740.pdf |
| 2 | https://apps.bea.gov/iTable/iTable.cfm?reqid=2&step=1&isuri=1#reqid=2&step=1&isuri=1 |
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Nordic direct investments in the U.S. totaled 148.7 bn. in 2021, with the number of workers employed in the U.S. by Nordic-owned affiliates amounting to 271,540 in 2019.
Customers
Our plan for customer acquisition is to a large degree related to our extensive network of business partners and associates, whether its ourselves actively targeting a company of interest or the other way around.
We also believe that as we continuously help the right Nordic companies establishing themselves on the U.S. market, that our services organically will be attractive and visible to a larger number of businesses throughout the Nordic region.
Sales and Marketing
We believe our management, through their shared network of strategic partners and affiliated companies, have the market reach needed in order for us to increase our awareness and recognition.
Our sales point is our competencies and expertise with regards to our corporate finance services. Our efforts will focus on companies in the following sectors:
| ● | Technology | |
| ● | IT | |
| ● | SaaS | |
| ● | E-commerce | |
| ● | Blockchain | |
| ● | Life Science | |
| ● | Green Energy / Clean Tech |
Competition
Given our two-fold business model we are somewhat of a hybrid between a management consulting firm – with certain attributes of a business incubator – as well as taking on the role of a corporate investor. Our competition will thus also be divided into two types of competitors:
| ● | Management consulting firms; and | |
| ● | Corporate investors, investment funds, venture funds, etc. |
Given the fact that our customer base is Nordic companies, our direct competitors will thus also be Nordic actors. According to CrunchBase, the total number of management consulting companies in the Nordic countries accumulate to 766. However, since management consulting firms can be more or less specialized to certain sectors, it cannot be expected that all 766 Nordic companies are in direct competition with us, even though we operate in numerous sectors given our widely applicable corporate finance services.
Examples of competitors in the space of management consulting could be EY, KPMG, PwC, Deloitte, Ramboll, Oliver Wyman, PA Consulting, Valcon, Vaeksthuset, etc.
Extended to our role as a corporate investor, the competitive landscape can be hard to quantify, given that there are not any public records accumulating the number of corporate investors in Scandinavia, as is the case for instance for private equity funds. As an example, according to CrunchBase there are currently 186 Nordic private equity funds, with some of them being the likes of Axcel, Nordic Eye, EQT, Industri Udvikling, Nordic Capital, SE Blue Equity to name a few.
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As a corporate investor, we differentiate ourselves from the respective fund types, in which we do not pool together funds from limited partners and invest in companies. Furthermore, private equity funds or venture funds are often guided by certain rules/strategies, with regards to Company types targeted, percentage interested in acquiring (majority vs. minority stake), investment size, capital structure, stage of targeted company, risk, etc.
We could thus be seen as taking a more hybrid approach compared to the different fund types, by having a flexible/versatile approach when it comes to our investment strategy, which could vary depending on the specific investment opportunity.
Government Regulation
Having business operations in a European country constitutes being aligned with The General Data Protection Regulation (GDPR). GDPR is a law enforced by the European Union, in order to ensure that companies are handling personal data in a manner which is secure, private and confidential to unwanted third parties.
As a management consultancy company, we will most likely be in possession of sensitive information regarding our clients. We will thus always be in correspondence with the GPDR laws set forth by the European Union. For additional information regarding the laws and regulations that may adversely affect our business, please see the section titled “Risk Factors” below.
Employees
We intend to employ outside contractors when needed, as it pertains to legal advice, market analysts, funding specialists, marketing specialists, corporate valuations and investor relations.
Legal Proceedings
We are not a party to any other legal proceedings, other than ordinary routine litigation incidental to our business, which we believe will not have a material effect on our financial position or results of operations.
Description of Properties
Currently, we do not own or lease any properties. We do intend to rent an office in Nevada for day to day business operations.
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RISK FACTORS
The following risk factors apply to the business and operations of the Company. These risk factors are not exhaustive. Investors are encouraged to perform their own investigation with respect to the business, financial condition and prospects of the Company. You should carefully consider the following risk factors, as well as the other information included in this Report. In particular, please refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.
Risks Related to our Capital Structure
There is no assurance of an active established public trading market, which would adversely affect the ability of the Company’s investors to sell their securities in the public market.
Although the Company’s common stock is registered under the Exchange Act and is traded on the OTC Pink Marketplace, an active trading market for the securities does not yet exist and may not exist or be sustained in the future. The OTC Pink Marketplace is an over-the-counter market that provides significantly less liquidity than the NASDAQ Stock Market. Prices for securities traded solely on the OTC Pink may be difficult to obtain and holders of common stock may be unable to resell their securities at or near their original offering price or at any price. Market prices for the Company’s common stock will be influenced by a number of factors, including:
| ● | The Company’s ability to obtain additional financing and the terms thereof; | |
| ● | The Company’s financial position and results of operations; | |
| ● | Any litigation against the Company; | |
| ● | Possible regulatory requirements on the Company’s business; | |
| ● | The issuance of new debt or equity securities pursuant to a future offering; | |
| ● | Competitive developments; | |
| ● | Variations and fluctuations in the Company’s operating results; | |
| ● | Change in financial estimates by securities analysts; | |
| ● | The depth and liquidity of the market for the Company’s common stock; | |
| ● | Investor perceptions of the Company; and | |
| ● | General economic and business conditions. |
Shares eligible for future sale may adversely affect the market price of the Company’s common stock, as the future sale of a substantial amount of outstanding stock in the public marketplace could reduce the price of the Company’s common stock.
Approximately 31.3% of the shares of common stock issued and outstanding are owned by 3 stockholders who will be eligible to sell some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act (“Rule 144”), subject to certain limitations commencing in one year. Rule 144 also permits the sale of securities, without any limitations, by a non-affiliate that has satisfied a six-month holding period commencing one year after the Company is no longer a shell company. Any substantial sale of common stock pursuant to Rule 144 may have an adverse effect on the market price of our common stock by creating an excessive supply.
The Company’s common stock is considered a “penny stock” and may be difficult to sell.
The Company’s common stock is considered to be a “penny stock” since it meets one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g) of the Exchange Act. These include but are not limited to the following: (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; (iii) it is not quoted on the NASDAQ Stock Market, or even if so, has a price less than $5.00 per share; or (iv) it is issued by a company with net tangible assets less than $2.0 million, if in business more than a continuous three years, or with average revenues of less than $6.0 million for the past three years. The principal result or effect of being designated a “penny stock” is that securities broker-dealers cannot recommend the stock but must trade in it on an unsolicited basis.
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Additionally, Section 15(g) of the Exchange Act and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account.
Holders in the Company’s common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.” Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to: (i) obtain from the investor information concerning its financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of the Company’s common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.
The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements that may also limit a stockholder’s ability to buy and sell our stock.
In addition to the “penny stock” rules described above, FINRA has adopted rules that require that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
A decline in the price of our common stock could affect our ability to raise additional working capital, it may adversely impact our ability to continue operations and we may go out of business.
A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale and issuance of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors not to choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and we may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale and issuance of our common stock and we may be forced to go out of business.
The Company does not intend to pay dividends and stockholders may not experience a return on investment without selling their securities.
The Company has never declared or paid, nor does it intend in the foreseeable future to declare or pay, any cash dividends on its common stock. Since the Company intends to retain all future earnings to finance the operation and growth of its business, stockholders will likely need to sell their securities in order to realize a return on their investment, if any.
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Unfavorable general economic conditions may materially adversely affect our business.
While it is difficult for us to predict the impact of general economic conditions on our business, these conditions could reduce customer demand for some of our products or services which could cause our revenue to decline. Also, our customers that are especially reliant on the credit and capital markets being liquid, retail investors having investment capital and other factors which could affect their ability to host successful capital raises and continue as a going concern. Moreover, we rely on obtaining additional capital and/or additional funding to provide working capital to support our operations. We regularly evaluate alternative financing sources. Further changes in the commercial capital markets or in the financial stability of our investors and creditors may impact the ability of our investors and creditors to provide additional financing. For these reasons, among others, if the economic conditions stagnate or decline, our operating results and financial condition could be adversely affected.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. As a result, current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.
We are a development stage company with limited resources. Therefore, we cannot assure investors that we will be able to maintain effective internal controls over financial reporting based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. For these reasons, we are considering the costs and benefits associated with improving and documenting our disclosure controls and procedures and internal controls and procedures, which includes (i) hiring additional personnel with sufficient U.S. GAAP experience and (ii) implementing ongoing training in U.S. GAAP requirements for our CFO and accounting and other finance personnel. If the results of these efforts are not successful, or if material weaknesses are identified in our internal control over financial reporting, our management will be unable to report favorably as to the effectiveness of our internal control over financial reporting and/or our disclosure controls and procedures, and we could be required to further implement expensive and time-consuming remedial measures and potentially lose investor confidence in the accuracy and completeness of our financial reports which could have an adverse effect on our stock price and potentially subject us to litigation.
Our management has limited experience in operating a public company.
Our executive officers and director have limited experience in the management of a publicly traded company. Our management team may not successfully or effectively manage our transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage to us in that it is likely that an increasing amount of their time will be devoted to these activities which will result in less time being devoted to the management and growth of our company. It is possible that we will be required to expand our employee base and hire additional employees, such as a chief financial officer experienced in public company financial reporting, to support our operations as a public company which will increase our operating costs in future periods.
A significant majority of our outstanding ordinary shares are held by a small number of shareholders, which may have significantly greater influence on us due to the size of their shareholdings relative to other shareholders.
As of the date of this Report, three persons beneficially own approximately 71.4% of the outstanding shares of Common Stock of the Company (including a warrant to purchase 5,585,000 shares of Common Stock). These major shareholders have significant influence in determining the outcome of any corporate transactions or other matters submitted to our shareholders for approval, including mergers, consolidations and schemes of arrangement, election and removal of directors and other significant corporate actions. They may not act in our best interests or our minority shareholders’ interests. In addition, without the consent of these major shareholders, we could be prevented from entering into transactions that could be beneficial to us. This concentration of ownership may also discourage, delay or prevent a change in control, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and might reduce the price of our Common Stock. These actions may be taken even if they are opposed by our other shareholders.
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We are subject to the periodic reporting requirements of the Exchange Act that will require us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to earn a profit.
We are required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our auditors and attorneys. However, the incurrence of such costs will obviously be an expense to our operations and thus have a negative effect on our ability to meet our overhead requirements and earn a profit. We may be exposed to potential risks resulting from any new requirements under Section 404 of the Sarbanes-Oxley Act of 2002. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended by SEC Release 33-8889, we are required to include in our annual report our assessment of the effectiveness of our internal control over financial reporting. Furthermore, if we cease to be a smaller reporting company, our independent registered public accounting firm will be required to report separately on whether it believes that we have maintained, in all material respects, effective internal control over financial reporting. We have not yet commenced any assessment of the effectiveness of our internal control over financial reporting. We expect to incur additional expenses and diversion of management’s time as a result of performing the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.
We do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identify other deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.
The capital markets may experience periods of disruption and instability. Such market conditions may materially and adversely affect debt and equity capital markets, which may have a negative impact on our business and operations.
Volatility and dislocation in the capital markets can also create a challenging environment in which to raise or access debt capital. The reappearance of market conditions similar to those experienced from 2008 through 2009 for any substantial length of time could make it difficult to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we currently experience including being at a higher cost due to a rising rate environment. If we are unable to raise or refinance debt, then our equity investors may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies.
Significant changes or volatility in the capital markets may also have a negative effect on the valuations of our investments. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). Significant changes in the capital markets may also affect the pace of our investment activity and the potential for liquidity events involving our investments. Thus, the illiquidity of our investments may make it difficult for us to sell such investments to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded our investments if we were required to sell them for liquidity purposes. An inability to raise or access capital could have a material adverse effect on our business, financial condition or results of operations.
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Risks Relating to our Business and Industry
We are a start-up company, and we may be unable to generate significant revenues and may never become profitable.
We are a start-up company that has not generated revenue to date and we may incur significant operating losses for the foreseeable future. We may not be able to validate and create our business in a manner that will generate significant revenues. In addition, any revenues that we may generate may be insufficient for us to become profitable.
In particular, potential investors should be aware that we have not proven that we can raise sufficient capital in the public and/or private markets; build a pipeline of businesses seeking services from us, develop and maintain relationships with key strategic partners that will be necessary to optimize the market value of our services; respond effectively to competitive pressures; or recruit and build a management team to accomplish our business plan. If we are unable to accomplish these goals, our business is unlikely to succeed.
Our future capital needs are uncertain and our independent registered public accounting firm has expressed in its report on our 2022 audited financial statements a substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on our ability to raise additional capital and our operations could be curtailed if we are unable to obtain the required additional funding when needed. We may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.
Our financial statements for the fiscal years ended March 31, 2022 and 2021, attached hereto as Exhibit 99.1 to this Report have been prepared assuming we will continue to operate as a going concern. However, due to our recurring losses from operations, and working capital deficiency, there is substantial doubt about our ability to continue as a going concern. Because we expect to continue to experience negative cash flow, our ability to continue as a going concern is subject to our ability to obtain necessary funding from outside sources, including obtaining additional funding from the sale of our securities, grants or other forms of financing. Our continued negative cash flow increases the difficulty in completing such sales or securing alternative sources of funding, and there can be no assurances that we will be able to obtain such funding on favorable terms or at all. If we are unable to obtain sufficient financing from the sale of our securities or from alternative sources, we may be required to reduce, defer or discontinue certain of our research and development and operating activities or we may not be able to continue as a going concern. As a result, our independent registered public accounting firm has expressed in its auditors’ report on the financial statements attached as Exhibit 99.1 to this Report for the fiscal years ended March 31, 2022 and 2021, a substantial doubt regarding our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of the uncertainty regarding our ability to continue as a going concern. If we cannot continue as a going concern, our shareholders may lose their entire investment in our Common Stock. Future reports from our independent registered public accounting firm may also contain statements expressing doubt about our ability to continue as a going concern.
Because of our limited operating history, we may not be able to correctly estimate our future operating expenses, which could lead to cash shortfalls.
We have only a limited operating history from which to evaluate our business. We have not generated any revenues to date. Accordingly, our prospects must be considered in light of the risks, expenses, and difficulties frequently encountered by companies in an early stage of development. We may not be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business, operating results and financial condition.
Because of this limited operating history and because of the emerging nature of the markets in which we compete, our historical financial data is of limited value in estimating future operating expenses. Our budgeted expense levels are based in part on our expectations concerning future revenues.
We may be unable to adjust our operations in a timely manner to compensate for any unexpected shortfall in revenues. Accordingly, a significant shortfall in demand for our product could have an immediate and material adverse effect on our business, results of operations, and financial condition.
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Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as any indication of our future performance. Our quarterly and annual expenses are likely to increase substantially over the next several years, and revenues from the sale of our services may not meet our expectations. Our operating results in future quarters may fall below expectations. Any of these events could adversely impact our business prospects and make it more difficult to raise additional equity capital at an acceptable price per share. Each of the risk factors listed in this “Risk Factors” section may affect our operating results.
Our business, the design of our product may change and evolve over time. Furthermore, we compete in an unpredictable industry against companies in the same business that have substantially more capital than we do and have existing distribution systems well established. Our ability to succeed depends on our ability to execute our business plan including navigating regulatory hurdles, launching a fully featured product and attracting both businesses seeking loans and investors interested in making loans. As such, our actual operating results may differ substantially from our projections.
We expect to need additional substantial capital to fund our growing operations and if we are unable to obtain sufficient capital, we may be forced to limit the scope of our operations.
We expect that for our business to grow we will need substantial additional working capital. If adequate additional debt and/or equity financing is not available on reasonable terms or at all, we may not be able to continue to expand our business or pay our outstanding obligations, and we will have to modify our business plans accordingly. These factors would have a material adverse effect on our future operating results and our financial condition.
We will operate in an ever-evolving industry and changes to it can have a material effect on our business model which makes it difficult to evaluate our business and prospects.
We expect to derive nearly all of our revenue from consulting services. Our business model is evolving and is distinct from many other companies in our industry, and it may not be successful. As a result of these factors, the future revenue and income potential of our business is uncertain. Any evaluation of our business and our prospects must be considered in light of these factors and the risks and uncertainties often encountered by companies in an immature industry with an evolving business model such as ours. Some of these risks and uncertainties relate to our ability to:
| ● | acquisition of potential customers; | |
| ● | maintain and expand customer relationships once established; | |
| ● | raise capital at attractive costs, or at all; | |
| ● | respond effectively to competition and potential negative effects of competition on profit margins; | |
| ● | attract and retain qualified management, employees and independent service providers; and | |
| ● | respond to government regulations relating to the Internet, personal data protection, email, software technologies and other aspects of our business. |
If we are unable to address these risks, our business, results of operations and prospects could suffer.
If we do not effectively manage our anticipated growth, our operating performance will suffer and we may lose potential customers.
We could experience rapid growth in our operations. This anticipated growth could place significant demands on our management and our operational and financial infrastructure. In particular, rapid growth, if realized, could make it more difficult for us to execute on our business plan.
In addition, our personnel, systems, procedures and controls, once implemented may be inadequate to support our anticipated future operations. The improvements which could be required to manage our anticipated growth could require us to make significant expenditures, expand, train and manage our employee base and allocate valuable management resources. If we fail to effectively manage our anticipated growth, our operating performance will suffer and we could lose potential customers and key personnel.
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We need to hire and retain additional qualified personnel to grow and manage our business. If we are unable to attract and retain qualified personnel, our business and growth could be seriously harmed.
Our performance depends on the talents and efforts of our key employees, who are charged with daily operations and strategy to reach commercial success. Our future success will depend on our ability to attract, retain and motivate highly skilled personnel in all areas of our organization and, in particular, in our engineering/technology, sales and marketing, media, finance and legal/regulatory teams. We plan to continue to grow our business and will need to hire additional personnel to support this growth. We have found it difficult from time to time to locate and hire suitable personnel. If we experience similar difficulties in the future, our growth may be hindered. Qualified individuals are in high demand, and we may incur significant costs to attract and retain them. Employees may be more likely to leave us following our initial public offering as a result of the establishment of a public market for our common stock. If we are unable to attract and retain the personnel we need to succeed, our business and growth could be harmed.
If we fail to compete effectively against other competitors, we could fail to attract customers and we may never generate revenues.
The market for consulting services is intensely competitive. We expect this competition to continue to increase in the future.
If we are unable to price our services appropriately, our margins and revenue may decline.
Our clients purchase our services according to a variety of pricing formulae. Sometimes these include formulae based on pay for performance, meaning clients pay only after we have delivered the desired result to them. Regardless of how a given client pays us, we ordinarily pay the vast majority of the costs associated with delivering our services to our clients according to contracts and other arrangements that do not always condition payment to vendors upon receipt of payments from our clients. This means we typically pay for the costs of providing our services before we receive payment from clients. Additionally, certain of our services costs are highly variable and may fluctuate significantly during each calendar month. Accordingly, we run the risk of not being able to recover the entire cost of our services from clients if pricing or other terms negotiated prior to the performance of services prove less than the cost of performing such services.
Limitations on director and officer liability and our indemnification of our officers and directors may discourage stockholders from bringing suit against a director.
Our articles of incorporation and bylaws provide, as permitted by Delaware corporation law, that a director or officer shall not be personally liable to us or our stockholders for breach of fiduciary duty as a director or officer, except for acts or omissions which involve intentional misconduct, fraud or knowing violation of law. These provisions may discourage stockholders from bringing suit against a director for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by stockholders on our behalf against a director. In addition, our amended and restated articles of incorporation and bylaws require indemnification of directors and officers to the fullest extent permitted by Delaware law.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
This Report on Form 8-K contains certain statements that are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.
The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended or using other similar expressions.
In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Report on Form 8-K. For example, given the cessation of our operations as a developer, manufacturer, marketer and seller of advanced polymers on January 31, 2020, resulting from the sale of substantially all of our assets to an independent third party, we became engaged in efforts to identify an operating company to acquire or merge with through an equity-based exchange transaction whereby such a transaction would likely result in a change in control. If we are unable to effect a transaction with an operating company, we may be required to cease all operations, including liquidation through bankruptcy proceedings. For all of these reasons, the reader is cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date hereof. In addition, you should read and carefully consider the Risk Factors discussed in Part I, Item 1A of this Form 8-K. We assume no responsibility to update any forward-looking statements as a result of new information, future events, or otherwise except as required by law.
Fiscal Year
Our fiscal year ends on March 31. Reference in this report to a fiscal year is reference to the fiscal year ended March 31. For example, references to “fiscal 2022” or our “2022 fiscal year” refer to the fiscal year ended March 31, 2022.
Business
On January 31, 2020 (the “Closing Date”), we completed the sale of substantially all of our assets (the “Asset Sale”) for a total purchase price of $7,250,000 pursuant to an Asset Purchase Agreement entered into between us and Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation (“MCPP”). Prior to the Closing Date, we developed and manufactured advanced polymer materials which provided critical characteristics in the design and development of medical devices. Our biomaterials were marketed and sold to medical device manufacturers who used our advanced polymers in devices designed for treating a broad range of anatomical sites and disease states.
As a result of the Asset Sale, we ceased operating as a developer, manufacturer, marketer and seller of advanced polymers. Subsequent to the Closing Date, we became engaged in efforts to identify either an (i) operating company to acquire or merge with through an equity-based exchange transaction or (ii) investor interested in purchasing a majority interest in our common stock, whereby either transaction would likely result in a change in control. On October 12, 2021, we entered into a Stock Purchase Agreement (the “SPA”) with Reddington Partners LLC, a California limited liability company (“Reddington”) providing for the purchase of a total of 5,114,475 of our common stock, on a post-split basis, or approximately 90% of our total shares of common stock outstanding for total cash consideration of $400,000. Reddington purchased in two tranches on October 12, 2021 and March 15, 2022.
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Pursuant to the SPA, the Company effectuated a 1-for 50 reverse stock split on March 11, 2022 (the “Reverse Split”). Accordingly, on a post-split basis, the shares purchased in connection with the First Closing resulted in Reddington owning 422,725 shares of our common stock. As set forth in the SPA, Reddington then purchased from us on March 15, 2022 an additional 4,691,750 shares of our common stock, on a post-split basis (the “Second Closing”). After the issuance thereof Reddington owned 5,114,475 shares of our common stock, or approximately 90% of our total shares of common stock outstanding.
Management is seeking to identify an operating company for the purposes of engaging in a merger or business combination of some kind, or acquire assets or shares of an entity actively engaged in a business that generates sustained revenues. Although we have investigated certain opportunities to determine whether they would have the potential to add value to us for the benefit of our stockholders, we have not yet entered into any binding arrangements.
We do not intend to restrict our consideration to any particular business or industry segment. Because we have limited resources, the scope and number of suitable candidates to merge with is relatively limited. Because we may participate in a business opportunity with a newly formed firm, a firm that is in the development stage, or a firm that is entering a new phase of growth, we may incur further risk due to the inability of the target’s management to have proven its abilities or effectiveness, or the lack of an established market for the target’s products or services, or the inability to reach profitability in the next few years.
Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to our present stockholders. As it is expected that the closing of such a transaction will result in a change in control, such transaction is expected to be accounted for as a reverse merger, with the operating company being considered the legal acquiree and accounting acquirer, and we would be considered the legal acquirer and the accounting acquiree. As a result, at and subsequent to closing of any such transaction, the financial statements of the operating company would become our financial statements for all periods presented.
Critical Accounting Policies
Our significant accounting policies are summarized in Note 3 to our financial statements included in Item 8 of our annual report on Form 10-K for the fiscal year ended March 31, 2022. However, certain of our accounting policies require the application of significant judgment by our management, and such judgments are reflected in the amounts reported in our financial statements. In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of estimates. Those estimates are based on our historical experience, terms of existing contracts, our observance of market trends, information provided by our strategic partners and information available from other outside sources, as appropriate. Actual results may differ significantly from the estimates contained in our financial statements. Other than as set forth below, there have been no changes to our critical accounting policies during the fiscal quarter ended December 31, 2022.
Stock-Based Compensation.
We applied the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the condensed consolidated statements of operations.
ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the reward- known as the requisite service period. No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The grant-date fair value of employee share options and similar instruments are estimated using the Black Scholes option-pricing model adjusted for the unique characteristics of those instruments.
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Equity instruments issued to non-employees are recorded at their fair values as determined in accordance with ASC 718 as amended by ASU 2018-07. As such, the grant date is the measurement date of an award’s fair value., which is expensed over the requisite service period.
Results of Operations
Three Months Ended December 31, 2022 vs. December 31, 2021
Operating Expenses
During the three months ended December 31, 2022, our operating expenses were approximately $853,000 as compared with $40,000 for the comparable prior year period, an increase of approximately $813,000. Our operating expenses are composed of those costs necessary to operate a public company, which are primarily composed of management consultant fees, accounting fees, professional fees, and regulatory fees. The increase in these operating costs is the result of the recording of stock-based compensation expense of approximately $825,000 in connection with the issuance of a warrants immediately exercisable into up to 750,000 shares of our common stock. The increase in operating costs was offset by a decrease in professional and consulting fees incurred prior to the change of control resulting from the purchase of common stock by an investor on October 12, 2021.
Nine Months Ended December 31, 2022 vs. December 31, 2021
Operating Expenses
During the nine months ended December 31, 2022, our operating expenses were approximately $5,941,000 as compared with $256,000 for the comparable prior year period, an increase of approximately $5,685,000. Our operating expenses are composed of those costs necessary to operate a public company, which are primarily composed of management consultant fees, accounting fees, professional fees, and regulatory fees. The increase in these operating costs is primarily a result of the recording of stock-based compensation of approximately $5,834,000 in connection with the issuance of a warrant immediately exercisable into up to 6,750,000 shares of our common stock. The increase in these operation costs were offset by a decrease in professional and consulting fees incurred prior to the change of control resulting from the purchase of common stock by an investor on October 12, 2021.
Other Income
On May 20, 2021, we received a $22,000 cash deposit (the “Deposit”) in connection with a non-binding arrangement entered into with a private company having an interest in a potential business combination with us. On August 12, 2021, we were notified by the private company of their intent to terminate the arrangement. The arrangement provided that the Deposit was refundable, net of all reasonable legal, advisory and regulatory fees incurred by us. Our legal, advisory and regulatory fees exceeded the amount of the Deposit, accordingly, there was no refund due to the private company.
Fiscal Years Ended March 31, 2022 vs. March 31, 2021
Operating Expenses
During the fiscal year ended March 31, 2022, our operating expenses were approximately $309,000 as compared with $326,000 for the comparable prior year period, a decrease of approximately $17,000, or 5.2%. Our operating expenses are composed of those costs necessary to operate a public company, which are primarily composed of management consultant fees, accounting fees, professional fees, and regulatory fees. The decrease in these operating costs is primarily a result of decreased accounting and management advisory fees which were reduced in connection with the sale of shares to a private investor.
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Other Income
On May 20, 2021, we received a $22,000 cash deposit (the “Deposit”) in connection with a non-binding arrangement entered into with a private company having an interest in a potential business combination with us. On August 12, 2021, we were notified by the private company of their intent to terminate the arrangement. The arrangement provided that the Deposit was refundable, net of all reasonable legal, advisory and regulatory fees incurred by us. Our legal, advisory and regulatory fees exceeded the amount of the Deposit, accordingly, there was no refund due to the private company.
Liquidity, Capital Resources and Going Concern
As of September 30, 2022, we had cash of approximately $1,000 as compared to a cash balance of approximately $246,000 as of March 31, 2022.
As of December 31, 2022, we had cash of approximately $5,000 as compared to a cash balance of approximately $246,000 as of March 31, 2022.
During the nine months ended December 31, 2022, we had net cash of approximately $140,000 used in operating activities. Our cash flows used in operating activities is primarily a result of (i) our net loss of approximately $5,933,000; and (ii) a decrease in accounts payable, accrued expenses and related party payable of approximately $44,000. The cash used in operating activities were offset by stock-based compensation of approximately $5,835,000 in connection with the issuance of a warrant immediately exercisable into up to 6,750,000 shares of our common stock at an exercise price of $1.00 per share. During the nine months ended December 31, 2021, we had net cash of approximately $206,000 used in operating activities. Our cash flows used in operating activities is primarily a result of our net loss of approximately $234,000 which was offset by an increase in accounts payable and accrued expense of approximately $28,000.
During the nine months ended December 31, 2022 we had net cash of approximately $101,000 used in financing activities as a result of the cash distribution of approximately $141,000 on September 22, 2022 to our stockholders of record as of March 15, 2022, which was offset by the $40,000 received for a note payable. During the nine months ended December 31, 2021, we had net cash of $200,000 provided by financing activities which was a result of the issuance of an additional 21,136,250 shares of our common stock to a private investor in consideration of $200,000 in cash.
On January 31, 2020 (the “Closing Date”), we completed the sale of substantially all of our assets (the “Asset Sale”) for a total purchase price of $7,250,000 pursuant to an Asset Purchase Agreement entered into between us and Mitsubishi Chemical Performance Polymers, Inc., a Delaware corporation (“MCPP”). As a result of the Asset Sale, we ceased operating as a developer, manufacturer, marketer and seller of advanced polymers. Subsequent to the Closing Date, we became engaged in efforts to identify either an (i) operating company to acquire or merge with through an equity-based exchange transaction or (ii) investor interested in purchasing a majority interest in our common stock, whereby either transaction would likely result in a change in control. On October 12, 2021, we entered into a Stock Purchase Agreement (the “SPA”) with Reddington Partners LLC, a California limited liability company (“Reddington”) providing for the purchase of a total of 5,114,475 of our common stock, on a post-split basis, or approximately 90% of our total shares of common stock outstanding for total cash consideration of $400,000. Reddington purchased these shares of our common stock in two tranches on October 12, 2021 and March 15, 2022.
Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the three months ended December 31, 2022 and 2021, we reported a net loss of approximately $26,000 and $40,000, respectively. During the nine months ended December 31, 2022 and 2021, we reported a net loss of approximately $5,108,000 and $234,000, respectively. Cash flows of approximately $140,000 and $206,000 were used in operations for the nine months ended December 31, 2022 and 2021, respectively. As a result, we expect our funds will not be sufficient to meet our needs for more than twelve months from the date of issuance of these financial statements. Accordingly, management believes there is substantial doubt about our ability to continue as a going concern.
Management is seeking to identify an operating company for the purposes of engaging in a merger or business combination of some kind, or acquire assets or shares of an entity actively engaged in a business that generates sustained revenues. Although we have investigated certain opportunities to determine whether they would have the potential to add value to us for the benefit of our stockholders, we have not yet entered into any binding arrangements.
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We do not intend to restrict our consideration to any particular business or industry segment. Because we have limited resources, the scope and number of suitable candidates to merge with is relatively limited. Because we may participate in a business opportunity with a newly formed firm, a firm that is in the development stage, or a firm that is entering a new phase of growth, we may incur further risk due to the inability of the target’s management to have proven its abilities or effectiveness, or the lack of an established market for the target’s products or services, or the inability to reach profitability in the next few years.
Any business combination or transaction will likely result in a significant issuance of shares and substantial dilution to our present stockholders. As it is expected that the closing of such a transaction will result in a change in control, such transaction is expected to be accounted for as a reverse merger, with the operating company being considered the legal acquiree and accounting acquirer, and we would be considered the legal acquirer and the accounting acquiree. As a result, at and subsequent to closing of any such transaction, the financial statements of the operating company would become our financial statements for all periods presented.
Off-Balance Sheet Arrangements
As of December 31, 2022, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
Subsequent Events
On October 14, 2022, we executed a Demand Promissory Note (the “Note”) in favor of GK Partners ApS (the “Lender”), a private company located in Denmark. The Note has a principal amount of $40,000, bears interest at a rate of 3% per annum and matures on June 30, 2023 (the “Maturity Date”). Principal and accrued interest are payable on the Maturity Date or earlier on demand. The Lender advanced $20,000 of the principal amount of the Note on October 14, 2022 and is expected to advance the remaining $20,000 no later than October 21, 2022. We used the amounts advanced to pay certain operating expenses. On February 15, 2023, we repaid the Note in full with interest.
On November 28, 2022, we issued (i) to David Volpe a warrant to purchase 500,000 shares of the Company’s Common Stock and (ii) to Bennett J. Yankowitz a warrant to purchase 250,000 shares of the Company’s Common Stock (the “Warrants”).
The Warrants have a term expiring on December 31, 2027, are fully vested on the date of issuance, and have an exercise price equal of $1.00 per share, subject to adjustment for stock splits, stock dividends, certain changes in control and subsequent sales of the Company’s securities at a price per share lower than the exercise price of the Warrants, as described in Section 9 of the Warrants. Copies of the Warrants are attached as Exhibits to this Current Report.
Mr. Volpe’s Warrants were issued as compensation for consulting services provided to the Company. Mr. Yankowitz’s Warrants were issued as compensation for his acting as the sole director and the chief executive officer of the Company. Mr. Yankowitz receives no other compensation from the Company.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of shares of our common stock, as of February 23, 2023 (the closing date of the Business Combination), of each person known by us to beneficially own five percent (5%) or more of such shares. Our current executive officer and director does not beneficially own any of our shares of common stock. Except as otherwise indicated, all shares are beneficially owned, and the persons named as owners hold investment and voting power.
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. Under this rule, certain shares may be deemed to be beneficially owned by more than one person, if, for example, persons share the power to vote or the power to dispose of the shares. In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares, for example, upon exercise of an option or warrant, within 60 days of February 23, 2023. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person, and only such person, by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date.
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage of Class (1) | ||||||
Tom Glaesner Larsen Dyrehavevej 3b 2930 Klampenborg Denmark | 9,887,804 | (2) | 66.2 | % | ||||
Henrik Rouf 7950 W. Sunset Blvd – Suite 629 Los Angeles, CA 90046 USA | 3,278,618 | (3) | 22.0 | % | ||||
Christian Hill-Madsen Mesterlodden 3a 2820 Gentofte Denmark | 2,500,000 | (4) | 16.7 | % | ||||
| (1) | Based on 14,931,248 shares of common stock as of February 23, 2023, composed of 8,296,248 outstanding shares of our common stock and 6,635,000 shares of our common stock underlying outstanding warrants. | |
| (2) | Includes (i) 5,885,000 shares of our common stock underlying a warrant issued to GK Partners ApS on April 1, 2022 exercisable immediately at an exercise price of $1.00 per share and expiring on December 31, 2023 and (ii) 2,500,000 shares of our common stock owned by Nordicus Partners A/S, of which Mr. Larsen and his wife Kiri Lillan Glaesner are beneficial owners. | |
| (3) | Includes (i) 778,618 shares of our common stock owned by Reddington Partners LLC of which Mr. Rouf is the sole beneficial owner, and (ii) 2,500,000 shares of our common stock owned by Nordicus Partners A/S, of which Mr. Rouf is a beneficial owner | |
| (4) | Consists of 2,500,000 shares of our common stock owned by Nordicus Partners A/S, of which Mr. Hill-Madsen is a beneficial owner. |
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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Below are the names of and certain information regarding our current executive officers and directors who were appointed effective as of the closing of the Business Combination and, with respect to incoming directors Tom Glaesner Larsen and Christian Hill-Madsen, subject to Rule 14f-1 of the Exchange Act (“Rule 14f-1”):
| Name | Age | Position | ||
| Henrik Rouf | 55 | Chief Executive Officer | ||
| Tom Glaesner Larsen | 53 | Director | ||
| Christian Hill-Madsen | 56 | Director | ||
| Bennett J. Yankowitz | 67 | Director and Chief Financial Officer |
There are no family relationships between our director and executive officer.
Henrik Rouf—Chief Executive Officer. Mr. Rouf has 30 years of experience in the global finance markets, working as an international financier, merchant banker and fund manager, respectively. Mr. Rouf advises and finances companies in many industries, including (though not limited to) software, semiconductors, blockchain, healthcare, medical devices, biotechnology, restaurant chains, apparel, cannabis, clean tech and advertising. By being located and working in the United States for more than 30 years, Mr. Rouf has a vast network and extensive ties to especially the US, but also to Europe and Asia. Since 2004, he has been the President of PacificWave Partners Inc., a California-based merchant bank.
Tom Glaesner Larsen— Member of our Board of Directors. Prior to joining EKIMAS Corporation, Mr. Larsen has for over +30 years worked as an accountant and management consultant, serving in various executive positions as CIO, CFO and/or CEO, at management consulting firms and at renewable energy companies, domestically and internationally. Since 2020, Mr. Larsen has been the CEO of Nordicus Partners A/S, a Denmark-based financial consultancy company. From 2017 until present Mr. Larsen also serves as the CEO of the management consultancy firm, GK Partners ApS, the accounting firm, Firm Management ApS, and the finance consultancy firm, Glaesner Holding ApS.
Christian Hill-Madsen—Chairman of our Board of Directors. Mr. Hill-Madsen joined the EKIMAS Corporation Board in January 2023. He has over 25 years of experience working as a headhunter dedicated to the Life Science Industry in the Nordics, mastering the fine art of finding the best candidates for the right job, in all aspects of the healthcare solution program from Headhunting and Recruitment, Salesforce Optimization, Assessment to Organizational Development, etc. He is the CEO of Life Science Power House ApS, a Denmark-based life science advisory and consultancy firm, since 2018. From 2013 to 2018 he was the Founder and CEO of the life science headhunting firm, Hill-Consult. Mr. Hill-Madsen is one of the few headhunters truly dedicated to the Life Science industry – from the single objective of wanting to be the best at what he does, working with his clients in the full employee life cycle to ensure that his clients always have the right person serving in the right position.
Bennett J. Yankowitz—Chief Financial Officer and Member of our Board of Directors. Mr. Yankowitz has more than 30 years of experience as a corporate attorney with leading law firms, specializing in securities, financial and merger and acquisition transactions, and has a background in financial analysis and real estate investment and development. He is of counsel to the law firm Shumaker Mallory LLP, and was previously of counsel to its predecessor firm Parker Shumaker Mills LLP. He was previously counsel to Kaye Scholer LLP and a partner of Heenan Blaikie and of Stroock & Stroock & Lavan LLP. From 2002 to 2014, he was a director of Proteus Energy Corporation, a California-based private oil and gas production and development company and was its Chief Executive Officer from 2008 to 2014. He is currently chief financial officer and a member of the board of directors of RocketFuel Blockchain, Inc. Mr. Yankowitz earned his B.A. degree in Mathematics from the University of California, Berkeley (1977), his J.D. degree from the University of Southern California (1980), where he was an editor of the Southern California Law Review, and his LL.M. degree (First Class Honours) from the University of Cambridge (1981), where he was an Evan Lewis-Thomas Scholar at Sidney Sussex College. He is a member of the California and New York bars.
Our Board has concluded that Mr. Yankowitz is an appropriate person to represent management on our Board of Directors given his position as our Chief Financial Officer, his professional credentials, and his understanding of corporate regulatory matters and merger and acquisition activities.
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Board Leadership Structure
On October 14, 2020, the Board appointed Mr. Michael F. Adams, our chief executive officer, to serve as the sole director. In connection with the First Closing of the Stock Purchase Agreement which we entered into with Reddington Partners LLC on October 12, 2021, Mr. Adams resigned as our chief executive officer and sole director, and Mr. Bennett J. Yankowitz was appointed as our chief executive officer and sole director.
Upon the consummation of the Contribution Agreement on February 23, 2023, Mr. Yankowitz resigned as our chief executive officer and became our chief financial officer. Mr. Rouf was appointed chief executive officer and Messrs. Larsen and Hill-Madsen were appointed directors.
Stockholder Communications with the Board of Directors
Pursuant to procedures set forth in our bylaws, our nominating committee will consider stockholder nominations for directors if we receive timely written notice, in proper form, of the intent to make a nomination at a meeting of stockholders. To be timely, the notice must be received within the time frame identified in our bylaws. To be in proper form, the notice must, among other matters, include each nominee’s written consent to serve as a director if elected, a description of all arrangements or understandings between the nominating stockholder and each nominee and information about the nominating stockholder and each nominee. These requirements are detailed in our bylaws, which were filed as Appendix D to our definitive proxy statement on Schedule 14A as filed with the SEC on August 30, 2007. A copy of our bylaws will be provided upon written request to the Chief Executive Officer at EKIMAS Corporation, 3651 Lindell Road, Suite D565, Las Vegas, Nevada 89103.
Code of Conduct and Ethics
We have adopted a Code of Ethics that allows for us to ensure that our disclosure controls and procedures remain effective. Our Code also defines the standard of conduct expected by our chief executive officer and director. A copy of our Code of Ethics will be furnished without charge to any person upon written request. Requests should be sent to: Chief Executive Officer, EKIMAS Corporation, 3651 Lindell Road, Suite D565, Las Vegas, Nevada 89103.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and persons who beneficially own more than 10% of a registered class of our securities to file reports of ownership and changes in ownership with the SEC. Based solely on a review of copies of such forms submitted to us, we believe that all persons subject to the requirements of Section 16(a) filed such reports on a timely basis in fiscal 2022.
Corporate Governance and Guidelines
Our Board of Directors has long believed that good corporate governance is important to ensure that we manage our company for the long-term benefit of stockholders. During the past year, our Board of Directors has continued to review our governance practices in light of the Sarbanes-Oxley Act of 2002 and recently revised SEC rules and regulations. We intend to implement internal corporate governance guidelines and practices when we have available resources to implement these guidelines and practices. Such guidelines and practices, when implemented, will be furnished without charge to any person upon written request. Requests should be sent to: Chief Executive Officer, EKIMAS Corporation, 3651 Lindell Road, Suite D565, Las Vegas, Nevada 89103.
Committees of the Board of Directors
We currently have no separate audit, compensation, or nominating committees. The entire Board oversees our (i) audits and auditing procedures; (ii) compensation philosophies and objectives, establishment of remuneration levels for our executive officer, and implementation of our incentive programs; and (iii) identification of individuals qualified to become Board members and recommendation to our shareholders of persons to be nominated for election as directors.
Code of Ethics
We have adopted a Code of Ethics that allows for us to establish a committee to ensure that our disclosure controls and procedures remain effective. Our Code also defines the standard of conduct expected by our officers, directors and key employees. A copy of our Code of Ethics and Business Conduct will be furnished without charge to any person upon written request. Requests should be sent to: Secretary, EKIMAS Corporation, Inc., 3651 Lindell Road, Suite D565, Las Vegas, Nevada 89103.
Audit Committee
We currently have no separate audit committee. The entire Board oversees our audits and auditing procedures.
Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board be “independent” and, as a result, we are not at this time required to have our Board comprised of a majority of “Independent Directors.” As of the date of this Report, none of our directors are considered to be independent.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides information concerning compensation for services rendered to us in all capacities for the fiscal years ended March 31, 2022 and 2021 by our named executive officer and former named executive officer.
| Named Executive Officer | Fiscal Year | Salary ($) | Bonus ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
Bennett J. Yankowitz President & Chief Executive Officer | 2022 | $ | - | $ | - | $ | - | $ | - | (1) | $ | - | ||||||||||||
| 2021 | - | - | - | - | (1) | - | ||||||||||||||||||
| Former Named Executive Officer | ||||||||||||||||||||||||
Michael F. Adams President & Chief Executive Officer | 2022 | $ | - | $ | - | $ | - | $ | 12,000 | (2) | $ | 12,000 | ||||||||||||
| 2021 | - | - | - | 76,000 | (2) | 76,000 | ||||||||||||||||||
| (1) | Effective October 12, 2021, Mr. Yankowitz was engaged as our chief executive officer on a consultative basis and received no compensation during the fiscal year ended March 31, 2022. On November 28, 2022 Mr. Yankowitz was granted a warrant to purchase 250,000 shares of our common stock at $1.00 per share. | |
| (2) | Mr. Adams, our former chief executive officer, was a non-employee consultant and holder of less than 1.0% of our outstanding common stock as of March 31, 2022. During the fiscal years ended March 31, 2022 and 2021, Mr. Adams earned approximately $12,000 and $76,000, respectively, in consulting fees and was reimbursed $2,000 and approximately $29,000, respectively, for office expenses and car allowance. |
Employment Agreements and Change in Control Provision
None
Outstanding Equity Awards at 2022 Fiscal Year-End
None.
2022 Option Exercises and Stock Vested
None
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Mr. Michael Adams, our former chief executive officer, was a non-employee consultant and holder of less than 1.0% of our outstanding common stock as of March 31, 2022. During the fiscal years ended March 31, 2022 and 2021, Mr. Adams earned approximately $12,000 and $76,000, respectively, in consulting fees and was reimbursed $2,000 and approximately $29,000, respectively, for office expenses and car allowance. As of March 31, 2022 and 2021, there was $0 and approximately $17,000, respectively, payable to Mr. Adams in consideration of his consulting services and reimbursable expenses and allowances. In connection with the First Closing of the Stock Purchase Agreement which we entered into with Reddington Partners LLC on October 12, 2021, Mr. Adams resigned as our chief executive officer and sole director, and Mr. Bennett J. Yankowitz was appointed as our chief executive officer and sole director.
During the fiscal year ended March 31, 2022, Mr. Yankowitz, our chief executive officer and sole director, was affiliated with legal counsel who provided us with general legal services (the “Affiliate”). We recorded legal fees paid to the Affiliate of approximately $12,000 for the fiscal year ended March 31, 2022. As of March 31, 2022 we had approximately $12,000 payable to the Affiliate. Mr. Yankowitz does not receive cash compensation for acting as our chief executive officer and sole director.
Independence of the Board of Directors
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the Board be “independent” and, as a result, we are not at this time required to have our Board comprised of a majority of “Independent Directors.” Our Board is currently composed of our chief executive officer.
Board Attendance
The Board did not meet during the fiscal year ended March 31, 2022.
Committees of the Board of Directors
We currently have no separate audit, compensation, or nominating committees. The entire Board oversees our (i) audits and auditing procedures; (ii) compensation philosophies and objectives, establishment of remuneration levels for our executive officer, and implementation of our incentive programs; and (iii) identification of individuals qualified to become Board members and recommendation to our shareholders of persons to be nominated for election as directors.
Directors’ Compensation
We did not provide any Board compensation during the fiscal year ended March 31, 2022.
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MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Our common stock is quoted on the OTC Market under the symbol “ASNB”. There is very limited trading of our common stock. The stock market in general has experienced extreme stock price fluctuations in the past few years. In some cases, these fluctuations have been unrelated to the operating performance of the affected companies. Many companies have experienced dramatic volatility in the market prices of their common stock. We believe that a number of factors, both within and outside our control, could cause the price of our common stock to fluctuate, perhaps substantially. Factors such as the following could have a significant adverse impact on the market price of our common stock:
| ● | Our ability to obtain additional financing and the terms thereof; | |
| ● | Our financial position and results of operations; | |
| ● | Any litigation against us; | |
| ● | Possible regulatory requirements on our business; | |
| ● | The issuance of new debt or equity securities pursuant to a future offering; | |
| ● | Changes in interest rates; | |
| ● | Competitive developments; | |
| ● | Variations and fluctuations in our operating results; | |
| ● | Change in financial estimates by securities analysts; | |
| ● | The depth and liquidity of the market for our common stock; | |
| ● | Investor perceptions of us; and | |
| ● | General economic and business conditions. |
The following table sets forth the high and low bid quotations for our common stock for each of the last two fiscal years, as reported on the OTC Market. Quotations from the OTC Market reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
| Year Ended 2022 | ||||||||
| High | Low | |||||||
| 4th Quarter | $ | 1.14 | $ | 0.85 | ||||
| 3rd Quarter | $ | 1.55 | $ | 1.05 | ||||
| 2nd Quarter | $ | 1.75 | $ | 1.18 | ||||
| 1st Quarter | $ | 3.00 | $ | 0.75 | ||||
| Year Ended 2021 | ||||||||
| High | Low | |||||||
| 4th Quarter | $ | 3.50 | $ | 0.90 | ||||
| 3rd Quarter | $ | 2.50 | $ | 0.73 | ||||
| 2nd Quarter | $ | 2.35 | $ | 0.78 | ||||
| 1st Quarter | $ | 3.25 | $ | 0.84 | ||||
Dividend Policy
Our dividend policy is determined by our Board of Directors and depends upon a number of factors, including our financial condition and performance, its cash needs and expansion plans, income tax consequences, and the restrictions that applicable laws and any credit or other contractual arrangements may then impose. The Company has not paid any cash dividends on the common stock. We do not anticipate paying a cash dividend on our common stock in the foreseeable future.
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DESCRIPTION OF SECURITIES
The following description of our common stock and provisions of our articles of incorporation and our bylaws, each of which will be in effect prior to the completion of the Business Combination, are summaries and are qualified by reference to the articles of incorporation and the bylaws.
Our current authorized capital stock consists of 50,000,000 shares of common stock.
Common Stock
At any general meeting every shareholder who is present in person (or, in the case of a shareholder being a corporation, by its duly authorized representative) or by proxy will have one vote for each share held on all matters to be voted on by shareholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors (provided, that, holders of at least 50% of the shares so voted can remove a director with or without cause).
In the event of a liquidation or winding up of the company, our shareholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of shares, if any, having preference over the Common Stock. Our shareholders have no preemptive or other subscription rights.
Dividends
Our shareholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of legally available funds. Our dividend policy is determined by our Board of Directors and depends upon a number of factors, including our financial condition and performance, its cash needs and expansion plans, income tax consequences, and the restrictions that applicable laws and any credit or other contractual arrangements may then impose. We have not paid any cash dividends on our common stock and at the current time we do not anticipate paying a cash dividend on our common stock in the foreseeable future. We did not declare or pay any cash dividends on our common stock during the past two fiscal years.
LEGAL PROCEEDINGS
We are not a party to any legal proceedings.
There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial shareholder of more than five percent of voting securities, is an adverse party or has a material interest adverse to the above-mentioned companies’ interest.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware (“DGCL”) provides, generally, that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (except actions by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. A corporation may similarly indemnify such person for expenses actually and reasonably incurred by such person in connection with the defense or settlement of any action or suit by or in the right of the corporation, provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, in the case of claims, issues and matters as to which such person shall have been adjudged liable to the corporation, provided that a court shall have determined, upon application, that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.
Section 102(b)(7) of the DGCL provides, generally, that a certificate of incorporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision may not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. No such provision may eliminate or limit the liability of a director for any act or omission occurring prior to the date when such provision became effective.
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Under Article SIXTH, Section B of the Company’s certificate of incorporation (the “Certificate of Incorporation”) and Article VII of the Company’s by-laws (the “By-Laws”), indemnification of directors and officers is provided for to the fullest extent permitted under the DGCL. Article SIXTH, Section A of the Certificate of Incorporation eliminates the liability of directors for monetary damages for breach of fiduciary duty as directors, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. We currently do not maintain directors and officer’s liability insurance.
The foregoing summary of Section 145 of the DGCL, Articles SIXTH, Sections A and B of the Certificate of Incorporation and Article VII of the By-Laws is qualified in its entirety by reference to the relevant provisions of Section 145 and the relevant provisions of the Company’s Certificate of Incorporation and Bylaws.
| Item 3.02. | Unregistered Sales of Equity Securities. |
The information contained in Item 2.01 below relating to the Purchaser Common Stock issuable pursuant to the Contribution Agreement described therein is incorporated herein by reference.
| Item 5.01. | Changes in Control of Registrant. |
As a result of the Business Combination, Nordicus received 2,500,000 of our shares of common stock, representing 30.6% of the outstanding shares (16.7% on a fully diluted basis). In addition, at the closing of the Business Combination, shareholders of Nordicus were appointed to two out of the three positions on our board of directors and to the position of new chief executive officer. Accordingly, we believe that we experienced a change in control with Nordicus effectively acquiring control of us as a result of the Business Combination. The disclosure set forth in Item 2.01 to this Report is incorporated into this item by reference.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
In connection with the Business Combination, on February 23, 2023, the Company appointed Henrik Rouf as our Chief Executive Officer, and Bennett J. Yankowitz resigned as our Chief Executive Officer and was appointed as our Chief Financial Officer.
The Company’s sole director also appointed Tom Glaesner Larsen and Christian Hill-Madsen as directors of the Company, which appointments shall take effect in accordance with Rule 14f-1. For a biographical summary of each of the incoming officers and directors, see “Item 2.01 – Directors, Executive Officers, Promoters and Control Persons – Biographies of Directors and Executive Officers.”
| Item 5.06. | Change in Shell Company Status |
The information in Items 1.01 and 2.01 above are incorporated herein by reference. Following the transactions described above, the Company is no longer considered a shell company, as that term is defined in Rule 12b-2 under the Exchange Act.
| Item 8.01. | Other Events. |
On March 1, 2023, the Company issued a press release announcing the closing of the Business Combination. This press release is attached as Exhibit 99.3 hereto and incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits |
The following are filed as part of this Form 8-K:
| (a) | Financial Statements of Business Acquired |
In accordance with Item 9.01(a), the Company’s audited financial statements for the fiscal years ended June 30, 2022 and 2021 are filed as Exhibit 99.2 hereto.
| (b) | Pro Forma Financial Information |
In accordance with Item 9.01(b), unaudited pro forma condensed combined financial statements and the accompanying notes, are filed as Exhibit 99.3 hereto.
| (d) | Exhibits |
| Exhibit | Filed or Furnished | |||||||||
| Number | Exhibit Description | Form | Exhibit | Filing Date | Herewith | |||||
| 2.1 | Contribution Agreement, dated February 23, 2023, by and among the Company, Nordicus, GK Partners ApS, Henrik Rouf and Life Science Power House ApS. | X | ||||||||
| 3.1 | Certificate of Incorporation | 14A | C | 8/30/2007 | ||||||
| 3.2 | Bylaws | 14A | D | 8/30/2007 | ||||||
| 3.3 | 2017 Non-qualified Equity Incentive Plan | 8-K | 10.37 | 8/22/2017 | ||||||
| 14.1 | Code of Ethics | X | ||||||||
| 99.1 | Audited financial statements of Nordicus for the fiscal years ended June 30, 2022 and December 31, 2021 | X | ||||||||
| 99.2 | Unaudited pro forma condensed combined financial statements of the EKIMAS Corporation and Nordicus. | X | ||||||||
| 99.3 | Press Release, dated March 1, 2023, announcing the closing of the Business Combination. | X | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | X | ||||||||
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Dated: March 1, 2023 | EKIMAS CORPORATION | |
| By: | /s/ Henrik Rouf | |
Henrik Rouf | ||
| Chief Executive Officer | ||
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Exhibit 2.1
CONTRIBUTION AGREEMENT
This Contribution Agreement (this “Agreement”) is made and entered into as of February 23, 2023 by and among (i) EKIMAS Corporation, a Delaware corporation (the “Purchaser”), (ii) Nordicus Partners A/S, a Danish stock corporation (Aktieselskab) (the “Company”), and GK Partners ApS, Henrik Rouf and LIFE SCIENCE POWER HOUSE ApS (the “Sellers”). The Purchaser, the Company and the Sellers are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties.”
RECITALS:
A. The Sellers are the owners of all of the issued and outstanding shares of capital stock of the Company (the “Company Interests”) and desire to transfer 100% of such shares of common stock of the Company (“Contributed Securities”) for shares of Purchaser Common Stock as described herein.
B. The Purchaser is authorized to issue 50,000,000 shares of its Common Stock, and as of the date hereof, 5,796,248 shares of that Purchaser Common Stock are issued and outstanding. The Purchaser desires to exchange at the Closing, 2,500,000 Purchaser Common Stock (the “Contribution Consideration”) representing approximately 43.86% of the total outstanding Purchaser Common Stock, after the issuance of the Contribution Consideration, for the Contributed Securities.
C. The Parties intend that the Contribution will qualify as a tax-free “reorganization” within the meaning of Section 351 of the Code (as defined herein).
D. Certain capitalized terms used herein are defined in ARTICLE I.
NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties hereto agree as follows:
ARTICLE
I.
DEFINITIONS
Section 1.01 Certain Definitions. For purpose of this Agreement, the following capitalized terms have the following meanings:
“Accounting Principles” means in accordance with GAAP as in effect at the date of the financial statement to which it refers or if there is no such financial statement, then as of the Closing Date, using and applying the same accounting principles, practices, procedures, policies and methods (with consistent classifications, judgments, elections, inclusions, exclusions and valuation and estimation methodologies) used and applied by the Company in the preparation of the latest audited Financial Statements. In any event, the Accounting Principles (i) shall not include any purchase accounting or other adjustment arising out of the consummation of the transactions contemplated by this Agreement, (ii) shall be based on facts and circumstances as they exist at or prior to the Closing and shall exclude the effect of any act, decision or event occurring after the Closing and (iii) shall follow the defined terms contained in this Agreement.
“Action” means any notice of noncompliance or violation, or any claim, demand, charge, action, suit, litigation, audit, settlement, complaint, stipulation, assessment or arbitration, or any request (including any request for information), inquiry, hearing, proceeding or investigation, by or before any Governmental Authority.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with such Person.
“Ancillary Documents” means each agreement, instrument or document attached hereto as an Exhibit, and the other agreements, certificates and instruments to be executed or delivered by any of the Parties hereto in connection with or pursuant to this Agreement.
“Assignment and Assumption Agreement” means the (i) Assignment and Assumption Agreement relating to the Company between Purchaser and the Sellers substantially in the form of Exhibit A.
“Benefit Plans” of any Person means any and all deferred compensation, executive compensation, incentive compensation, equity purchase or other equity-based compensation plan, employment or consulting, severance or termination pay, holiday, vacation or other bonus plan or practice, hospitalization or other medical, life or other insurance, supplemental unemployment benefits, profit sharing, pension, or retirement plan, program, agreement, commitment or arrangement, and each other employee benefit plan, program, agreement or arrangement, including each “employee benefit plan” as such term is defined under Section 3(3) of ERISA, maintained or contributed to or required to be contributed to by a Person for the benefit of any employee or terminated employee of such Person, or with respect to which such Person has any Liability, whether direct or indirect, actual or contingent, whether formal or informal, and whether legally binding or not.
“Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York, New York are authorized to close for business.
“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute thereto, as amended. Reference to a specific section of the Code shall include such section and any valid treasury regulation promulgated thereunder.
“Company Charter” means the [Articles of Organization] of the Company, as amended.
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“Confidential Information” means all confidential or proprietary documents and information concerning the either Party or any of its Representatives; provided, however, that the Confidential Information shall not include any information which, (i) at the time of disclosure by the Company or its respective Representatives, is generally available publicly and was not disclosed in breach of this Agreement or (ii) at the time of the disclosure by the Purchaser or its Representatives to the Company or its Representatives, was previously known by such receiving party without violation of Law or any confidentiality obligation by the Person receiving such Purchaser Confidential Information.
“Consent” means any consent, approval, waiver, authorization or Permit of, or notice to or declaration or filing with any Governmental Authority or any other Person.
“Contracts” means all contracts, agreements, binding arrangements, bonds, notes, indentures, mortgages, debt instruments, purchase order, licenses (and all other contracts, agreements or binding arrangements concerning Intellectual Property), franchises, leases and other instruments or obligations of any kind, written or oral (including any amendments and other modifications thereto).
“Control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise. “Controlled”, “Controlling” and “under common Control with” have correlative meanings. Without limiting the foregoing a Person (the “Controlled Person”) shall be deemed Controlled by (a) any other Person (the “10% Owner”) (i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act, securities entitling such Person to cast ten percent (10%) or more of the votes for election of directors or equivalent governing authority of the Controlled Person or (ii) entitled to be allocated or receive ten percent (10%) or more of the profits, losses, or distributions of the Controlled Person; (b) an officer, director, general partner, partner (other than a limited partner), manager, or member (other than a member having no management authority that is not a 10% Owner) of the Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or brother-in-law of an Affiliate of the Controlled Person or a trust for the benefit of an Affiliate of the Controlled Person or of which an Affiliate of the Controlled Person is a trustee.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FINRA” means the Financial Industry Regulatory Authority, Inc.
“Fraud Claim” means any claim based in whole or in part upon fraud, willful misconduct or intentional misrepresentation.
“GCL” means the Delaware General Corporation Law, 8 Del. C. ch. 1.
“GAAP” means generally accepted accounting principles as in effect in the United States of America.
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“Governmental Authority” means any federal, state, local, foreign or other governmental, quasi-governmental or administrative body, instrumentality, department or agency or any court, tribunal, administrative hearing body, arbitration panel, commission, or other similar dispute-resolving panel or body.
“Indebtedness” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money (including the outstanding principal and accrued but unpaid interest), (b) obligations for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business), (c) any other indebtedness of such Person that is evidenced by a note, bond, debenture, credit agreement or similar instrument, (d) all obligations of such Person under leases that should be classified as capital leases in accordance with GAAP, (e) all obligations of such Person for the reimbursement of any obligor on any line or letter of credit, banker’s acceptance, guarantee or similar credit transaction, in each case, that has been drawn or claimed against, (f) all obligations of such Person in respect of acceptances issued or created, (g) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (h) all obligations secured by an Lien on any property of such Person, (i) any premiums, prepayment fees or other penalties, fees, costs or expenses associated with payment of any Indebtedness of such Person and (j) all obligation described in clauses (a) through (i) above of any other Person which is directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss.
“Intellectual Property” means all of the following as they exist in any jurisdiction throughout the world: patents, trademarks, copyrights, trade secrets, internet assets, software and other intellectual property, and all licenses, sublicenses and other agreements or permissions related to the preceding property.
“IRS” means the U.S. Internal Revenue Service (or any successor Governmental Authority).
“Knowledge” means, with respect to (i) the Company, the actual knowledge of the executive officers or directors of the Company, after due inquiry or (ii) any other Party, the actual knowledge of its directors and executive officers, after due inquiry.
“Law” means any federal, state, local, municipal, foreign or other law, statute, legislation, principle of common law, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, directive, requirement, writ, injunction, settlement, Order or Consent that is or has been issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Liabilities” means any and all liabilities, Indebtedness, Actions or obligations of any nature (whether absolute, accrued, contingent or otherwise, whether known or unknown, whether direct or indirect, whether matured or unmatured and whether due or to become due), including Tax liabilities due or to become due.
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“Lien” means any mortgage, pledge, security interest, attachment, right of first refusal, option, proxy, voting trust, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof), restriction (whether on voting, sale, transfer, disposition or otherwise), any subordination arrangement in favor of another Person, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar Law.
“Material Adverse Effect” means, with respect to any specified Person, any fact, event, occurrence, change or effect that has had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect upon (a) the business, assets, Liabilities, results of operations, prospects or condition (financial or otherwise) of such Person and its Subsidiaries, taken as a whole, or (b) the ability of such Person or any of its Subsidiaries on a timely basis to consummate the transactions contemplated by this Agreement or the Ancillary Documents to which it is a party or bound or to perform its obligations hereunder or thereunder; provided, however, that for purposes of clause (a) above, any changes or effects directly or indirectly attributable to, resulting from, relating to or arising out of the following (by themselves or when aggregated with any other, changes or effects) shall not be deemed to be, constitute, or be taken into account when determining whether there has or may, would or could have occurred a Material Adverse Effect: (i) general changes in the financial or securities markets or general economic or political conditions in the country or region in which such Person or any of its Subsidiaries do business; (ii) changes, conditions or effects that generally affect the industries in which such Person or any of its Subsidiaries principally operate; (iii) changes in GAAP or other applicable accounting principles or mandatory changes in the regulatory accounting requirements applicable to any industry in which such Person and its Subsidiaries principally operate; (iv) conditions caused by acts of God, terrorism, war (whether or not declared) or natural disaster; (v) any failure in and of itself by such Person and its Subsidiaries to meet any internal or published budgets, projections, forecasts or predictions of financial performance for any period (provided that the underlying cause of any such failure may be considered in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent not excluded by another exception herein) and (vi), with respect to the Purchaser, the consummation and effects of the Redemption; provided further, however, that any event, occurrence, fact, condition, or change referred to in clauses (i) - (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition, or change has a disproportionate effect on such Person or any of its Subsidiaries compared to other participants in the industries in which such Person or any of its Subsidiaries primarily conducts its businesses.
“Order” means any order, decree, ruling, judgment, injunction, writ, determination, binding decision, verdict, judicial award or other action that is or has been made, entered, rendered, or otherwise put into effect by or under the authority of any Governmental Authority.
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“Organizational Documents” means, with respect to any Person that is an entity, its certificate of incorporation or formation, bylaws, operating agreement or similar organizational documents, in each case, as amended.
“PCAOB” means the U.S. Public Company Accounting Oversight Board (or any successor thereto).
“Permits” means all federal, state, local or foreign or other third-party permits, grants, easements, consents, approvals, authorizations, exemptions, licenses, franchises, concessions, ratifications, permissions, clearances, confirmations, endorsements, waivers, certifications, designations, ratings, registrations, qualifications or orders of any Governmental Authority or any other Person.
“Permitted Liens” means (a) Liens for Taxes or assessments and similar governmental charges or levies, which either are (i) not delinquent or (ii) being contested in good faith and by appropriate proceedings, and adequate reserves have been established with respect thereto, (b) other Liens imposed by operation of Law arising in the ordinary course of business for amounts which are not due and payable and as would not in the aggregate materially adversely affect the value of, or materially adversely interfere with the use of, the property subject thereto, (c) Liens incurred or deposits made in the ordinary course of business in connection with social security, (d) Liens on goods in transit incurred pursuant to documentary letters of credit, in each case arising in the ordinary course of business, or (v) Liens arising under this Agreement or any Ancillary Document.
“Person” means an individual, corporation, partnership (including a general partnership, limited partnership or limited liability partnership), limited liability company, association, trust or other entity or organization, including a government, domestic or foreign, or political subdivision thereof, or an agency or instrumentality thereof.
“Personal Property” means any machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, parts and other tangible personal property.
“Purchaser Charter” means the certificate of incorporation of the Purchaser, as amended and effective under the GCL.
“Purchaser Common Stock” means the shares of common stock, par value $0.001 per share, of the Purchaser.
“Representatives” means, as to any Person, such Person’s Affiliates and the respective managers, directors, officers, employees, independent contractors, consultants, advisors (including financial advisors, counsel and accountants), agents and other legal representatives of such Person or its Affiliates.
“SEC” means the Securities and Exchange Commission (or any successor Governmental Authority).
“Securities Act” means the Securities Act of 1933, as amended.
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“Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons will be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons will be allocated a majority of partnership, association or other business entity gains or losses or will be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. A Subsidiary of a Person will also include any variable interest entity which is consolidated with such Person under applicable accounting rules.
“Tax Return” means any return, declaration, report, claim for refund, information return or other documents (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Taxes or the administration of any Laws or administrative requirements relating to any Taxes.
“Taxes” means (a) all direct or indirect federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, value-added, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, social security and related contributions due in relation to the payment of compensation to employees, excise, severance, stamp, occupation, premium, property, windfall profits, alternative minimum, estimated, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (b) any Liability for payment of amounts described in clause (a) whether as a result of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of law and (c) any Liability for the payment of amounts described in clauses (a) or (b) as a result of any tax sharing, tax group, tax indemnity or tax allocation agreement with, or any other express or implied agreement to indemnify, any other Person.
ARTICLE
II.
CONTRIBUTION
Section 2.01 Contribution. Effective as of the Closing Date, (i) the Sellers each hereby contribute, transfer, assign and convey to the Purchaser all right, title and interest in and to all of the Contributed Securities, together with any and all rights, privileges, benefits, obligations and liabilities appertaining thereto, reserving unto such Seller no rights or interests therein whatsoever, and (ii) the Purchaser hereby accepts the contribution of the Contributed Securities, and in consideration for such contribution the Sellers collectively shall be entitled to receive from the Purchaser the Contribution Consideration with each Seller receiving for their respective percentage of Contributed Securities that same percentage of the Contribution Consideration (the “Contribution”).
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Section 2.02 Tax Treatment. For U.S. federal income tax purposes, the Contribution is intended to constitute a tax-free reorganization within the meaning of Section 351, as mutually agreed to by the Parties.
ARTICLE
III.
CLOSING
Section 3.01 Closing. Subject to and conditional upon the satisfaction or waiver of the Closing Conditions the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Shumaker Mallory LLP, 280 S. Beverly Dr., Suite 505, Beverly Hills, CA 90212, on the second Business Day after all the Closing conditions to this Agreement have been satisfied or waived, at 10:00 a.m. local time, or at such other date, time or place as the Purchaser and the Company may agree (the date and time at which the Closing is actually held being the “Closing Date”). The parties need not be physically present at the Closing and may participate telephonically.
ARTICLE
IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Except as set forth in the disclosure schedules delivered by the Purchaser to the Company on the date hereof (the “Purchaser Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer the Purchaser represents and warrants to the Company, as of the date hereof and as of the Closing, as follows:
Section 4.01 Organization and Standing. The Purchaser is a corporation duly incorporated, validly existing and in good standing under the state of Delaware. The Purchaser has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Purchaser is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. The Purchaser has heretofore made available to the Company accurate and complete copies of the Organizational Documents of the Purchaser, as currently in effect. The Purchaser is not in violation of any provision of its Organizational Documents.
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Section 4.02 Authorization; Binding Agreement. The Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform the Purchaser’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby (a) have been duly and validly authorized by the board of directors of the Purchaser, and (b) no other corporate proceedings, other than as set forth elsewhere in the Agreement, on the part of the Purchaser are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which the Purchaser is a party shall be when delivered, duly and validly executed and delivered by the Purchaser and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “Enforceability Exceptions”).
Section 4.03 Governmental Approvals. No Consent of or with any Governmental Authority, on the part of the Purchaser is required to be obtained or made in connection with the execution, delivery or performance by the Purchaser of this Agreement and each Ancillary Document to which it is a party or the consummation by the Purchaser of the transactions contemplated hereby and thereby, other than (a) such filings as contemplated by this Agreement, (b) any filings required with FINRA or the SEC with respect to the transactions contemplated by this Agreement, (c) applicable requirements, if any, of the Securities Act, the Exchange Act, or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (d) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on the Purchaser.
Section 4.04 Non-Contravention. The execution and delivery by the Purchaser of this Agreement and each Ancillary Document to which it is a party, the consummation by the Purchaser of the transactions contemplated hereby and thereby, and compliance by the Purchaser with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of the Purchaser’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.03, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to the Purchaser or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by the Purchaser under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of the Purchaser under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any Purchaser Material Contract, except for any deviations from any of the foregoing clauses (a), (b) or (c) that would not reasonably be expected to have a Material Adverse Effect on the Purchaser.
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Section 4.05 Capitalization
(a) The Purchaser is authorized to issue 50,000,000 shares of Purchaser Common Stock. The issued and outstanding shares of Purchaser Common Stock as of the date of this Agreement are set forth on Schedule 4.5(a). All outstanding shares of Purchaser Common Stock are duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision under the GCL, as then applicable, the Purchaser Charter or any Contract to which the Purchaser is a party. None of the outstanding Purchaser Common Stock has been issued in violation of any applicable securities Laws.
(b) Except as set forth on Schedule 4.5(b), there are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued shares of the Purchaser or (B) obligating the Purchaser to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating the Purchaser to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. There are no outstanding obligations of the Purchaser to repurchase, redeem or otherwise acquire any shares of the Purchaser or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. There are no shareholders agreements, voting trusts or other agreements or understandings to which the Purchaser is a party with respect to the voting of any shares of the Purchaser.
Section 4.06 Indebtedness. Except as otherwise set forth in the balance sheet of the Purchaser, dated June 30, 2022 (the “Closing Date Balance Sheet”), immediately prior to the Closing, the Purchaser will not have any Indebtedness except for certain accounts payable and accrued expenses not to exceed $10,000 in the aggregate.
Section 4.07 SEC Filings and Purchaser Financials
(a) The Purchaser, since April 1, 2019, has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to be filed or furnished by the Purchaser with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto, and will file all such forms, reports, schedules, statements and other documents required to be filed subsequent to the date of this Agreement (the “SEC Reports”). The SEC Reports (x) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not, as of their respective effective dates (in the case of SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other SEC Reports) 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 made therein, in the light of the circumstances under which they were made, not misleading.
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(b) The financial statements and notes contained or incorporated by reference in the SEC Reports (the “Purchaser Financials”), fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows of the Purchaser at the respective dates of and for the periods referred to in such financial statements, all in accordance with (i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable).
(c) Except as and to the extent reflected or reserved against in the Purchaser Financials, the Purchaser has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that is not adequately reflected or reserved on or provided for in the Purchaser Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred since the Purchaser’s formation in the ordinary course of business.
Section 4.08 Shell Company. The Purchaser is a shell company and except as otherwise shown on the Closing Date Balance Sheet, has (a) no assets or liabilities as of the Closing Date, (b) other than as described on Schedule 4.8, since April 20, 2020, conducted no business other than the public offering of its securities (and the related private offerings), public reporting and related activities.
Section 4.09 Compliance with Laws. The Purchaser is, and has since April 20, 2020, been, in compliance with all Laws applicable to it and the conduct of its business except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect on the Purchaser, and the Purchaser has not received since April 20, 2020, written notice alleging any violation of applicable Law in any material respect by the Purchaser.
Section 4.10 Actions; Orders; Permits. There is no pending or, to the Knowledge of the Purchaser, threatened material Action to which the Purchaser is subject which would reasonably be expected to have a Material Adverse Effect on the Purchaser. There is no material Action that the Purchaser has pending against any other Person. The Purchaser is not subject to any material Orders of any Governmental Authority, nor are any such Orders pending. The Purchaser holds all material Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure to hold such Consent or for such Consent to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on the Purchaser.
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Section 4.11 Taxes and Returns.
(a) The Purchaser has or will have timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it for the tax years 2019 and later, which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP. There are no audits, examinations, investigations or other proceedings pending against the Purchaser in respect of any Tax, and the Purchaser has not been notified in writing of any proposed Tax claims or assessments against the Purchaser (other than, in each case, claims or assessments for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP or are immaterial in amount). There are no Liens with respect to any Taxes upon any of the Purchaser’s assets, other than Permitted Liens. The Purchaser has no outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by the Purchaser for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.
(b) Since April 20, 2020, the Purchaser has not (i) changed any Tax accounting methods, policies or procedures except as required by a change in Law, (ii) made, revoked, or amended any material Tax election, (iii) filed any amended Tax Returns or claim for refund or (iv) entered into any closing agreement affecting or otherwise settled or compromised any material Tax Liability or refund.
Section 4.12 Employees and Employee Benefit Plans. The Purchaser does not (a) have any paid employees or (b) maintain, sponsor, contribute to or otherwise have any Liability under, any Benefit Plans.
Section 4.13 Properties. The Purchaser does not own, license or otherwise have any right, title or interest in any material Intellectual Property. The Purchaser does not own or lease any material real property or Personal Property.
Section 4.14 Material Contracts. Except as set forth on Schedule 4.14, other than this Agreement and the Ancillary Documents, there are no Contracts to which the Purchaser is a party or by which any of its properties or assets may be bound, subject or affected, which (i) creates or imposes a Liability greater than $1,000, (ii) may not be cancelled by the Purchaser on less than sixty (60) days’ prior notice without payment of a material penalty or termination fee or (iii) prohibits, prevents, restricts or impairs in any material respect any business practice of the Purchaser as its business is currently conducted, any acquisition of material property by the Purchaser, or restricts in any material respect the ability of the Purchaser from engaging in business as currently conducted by it or from competing with any other Person (each, a “Purchaser Material Contract”). All Purchaser Material Contracts have been filed as exhibits to the SEC Reports.
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Section 4.15 Transactions with Affiliates. Except as set forth on Schedule 4.15, there are no contracts or arrangements that are in existence as of the date of this Agreement under which there are any existing or future Liabilities or obligations between the Purchaser and any (a) present or former director, officer or employee or Affiliate of the Purchaser, or any immediate family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of the Purchaser’s outstanding capital stock as of the date hereof.
Section 4.16 Finders and Brokers. Except as set forth on Schedule 4.16, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from the Purchaser, the Company or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Purchaser.
Section 4.17 Ownership of Contribution Consideration. All shares of Purchaser Common Stock to be issued and delivered to the Sellers as Contribution Consideration in accordance with ARTICLE II shall be, upon issuance and delivery of such Purchaser Common Stock, fully paid and non-assessable, free and clear of all Liens, other than restrictions arising from applicable securities Laws and any Liens incurred by the Company or any Seller, and the issuance and sale of such Purchaser Common Stock pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.
Section 4.18 Independent Investigation. The Purchaser has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Company and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Company for such purpose. The Purchaser acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Company set forth in ARTICLE V (including the related portions of the Company Disclosure Schedules); and (b) none of the Company nor its respective Representatives have made any representation or warranty as to the Company, or this Agreement, except as expressly set forth in ARTICLE V (including the related portions of the Company Disclosure Schedules).
ARTICLE
V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedules delivered by the Company to the Purchaser on the date hereof (the “Company Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, the Company hereby represents and warrants to the Purchaser, as of the date hereof and as of the Closing, as follows:
Section 5.01 Organization and Standing. The Company is a Danish stock corporation (Aktieselskab) and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company has heretofore made available to the Purchaser accurate and complete copies of the Organizational Documents of the Company, as currently in effect. The Company is not in violation of any provision of its Organizational Documents.
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Section 5.02 Authorization; Binding Agreement. The Company has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or is required to be a party, to perform the Company’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which the Company is a party shall be when delivered, duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of the Company, enforceable against the Purchaser in accordance with its terms, except to the extent that enforceability thereof may be limited by the Enforceability Exceptions.
Section 5.03 Subsidiaries. The Company does not own, of record or beneficially, or control any direct or indirect equity or other interest, or any right (contingent or otherwise) to acquire the same, in any corporation, partnership, limited liability company, joint venture, association or other entity.
Section 5.04 Governmental Approvals. No Consent of or with any Governmental Authority on the part of the Company is required to be obtained or made in connection with the execution, delivery or performance by the Company of this Agreement or any Ancillary Documents or the consummation by the Company of the transactions contemplated hereby or thereby other than such filings as are expressly contemplated by this Agreement and (b) pursuant to Antitrust Laws.
Section 5.05 Non-Contravention. The execution and delivery by the Company of this Agreement and each Ancillary Document to which the Company is a party or otherwise bound, and the consummation by the Company of the transactions contemplated hereby and thereby and compliance by the Company with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of the Company’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 5.04, the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to the Company or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by the Company under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of the Company under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of any material contract of the Company.
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Section 5.06 Financial Statements. As used herein, the term “Company Financials” means the (i) audited financial statements of the Company (including, in each case, any related notes thereto), consisting of the audited balance sheets of the Company as of June 30, 2020, and the related audited income statements, changes in stockholder equity and statements of cash flows for the period from inception to June 30, 2022, each audited in accordance with GAAP standards by a PCAOB qualified auditor (the “Audited Company Financials”), (ii) pro forma financial information for the Company after the Contribution, (iii) the unaudited financial statements, consisting of the balance sheet of the Company as of December 31, 2022 (the “Interim Balance Sheet”), and (iv) any other the unaudited financial statements, consisting of the balance sheet of the Company for the applicable fiscal quarters as may be required for the SEC filing. True and correct copies of the Company Financials have been provided to the Purchaser. The Company Financials (i) accurately reflect the books and records of the Company as of the times and for the periods referred to therein, (ii) were prepared in accordance with GAAP, consistently applied throughout and among the periods involved (except that the unaudited statements exclude the footnote disclosures and other presentation items required for GAAP and exclude year-end adjustments which will not be material in amount), and (iii) fairly present in all material respects the financial position of the Company as of the respective dates thereof and the results of the operations and cash flows of the Company for the periods indicated. The Company has never been subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act.
Section 5.07 Absence of Certain Changes. Since April 20, 2020, the Company has (a) conducted its business only in the ordinary course of business consistent with past practice, (b) not been subject to a Material Adverse Effect and (c) has not taken any action or committed or agreed to take any action that would be prohibited by Section 7.02(b) if such action were taken on or after the date hereof without the consent of the Purchaser.
Section 5.08 Compliance with Laws. The Company has not nor has been in material conflict or material non-compliance with, or in material default or violation of, nor has the Company received, since April 1, 2019, any written or, to the Knowledge of the Company, oral notice of any material conflict or non-compliance with, or material default or violation of, any applicable Laws by which it or any of its properties, assets, employees, business or operations are or were bound or affected.
Section 5.09 Litigation. There is no (a) Action of any nature pending or, to the Company’s Knowledge, threatened, nor is there any reasonable basis for any Action to be made (and no such Action has been brought or, to the Company’s Knowledge, threatened); or (b) Order pending now or rendered by a Governmental Authority, in either case of (a) or (b) by or against the Company, its members, its business, equity securities or assets.
Section 5.10 Material Contracts. The Company has not received notice of breach on any material contract.
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Section 5.11 Taxes and Returns. The Company has or will have timely filed, or caused to be timely filed, all federal, state and local Tax Returns required to be filed by it (taking into account all available extensions), which Tax Returns are true, accurate, correct and complete in all material respects. The Company has complied with all applicable Laws relating to Tax.
Section 5.12 Title to and Sufficiency of Assets. The Company has good and marketable title to, or a valid leasehold interest in or right to use, all of its assets, free and clear of all Liens other than (a) Permitted Liens, (b) the rights of lessors under leasehold interests, and (c) Liens specifically identified on the Interim Balance Sheet. The assets (including contractual rights) of the Company constitute all of the assets, rights and properties that are used in the operation of the businesses of the Company as it is now conducted and presently proposed to be conducted or that are used or held by the Company for use in the operation of the businesses of the Company, and taken together, are adequate and sufficient for the operation of the businesses of the Company as currently conducted and as presently proposed to be conducted.
Section 5.13 No Brokers. The Company has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or charges or any similar charges in connection with this Agreement or any transactions contemplated hereby.
ARTICLE
VI.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Except as set forth in the disclosure schedules delivered by the Sellers to the Purchaser on the date hereof (the “Seller Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, each of the Sellers, severally, hereby represents and warrants to the Purchaser as of the date hereof and as of the Closing, as follows:
Section 6.01 Authority, Etc. Each of the Sellers has the requisite power and authority to enter into this Agreement and to carry out such Seller’s obligations hereunder. The execution and delivery of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby (a) have been duly and validly authorized by each Seller, and (b) no other joint venture proceedings, other than as set forth elsewhere in the Agreement, on the part of such Seller are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which such Seller is a party shall be when delivered, duly and validly executed and delivered by such Seller and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of such Seller, enforceable against the Purchaser in accordance with its terms, except to the extent that enforceability thereof may be limited by the Enforceability Exceptions.
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Section 6.02 Title to Properties, Liens and Encumbrances. Each of the Sellers have good title to each of their Contributed Securities of the Company, free and clear free of all claims, liens, security interests and other rights and encumbrances, and as a group the Sellers are owners of all the Company Interests.
Section 6.03 Reliance. This Agreement is made with the Sellers in reliance upon each Seller’s representation to the Purchaser, which by such Seller’s execution of this Agreement, such Seller hereby confirms, that the shares of the Purchaser’s Common stock constituting the Contribution Consideration to be acquired by such Seller (the “Securities”) will be acquired for investment for such Seller’s own account, not as a nominee or agent. By executing this Agreement, each Seller further represents that such Seller does not presently have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participations to such Person or to any third Person, with respect to any of the Securities. The Purchaser has not been formed for the specific purpose of acquiring the Securities.
Section 6.04 Investment Representations. Each Seller understands that the shares of Purchaser Common Stock 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 unless an exemption from such registration is available. Each Seller understands that the Securities are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, the Purchaser must hold the Securities indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available. Each Seller acknowledges that the Purchaser has no obligation to register or qualify the Securities for resale. Each Seller further acknowledges that (a) there is no assurance that any exemption from registration or qualification will be available, and (b) if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities, and on requirements relating to the Purchaser which are outside of such Seller’s control (including without limitation any current public information requirements of Rule 144 promulgated under the Securities Act or any similar or successor rule or regulation), and which the Purchaser is under no obligation and may not be able to satisfy, and therefore that there is no assurance that any such exemption will allow such Seller to dispose of, or otherwise transfer, all or any portion of the Securities.
Section 6.05 Legends. Each Seller understands that the Securities and any securities issued in respect of or exchange for the Securities, may bear one or all of the following legends:
(a) “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SALE, TRANSFER, ASSIGNMENT, PLEDGE OR HYPOTHOCATION OF SUCH SECURITIES MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE OR HYPOTHOCATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE SECURITIES ACT OF 1933, AS AMENDED.”
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(b) Any legend required by the securities laws of any state to the extent such laws are applicable to the Securities represented by the certificate so legended.
Section 6.06 Accredited Investor. Each Seller is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
Section 6.07 Risks. Each Seller is aware that the Securities are highly speculative and that there can be no assurance as to what return, if any, there may be. Each Seller is aware that the Purchaser may issue additional securities in the future which could result in the dilution of such Seller’s ownership interest in the Purchaser.
ARTICLE
VII.
COVENANTS
Section 7.01 Access and Information The Purchaser shall give, and shall direct its Representatives to give, the Company and its Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, access to all offices and other facilities and to all employees, properties, Contracts, agreements, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to the Purchaser or its Subsidiaries, as the Company or its Representatives may reasonably request regarding the Purchaser, its Subsidiaries and their respective businesses, assets, Liabilities, financial condition, prospects, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any)) and to reasonably cooperate with the Company and its Representatives in their investigation; provided, however, that the Company and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Purchaser or any of its Subsidiaries.
Section 7.02 No Solicitation.
(a) For purposes of this Agreement, (i) an “Acquisition Proposal” means any inquiry, proposal or offer, or any indication of interest in making an offer or proposal, from any Person or group at any time relating to an Alternative Transaction, and (ii) an “Alternative Transaction” means (A) with respect to the Company and its Affiliates, a transaction (other than the transactions contemplated by this Agreement) concerning the sale of (x) all or any material part of the business or assets of the Company (other than in the ordinary course of business consistent with past practice) or (y) any of the shares or other equity interests or profits of the Company, in any case, whether such transaction takes the form of a sale of shares or other equity, assets, merger, consolidation, issuance of debt securities, management Contract, joint venture or partnership, or otherwise and (B) with respect to the Purchaser and its Affiliates, a transaction (other than the transactions contemplated by this Agreement) concerning a Business Combination.
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(b) In order to induce the other Parties to continue to commit to expend management time and financial resources in furtherance of the transactions contemplated hereby, each Party shall not, and shall cause its Representatives to not, without the prior written consent of the Company and the Purchaser, directly or indirectly, (i) solicit, assist, initiate or facilitate the making, submission or announcement of, or intentionally encourage, any Acquisition Proposal, (ii) furnish any non-public information regarding such Party or its Affiliates or their respective businesses, operations, assets, Liabilities, financial condition, prospects or employees to any Person or group (other than a Party to this Agreement or their respective Representatives) in connection with or in response to an Acquisition Proposal, (iii) engage or participate in discussions or negotiations with any Person or group with respect to, or that could be expected to lead to, an Acquisition Proposal, (iv) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any Acquisition Proposal, (v) negotiate or enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Acquisition Proposal, or (vi) release any third Person from, or waive any provision of, any confidentiality agreement to which such Party is a party.
(c) Each Party shall notify the others as promptly as practicable (and in any event within 48 hours) orally and in writing of the receipt by such Party or any of its Representatives of (i) any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding or constituting any Acquisition Proposal or any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations that could be expected to result in an Acquisition Proposal, and (ii) any request for non-public information relating to such Party or its Affiliates, specifying in each case, the material terms and conditions thereof (including a copy thereof if in writing or a written summary thereof if oral) and the identity of the party making such inquiry, proposal, offer or request for information. Each Party shall keep the others promptly informed of the status of any such inquiries, proposals, offers or requests for information. Each Party shall, and shall cause its Representatives to, immediately cease and cause to be terminated any solicitations, discussions or negotiations with any Person with respect to any Acquisition Proposal and shall, and shall direct its Representatives to, cease and terminate any such solicitations, discussions or negotiations.
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Section 7.03 Notification of Certain Matters. Each of the Parties shall give prompt notice to the other Parties if such Party or its Affiliates: (a) fails to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it or its Affiliates hereunder in any material respect; (b) receives any notice or other communication in writing from any third party (including any Governmental Authority) alleging (i) that the Consent of such third party is or may be required in connection with the transactions contemplated by this Agreement or (ii) any non-compliance with any Law by such Party or its Affiliates; (c) receives any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; (d) discovers any fact or circumstance that, or becomes aware of the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would reasonably be expected to cause or result in any of the conditions to set forth in ARTICLE IX not being satisfied or the satisfaction of those conditions being materially delayed; or (e) becomes aware of the commencement or threat, in writing, of any Action against such Party or any of its Affiliates, or any of their respective properties or assets, or, to the Knowledge of such Party, any officer, director, partner, member or manager, in his, her or its capacity as such, of such Party or of its Affiliates with respect to the consummation of the transactions contemplated by this Agreement. No such notice shall constitute an acknowledgement or admission by the Party providing the notice regarding whether or not any of the conditions to the Closing have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached.
Section 7.04 Tax Matters. For federal income tax purposes, the Contribution is intended to constitute a “reorganization” within the meaning of Section 351 of the Code, as mutually agreed to by the Parties. None of the Parties shall (and each of the Parties shall cause their respective Subsidiaries not to) take any action, or fail to take any action, that could reasonably be expected to cause the Contribution to fail to qualify as a “reorganization” within the meaning of Section 351 of the Code. The Parties intend to report and, except to the extent otherwise required by Law, shall report, for federal income tax purposes, the Contribution as a “reorganization” within the meaning of Section 351 of the Code.
Section 7.05 Further Assurances. The Parties hereto shall further cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate the transactions contemplated by this Agreement as soon as reasonably practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings.
Section 7.06 Public Announcements and Filings.
(a) The Parties shall mutually agree upon and, as promptly as practicable after the execution of this Agreement (but in any event within four (4) Business Days thereafter), issue a press release announcing the execution of this Agreement (the “Signing Press Release”).
(b) Promptly after the issuance of the Signing Press Release, the Purchaser shall file a current report on Form 8-K (the “Super 8-K”) with the Signing Press Release and a description of this Agreement as required by Federal Securities Laws, which the Company shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing (with the Company reviewing, commenting upon and approving such Super 8-K in any event no later than the third (3rd) Business Day after the execution of this Agreement).
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(c) The Parties shall mutually agree upon and, as promptly as practicable after the Closing (but in any event within four (4) Business Days thereafter), issue a press release announcing the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”). Promptly after the issuance of the Closing Press Release, the Purchaser shall file a current report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description of the Closing as required by Federal Securities Laws which the Company shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing.
(d) The Parties shall mutually agree upon and, as promptly as practicable after the execution of this Agreement (but in any event within ten (10) days thereafter), file a current report on Form 8-K reporting a change in control of the Company and a Rule 14f-1 Information Statement (the “14f Filing”). In addition, those directors and officers or other insiders or Affiliates who will no longer have such status as a result of this Agreement and the contemplated transactions, shall file final Form 4’s with the SEC within two (2) days following the effective date of the 14f Filing as to all current directors.
(e) The Parties shall mutually agree upon and, as promptly as practicable after the Closing Date, file an information statement on a Schedule 14C with the SEC reporting a name change and mail such Schedule 14C to the shareholders of the Purchaser (the “Schedule 14C”).
(f) In connection with the preparation of the Signing Press Release, the Super 8-K, the Closing Filing, the Closing Press Release, the 14f Filing, the Schedule 14C or any other report, statement, filing notice or application made by or on behalf of a Party to any Governmental Authority or other third party in connection with the transactions contemplated hereby, each Party shall, upon request by any other Party, furnish the Parties with all information concerning themselves, their respective managers, members, directors, officers and equity holders, and such other matters as may be reasonably necessary or advisable in connection with the transactions contemplated hereby, or any other report, statement, filing, notice or application made by or on behalf of a Party to any third party and/ or any Governmental Authority in connection with the transactions contemplated hereby.
(g) Purchaser shall be solely responsible for the costs and expenses relating to the Signing Press Release, the Super 8-K, the Closing Press Release, the Closing Filing, the 14f Filing, the Schedule 14C and related documents, instruments or filings. Purchaser shall be responsible for any Form 10-K filing, and any related documents, instruments or filings due to be filed with the SEC on or before the Closing Date.
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Section 7.07 Confidential Information. The Parties hereby agree that in the event this Agreement is terminated in accordance with Section 10.01, for a period of two (2) years after such termination, they shall, and shall cause their Representatives to: (i) treat and hold in strict confidence any Confidential Information, and will not use for any purpose (except in connection with the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, performing their obligations hereunder or thereunder, enforcing their rights hereunder or thereunder), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any of the Confidential Information without the other Party’s prior written consent; and (ii) in the event that either Party or its Affiliates or Representatives, in the event this Agreement is terminated in accordance with Section 10.01, for a period of two (2) years after such termination, becomes legally compelled to disclose any Confidential Information, (A) provide the other Party with prompt written notice of such requirement so that that Party or an Affiliate thereof may seek a protective Order or other remedy or waive compliance with this Section 7.07, and (B) in the event that such protective Order or other remedy is not obtained, or the relevant Party waives compliance with this Section 7.07, furnish only that portion of such Confidential Information which is legally required to be provided as advised in writing by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such Confidential Information. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, the Parties shall, and shall cause their Affiliates and Representatives to, promptly deliver to the other Party any and all copies (in whatever form or medium) of Confidential Information and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon.
ARTICLE
VIII.
SURVIVAL AND INDEMNIFICATION
Section 8.01 Survival.
(a) All representations and warranties of the Purchaser contained in this Agreement (including all schedules and exhibits hereto and all certificates, documents, instruments and undertakings furnished pursuant to this Agreement) shall survive the Closing through and until and including December 31, 2023 . All covenants, obligations and agreements of the Purchaser contained in this Agreement (including all schedules and exhibits hereto and all certificates, documents, instruments and undertakings furnished by the Purchaser pursuant to this Agreement), including any indemnification obligations, shall survive the Closing and continue until fully performed in accordance with their terms.
(b) The representations and warranties of the Company contained in this Agreement or in any certificate or instrument delivered by or on behalf of Company pursuant to this Agreement shall not survive the Closing, and from and after the Closing, the Company shall not have any further obligations, nor shall any claim be asserted or action be brought against the Purchaser. The covenants and agreements made by the Company in this Agreement or in any certificate or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such covenants or agreements, shall not survive the Closing, except for those covenants and agreements contained herein and therein that by their terms apply or are to be performed in whole or in part after the Closing (which such covenants shall survive the Closing and continue until fully performed in accordance with their terms).
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ARTICLE
IX.
CLOSING CONDITIONS
Section 9.01 Conditions to Obligations of the Company. The obligations of the Company to consummate the Contribution and the other transactions contemplated by this Agreement are subject to the satisfaction or written waiver (by the Company) of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of the Purchaser set forth in this Agreement and in any certificate delivered by the Purchaser pursuant hereto shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, the Purchaser.
(b) Agreements and Covenants. The Purchaser shall have performed in all material respects all of the Purchaser’s obligations and complied in all material respects with all of the Purchaser’s agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to the Purchaser since the date of this Agreement which is continuing and uncured.
(d) Closing Deliveries.
(i) OFFICER CERTIFICATE. The Purchaser shall have delivered to the Company a certificate, dated the Closing Date, signed by an executive officer of the Purchaser in such capacity, certifying as to the satisfaction of the conditions specified in Section 9.01(a), (b) and (c).
(ii) SECRETARY CERTIFICATE. The Purchaser shall have delivered to the Company a certificate from its secretary or other executive officer certifying as to, and attaching, (A) copies of the Purchaser’s Organizational Documents as in effect as of the Closing Date (immediately prior to giving effect to the Conversion), (B) the resolutions of the Purchaser’s board of directors authorizing the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby and thereby, and (C) the incumbency of officers authorized to execute this Agreement or any Ancillary Document to which the Purchaser is or is required to be a party or otherwise bound.
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(iii) GOOD STANDING. The Purchaser shall have delivered to the Company a good standing certificate (or similar documents applicable for such jurisdictions) for the Purchaser certified as of a date no later than thirty (30) days prior to the Closing Date from the proper Governmental Authority of the Purchaser’s jurisdiction of organization and from each other jurisdiction in which the Purchaser is qualified to do business as a foreign entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions.
(iv) RESIGNATIONS AND ELECTIONS. The Purchaser shall have obtained and deliver to the Company at or prior to the Closing the resignation of each officer of the Purchaser and the board resolutions of the Purchaser appointing, effective at Closing, Henrik Rouf as Chief Executive Officer, and the elections (subject to requirements of Rule 14f-1 of the Exchange Act) of Tom Glaesner Larsen and Christian Hill-Madsen as additional directors of the Purchaser .
Section 9.02 Conditions to Obligations of the Purchaser. The obligations of the Purchaser to consummate the Contribution and the other transactions contemplated by this Agreement are subject to the satisfaction or written waiver (by the Purchaser) of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of the Company set forth in this Agreement and in any certificate delivered by the Company, shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, the Company.
(b) Agreements and Covenants. The Company shall have performed in all material respects all of its obligations and complied in all material respects with all of its agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date.
(c) No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to the Company since the date of this Agreement which is continuing and uncured.
(d) Closing Deliveries.
(i) OFFICER CERTIFICATE. The Purchaser shall have received a certificate from the Company, dated as the Closing Date, signed by an executive officer of the Company in such capacity, certifying as to the satisfaction of the conditions specified in Section 9.02(a), (b) and (c).
(ii) SECRETARY CERTIFICATE. The Company shall have delivered to the Purchaser a certificate executed by the Company’s secretary certifying as to the validity and effectiveness of, and attaching, (A) copies of the Company’s Organizational Documents as in effect as of the Closing Date (immediately prior to the Closing), and (B) the incumbency of officers of the Company authorized to execute this Agreement or any Ancillary Document to which the Company is or is required to be a party or otherwise bound.
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Section 9.03 Frustration of Conditions. Notwithstanding anything contained herein to the contrary, no Party may rely on the failure of any condition set forth in this ARTICLE IX to be satisfied if such failure was caused by the failure of such Party or its Affiliates (or with respect to the Company, the Company or Seller) failure to comply with or perform any of its covenants or obligations set forth in this Agreement.
ARTICLE
X.
TERMINATION AND EXPENSES
Section 10.01 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows:
(a) by mutual written consent of the Purchaser and the Company;
(b) by written notice by the Purchaser or the Company if any of the conditions to the Closing set forth in ARTICLE IX have not been satisfied or waived by June 30, 2023 (the “Outside Date”); provided, however, the right to terminate this Agreement under this Section 10.01(b) shall not be available to a Party if the breach or violation by such Party or its Affiliates of any representation, warranty, covenant or obligation under this Agreement was the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date;
(c) by written notice by either the Purchaser or the Company if a Governmental Authority of competent jurisdiction shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such Order or other action has become final and non-appealable; provided, however, that the right to terminate this Agreement pursuant to this Section 10.01(c) shall not be available to a Party if the failure by such Party or its Affiliates to comply with any provision of this Agreement has been a substantial cause of, or substantially resulted in, such action by such Governmental Authority;
(d) by written notice by the Company, if (i) there has been a material breach by the Purchaser of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of the Purchaser shall have become materially untrue or materially inaccurate, in any case, which would result in a failure of a condition set forth in Section 9.01(a) or Section 9.01(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach or inaccuracy is provided by the Company or (B) the Outside Date;
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(e) by written notice by the Purchaser, if (i) there has been a breach by the Company of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of such Parties shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 9.02(a) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach or inaccuracy is provided by the Purchaser or (B) the Outside Date;
(f) by written notice by the Purchaser, if there shall have been a Material Adverse Effect on the Company or its Subsidiaries following the date of this Agreement which is uncured and continuing; or
(g) by written notice by the Purchaser to the Company if (i) the Company shall not have delivered to the Purchaser on or prior to August 14, 2018 the PCAOB Audited Financials, or (ii) if the PCAOB Audited Financials are substantially different from the Audited Company Financials in an adverse manner, including any of the consolidated revenues, net income or assets being at least five percent (5%) less than the amounts set forth in the Audited Company Financials or the consolidated liabilities being at least five percent (5%) greater than the amounts set forth in the Audited Company Financials.
Section 10.02 Effect of Termination. This Agreement may only be terminated in the circumstances described in Section 10.01 and pursuant to a written notice delivered by the applicable Party to the other applicable Parties, which sets forth the basis for such termination, including the provision of Section 10.01 under which such termination is made. In the event of the valid termination of this Agreement pursuant to Section 10.01, (i) this Agreement shall forthwith become void, , and (ii) there shall be no Liability on the part of any Party or any of their respective Representatives, and all rights and obligations of each Party shall cease, except: (x) Section 10.03, Error! Reference source not found., ARTICLE XI and this Section 10.02 shall survive the termination of this Agreement, and (y) nothing herein shall relieve any Party from Liability for any willful breach of any representation, warranty, covenant or obligation under this Agreement or any Fraud Claim against such Party, in either case, prior to termination of this Agreement.
Section 10.03 Fees and Expenses. Except as provided otherwise in this Agreement, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses. As used in this Agreement, “Expenses” shall include all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financial advisors, financing sources, experts and consultants to a Party hereto or any of its Affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution or performance of this Agreement or any Ancillary Document related hereto and all other matters related to the consummation of this Agreement.
| 27 |
ARTICLE
XI.
MISCELLANEOUS
Section 11.01 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by facsimile or other electronic means, with affirmative confirmation of receipt, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified by like notice):
If to the Purchaser, to:
EKIMAS Corporation
c/o Bennett J. Yankowitz
280 S. Beverly Dr., Suite 505
Beverly Hills, CA 90212
yankowitz@smcounsel.com
If to the Company, to:
Henrik Rouf
7950 W Sunset Blvd 629
Los Angeles, CA 90046
henrikrouf@gmail.com
Section 11.02 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. This Agreement shall not be assigned by operation of Law or otherwise without the prior written consent of the Purchaser and the Company and any assignment without such consent shall be null and void; provided that no such assignment shall relieve the assigning Party of its obligations hereunder.
Section 11.03 Third Parties. Nothing contained in this Agreement or in any instrument or document executed by any party in connection with the transactions contemplated hereby shall create any rights in, or be deemed to have been executed for the benefit of, any Person that is not a Party hereto or thereto or a successor or permitted assign of such a Party.
Section 11.04 Governing Law; Jurisdiction. This Agreement shall be governed by, construed and enforced in accordance with the Laws of the State of Delaware without regard to the conflict of laws principles thereof. All Actions arising out of or relating to this Agreement shall be heard and determined exclusively in any state or federal court located in Los Angeles County, California (or in any appellate court thereof) (the “Specified Courts”). Each Party hereto hereby (a) submits to the exclusive jurisdiction of any Specified Court for the purpose of any Action arising out of or relating to this Agreement brought by any Party hereto and (b) irrevocably waives, and agrees not to assert by way of motion, defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any Specified Court. Each Party agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party irrevocably consents to the service of the summons and complaint and any other process in any other Action relating to the transactions contemplated by this Agreement, on behalf of itself, or its property, by personal delivery of copies of such process to such Party at the applicable address set forth in Section 11.01. Nothing in this Section 11.04 shall affect the right of any Party to serve legal process in any other manner permitted by Law.
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Section 11.05 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.5.
Section 11.06 Specific Performance. Each Party acknowledges that the rights of each Party to consummate the transactions contemplated hereby are unique, recognizes and affirms that in the event of a breach of this Agreement by any Party, money damages may be inadequate and the non-breaching Parties may have not adequate remedy at law, and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by an applicable Party in accordance with their specific terms or were otherwise breached. Accordingly, each Party shall be entitled to seek an injunction or restraining order to prevent breaches of this Agreement and to seek to enforce specifically the terms and provisions hereof, without the requirement to post any bond or other security or to prove that money damages would be inadequate, this being in addition to any other right or remedy to which such Party may be entitled under this Agreement, at law or in equity.
Section 11.07 Severability. In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties will substitute for any invalid, illegal or unenforceable provision a suitable and equitable provision that carries out, so far as may be valid, legal and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
| 29 |
Section 11.08 Amendment. This Agreement may be amended, supplemented or modified only by execution of a written instrument signed by the Purchaser and the Company.
Section 11.09 Waiver. The Purchaser on behalf of itself and its Affiliates, the Company on behalf of itself and its Affiliates, may in its sole discretion (i) extend the time for the performance of any obligation or other act of any other non-Affiliated Party hereto, (ii) waive any inaccuracy in the representations and warranties by such other non-Affiliated Party contained herein or in any document delivered pursuant hereto and (iii) waive compliance by such other non-Affiliated Party with any covenant or condition contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by a Party in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.
Section 11.10 Entire Agreement. This Agreement and the documents or instruments referred to herein, including any exhibits and schedules attached hereto, which exhibits and schedules are incorporated herein by reference, together with the Ancillary Documents, embody the entire agreement and understanding of the Parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or the documents or instruments referred to herein, which collectively supersede all prior agreements and the understandings among the Parties with respect to the subject matter contained herein.
Section 11.11 Counterparts. This Agreement may be executed and delivered (including by facsimile or other electronic transmission) in one or more counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
Section 11.12 Power of Attorney. The Sellers, each and individually, irrevocably and severally appoint Henrik Rouf to be their attorney in fact and to take any action which the Sellers are obliged to take under this Agreement. The Sellers hereby ratify and confirm whatever their attorney in fact does or purports to do pursuant to its appointment under this Section 11.12.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be signed and delivered as of the date first written above.
| The Purchaser: | ||
| EKIMAS Corporation | ||
| By: | ||
| Bennett J. Yankowitz, CEO and Sole Director | ||
| The Company: | ||
| Nordicus Partners A/S | ||
| By: | ||
| Tom G. Larsen, CEO | ||
The Sellers: |
||
| GK Partners ApS | ||
| By: | ||
| Tom G. Larsen, CEO | ||
|
Henrik Rouf, Individual |
||
| Life Science Power House ApS | ||
| By: | ||
| Christian Hill-Madsen | ||
| 31 |
Exhibit 14.1
Exhibit 99.1
NORDICUS PARTNERS A/S
FINANCIAL STATEMENTS
JUNE 30, 2022 AND DECEMBER 31, 2021
Index to Financial Statement Statements
| 2 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the board of directors of Nordicus Partners A/S
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Nordicus Partners A/S (the "Company") as of June 30, 2022 and December 31, 2021, the related statement of operations, stockholders' equity (deficit), and cash flows for the period January 1, 2022 through June 30, 2022 and the period August 12, 2020 through December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and December 31, 2021, and the results of its operations and its cash flows for the period January 1, 2022 through June 30, 2022 and the period August 12, 2020 through December 31, 2021, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ BF Borgers CPA PC
BF Borgers CPA PC (PCAOB ID 5041)
We have served as the Company's auditor since 2023
Lakewood, CO
March 1, 2023
| 3 |
| BALANCE SHEETS | ||||||||
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 3,884 | $ | 5,143 | ||||
| Investment in publicly listed shares | 5,377 | 16,100 | ||||||
| Total Assets | $ | 9,261 | $ | 21,243 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 2,115 | $ | 1,224 | ||||
| Accounts payable - related parties | 1,912 | 136,990 | ||||||
| Total Current Liabilities | 4,027 | 138,214 | ||||||
| Total Liabilities | 4,027 | 138,214 | ||||||
| Shareholders’ Equity (Deficit): | ||||||||
| Common stock, DKK $1 par value, 40,000 shares authorized; 40,000 shares issued and outstanding | 6,348 | 6,348 | ||||||
| Additional paid-in capital | 91,630 | — | ||||||
| Accumulated deficit | (105,830 | ) | (128,123 | ) | ||||
| Accumulated other comprehensive income | 13,086 | 4,804 | ||||||
| Total Shareholders’ Equity (Deficit) | 5,234 | (116,971 | ) | |||||
| Total Liabilities and Shareholders’ Deficit | $ | 9,261 | $ | 21,243 | ||||
The accompanying notes are an integral part of these financial statements.
| 4 |
STATEMENTS OF OPERATIONS
| For
the Period from January 1, 2022, through June 30, 2022 | For
the Period from August 12, 2020, through December 31, 2021 | |||||||
| Operating Expenses: | ||||||||
| General and administrative | $ | 1,160 | $ | 2,251 | ||||
| Total operating expenses | 1,160 | 2,251 | ||||||
| Loss from Operations | (1,160 | ) | (2,251 | ) | ||||
| Other Income (Expense): | ||||||||
| Unrealized gain (loss) in publicly listed shares | 24,310 | (122,096 | ) | |||||
| Interest expense | (25 | ) | (39 | ) | ||||
| Interest expense – related party | (832 | ) | (3,737 | ) | ||||
| Total other income (expense) | 23,453 | (125,872 | ) | |||||
| Net income (loss) | $ | 22,293 | $ | (128,123 | ) | |||
| Other comprehensive income: | ||||||||
| Foreign currency translation adjustment | 8,282 | 4,804 | ||||||
| Comprehensive income (loss) | $ | 30,575 | $ | (123,319 | ) | |||
| Income (loss) per Common Share: | ||||||||
| Basic and Diluted | $ | 0.56 | $ | (3.20 | ) | |||
| Weighted Average Number of Common Shares Outstanding: | ||||||||
| Basic and Diluted | 40,000 | 40,000 | ||||||
The accompanying notes are an integral part of these financial statements.
| 5 |
|
STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||||
| Common Stock | Additional Paid-in | Accumulated | Other Comprehensive | Total Shareholders’ Equity | ||||||||||||||||||||
| Shares | Amount | Capital |
Deficit |
Income | (Deficit) | |||||||||||||||||||
| Balance, August 12, 2020 | 40,000 | $ | 6,348 | $ | — | $ | — | $ | — | $ | 6,334 | |||||||||||||
| Net Loss | — | — | — | (128,123 | ) | 4,804 | (123,319 | ) | ||||||||||||||||
| Balance, December 31, 2021 | 40,000 | 6,348 | — | (128,123 | ) | 4,804 | (116,971 | ) | ||||||||||||||||
| Contributions from related parties | — | — | 91,630 | — | — | 91,630 | ||||||||||||||||||
| Net Income | — | — | — | 22,293 | 8,282 | 30,575 | ||||||||||||||||||
| Balance, June 30, 2022 | 40,000 | $ | 6,348 | $ | 91,630 | $ | (105,830 | ) | $ | 13,086 | $ | 5,234 | ||||||||||||
The accompanying notes are an integral part of these financial statements.
| 6 |
| STATEMENTS OF CASH FLOWS | ||||||||
| For
the Period from January 1, 2022, through June 30, 2022 | For
the Period from August 12, 2020, through December 31, 2021 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | 22,293 | $ | (128,123 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Unrealized gain (loss) of publicly listed shares | (24,310 | ) | 122,096 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable | 891 | 1,224 | ||||||
| Accounts payable - related parties | (135,078 | ) | 136,990 | |||||
| Net cash (used) provided by operating activities | (136,204 | ) | 132,187 | |||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of publicly listed shares | — | (133,400 | ) | |||||
| Sale of publicly listed shares | 32,785 | — | ||||||
| Net cash provided (used) by investing activities | 32,785 | (133,400 | ) | |||||
| Cash Flows from Financing Activities: | ||||||||
| Contribution from related parties | 91,630 | — | ||||||
| Net cash provided by financing activities | 91,630 | — | ||||||
| Effect of exchange rate on cash | 10,530 | 6,356 | ||||||
| Net change in cash | (11,789 | ) | (1,213 | ) | ||||
| Cash, beginning of year | 5,143 | — | ||||||
| Cash, end of year | $ | 3,884 | $ | 5,143 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | — | $ | — | ||||
| Income tax paid | $ | — | $ | — | ||||
The accompanying notes are an integral part of these financial statements.
| 7 |
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2022
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Nordicus Partners A/S (the “Company”, “we”, “us”, or the “organization”) is an investment company focused on investments in both listed and unlisted companies in Denmark and USA.
The fiscal year end of the Company has been changed from December 31 to June 30 beginning January 1, 2022. The presented financial statements contain two different periods, 1) January 1, 2022 through June 30, 2022 (6 months) and from August 12, 2020 through December 31, 2021 (16 month). Due to the limited activity of the Company management considers the two periods comparable.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s accounting estimates include the collectability of receivables, useful lives of long-lived assets and recoverability of those assets, impairment in fair value of goodwill, valuation allowances for income taxes, stock-based compensation.
Concentration of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Cash equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the periods ended June 30, 2022 or December 31, 2021.
Translation Adjustment
The accounts of the Company and its financial statements are maintained in Danish Crowns - DKK. Such financial statements were translated into USD in accordance with the Foreign Currency Matters Topic of the Codification (ASC 830), with the DKK as the functional currency. According to the Codification, all assets and liabilities are translated at the current exchange rate at respective balance sheets dates, equity accounts are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with the Comprehensive Income Topic of the Codification (ASC 220), as a component of shareholders’ equity. Transaction gains and losses are reflected in the income statement.
Comprehensive Income
The Company uses SFAS 130 “Reporting Comprehensive Income” (ASC Topic 220). Comprehensive income is comprised of net income and all changes to the statements of stockholders’ deficit. Comprehensive income for the periods presented are included in net income (loss) as foreign currency translation adjustments.
Investments
The Company follows ASC subtopic 321-10, Investments-Equity Securities which requires the accounting for an equity security to be measured at fair value with changes in unrealized gains and losses included in current period operations. Where an equity security is without a readily determinable fair value, the Company may elect to estimate its fair value at cost minus impairment plus or minus changes resulting from observable price changes.
| 8 |
Stock-based Compensation
In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. We adopted this ASU on January 1, 2019.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments.
Net income (loss) per common share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
Income Taxes
The Company is domiciled in Denmark and eligible for Danish income tax of 22%.
Recently issued accounting pronouncements
The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has no revenue, $9,261 of current asset and an accumulated deficit of $105,830 as of June 30, 2022. Due to these conditions, it raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.
| 9 |
NOTE 4 - MARKETABLE SECURITIES
On April 1, 2021, the company acquired 67.084 shares in Rocketfuel, Inc. for $133,400 (DKK 872.000). In 2022 the company sold 33.542 of the shares for $32,785 (DKK 232.566).
As of June 30, 2022, and December 31, 2021, the Company’s marketable securities were classified as follows:
| As of June 30, 2022 | ||||||||||||||||
| Cost | Gross Gains | Gross
Realized Gains | Fair Value | |||||||||||||
| Available-for-sale: | ||||||||||||||||
| Corporate Stocks | $ | — | $ | — | $ | 24,310 | $ | 5,377 | ||||||||
| Total | $ | — | $ | — | $ | 24,310 | $ | 5,377 | ||||||||
| As of December 31, 2021 | ||||||||||||||||
| Cost | Gross Gains | Gross
Realized Losses | Fair Value | |||||||||||||
| Available-for-sale: | ||||||||||||||||
| Corporate Stocks | $ | 133,400 | $ | (122,096 | ) | $ | — | $ | 16,100 | |||||||
| Total | $ | 133,400 | $ | (122,096 | ) | $ | — | $ | 16,100 | |||||||
NOTE 5 – SHAREHOLDERS’ EQUITY
The company has 40,000 shares of common stock issued and outstanding. The shares are owned by the following shareholders:
GK Partners ApS owns 34,000 shares, for an 85% ownership.
Henrik Rouf owns 4,000 shares for a 1 0% ownership.
Life Science Power House ApS owns 2,000 shares for a 5% ownership.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company has borrowed funds from its related parties when needed. During 2021 the Company borrowed approximately $64,770 (459.468 DKK ) from Kama ApS and approximately $61,460 (436.000 DKK) from GK Partners.
During 2022 Kama ApS and GK Partners ApS converted the amounts due to them into a capital contribution of $91,630 (650.000 DKK) presented as an increase to additional paid in capital under shareholder’s equity.
NOTE 7 – SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements.
| 10 |
Exhibit 99.2
EKIMAS CORPORATION
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information is based on the financial statements of EKIMAS Corporation (the “Company”) and Nordicus Partners A/S, a Danish stock corporation (“Nordicus”), after entering into an agreement on February 23, 2023, to whereby the Company agreed to acquire one hundred percent of the outstanding shares of Nordicus. The notes to the unaudited pro forma condensed combined financial information describe the reclassifications and adjustments to the financial information presented.
The Company is a financial consulting company, specializing in providing Nordic companies with the best possible conditions to establish themselves on the U.S. market, taking advantage of management’s combined +90 years of experience in the corporate sector, serving in different capacities both domestically and globally.
Nordicus is an investment company focused on investments in both listed and unlisted companies in Denmark and USA.
The unaudited pro forma condensed combined financial information is not intended to represent or be indicative of the Company’s consolidated results of operations or financial position that the Company would have reported had the Nordicus acquisition been completed as of the dates presented and should not be taken as a representation of the Company’s future consolidated results of operation or financial position.
The unaudited pro forma condensed combined financial statements do not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated synergies, operating efficiencies or cost savings that may be associated with the acquisition. The unaudited pro forma condensed combined financial statements also do not include any integration costs, cost overlap or estimated future transaction costs that the companies expect to incur as a result of the acquisition.
The historical financial information has been adjusted to give effect to events that are directly attributable to the Acquisition, factually supportable and expected to have a continuing impact on the results of the combined company. The adjustments that are included in the following unaudited pro forma condensed combined financial statements are described in Note 3 below, which includes the numbered notes that are marked in those financial statements.
EKIMAS CORPORATION
Unaudited Pro Forma Condensed Combined Balance Sheets
| EKIMAS Corporation as of March 31, 2022 | Nordicus Partners A/S as of June 30, 2022 | Pro Forma Adjustments | Notes | Pro Forma Combined | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current Assets: | ||||||||||||||||||
| Cash | $ | 245,945 | $ | 3,884 | $ | — | $ | 249,829 | ||||||||||
| Prepaid expenses | 3,500 | — | — | 3,500 | ||||||||||||||
| Investment in trading securities | — | 5,377 | — | 5,377 | ||||||||||||||
| Total Current Assets | 249,445 | 9,261 | — | 258,706 | ||||||||||||||
| Total Assets | $ | 249,445 | $ | 9,261 | $ | — | $ | 258,706 | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||
| Accounts payable | $ | 43,422 | $ | 2,115 | $ | — | $ | 45,537 | ||||||||||
| Accounts payable – related party | 11,512 | 1,912 | — | 13,424 | ||||||||||||||
| Total Current Liabilities | 54,934 | 4,027 | — | 58,961 | ||||||||||||||
| Total Liabilities | 54,934 | 4,027 | — | 58,961 | ||||||||||||||
| Shareholders’ Equity (Deficit): | ||||||||||||||||||
| Common stock | 5,681 | 6,348 | (3,848 | ) | (1) (2) | 8,181 | ||||||||||||
| Additional paid-in-capital | 33,944,605 | 91,630 | 2,503,848 | (1) (2) | 36,540,083 | |||||||||||||
| Treasury stock | (30,328 | ) | — | — | (30,328 | ) | ||||||||||||
| Accumulated deficit | (33,725,447 | ) | (105,830 | ) | (2,500,000 | ) | (1) | (36,331,277 | ) | |||||||||
| Accumulated other comprehensive income | — | 13,086 | — | 13,086 | ||||||||||||||
| Total Shareholders’ Equity (Deficit) | 194,511 | 5,234 | — | 199,745 | ||||||||||||||
| Total Liabilities and Shareholders’ Deficit | $ | 249,445 | $ | 9,261 | $ | — | $ | 258,706 | ||||||||||
EKIMAS CORPORATION
Unaudited Pro Forma Condensed Combined Statements of Operations
| EKIMAS Corporation for the Fiscal Year Ended March 31, 2022 | Nordicus Partners A/S for the period from August 12, 2020, through June 30, 2022 | Pro Forma Adjustments | Notes | Pro Forma Combined | ||||||||||||||
| Operating Expenses: | ||||||||||||||||||
| General and administrative | $ | 309,171 | $ | 3,411 | $ | — | $ | 312,582 | ||||||||||
| Acquisition expense | — | — | 2,500,000 | (1) | 2,500,000 | |||||||||||||
| Total operating expenses | 309,171 | 3,411 | 2,500,000 | 2,812,582 | ||||||||||||||
| Loss from operations | (309,171 | ) | (3,411 | ) | (2,500,000 | ) | (2,812,582 | ) | ||||||||||
| Other Income (Expense): | ||||||||||||||||||
| Other income | 22,000 | — | — | 22,000 | ||||||||||||||
| Interest expense | — | (64 | ) | — | (64 | ) | ||||||||||||
| Interest expense – related party | — | (4,569 | ) | — | (4,569 | ) | ||||||||||||
| Unrealized loss on trading securities | — | (97,786 | ) | — | (97,786 | ) | ||||||||||||
| Total other income (expense) | 22,000 | (102,419 | ) | — | (80,419 | ) | ||||||||||||
| Net loss | $ | (287,171 | ) | $ | (105,830 | ) | $ | (2,500,000 | ) | $ | (2,893,001 | ) | ||||||
| Other comprehensive income: | ||||||||||||||||||
| Foreign currency translation adjustment | — | 13,086 | — | 13,086 | ||||||||||||||
| Comprehensive loss | $ | (287,171 | ) | $ | (92,744 | ) | $ | (2,500,000 | ) | $ | (2,879,915 | ) | ||||||
| Net loss per common share, basic and diluted | $ | (0.30 | ) | $ | (0.84 | ) | ||||||||||||
| Weighted average number of common shares outstanding, basic and diluted | 944,651 | 3,444,651 | ||||||||||||||||
EKIMAS CORPORATION,
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma statement of operations for the periods presented, is based on the financial statements of the Company and Nordicus, after giving effect to the Company’s acquisition of Nordicus that was consummated on February 23, 2023, and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information.
NOTE 2 - ACQUISITION OF NORDICUS PARTNERS A/S
On February 23, 2023 (the “Closing Date”), EKIMAS Corporation (“EKIMAS”) and Nordicus Partners A/S, a Danish stock corporation (“Nordicus”), consummated the transactions contemplated by that certain Contribution Agreement (the “Contribution Agreement”) made and entered into as of February 23, 2023 by and among EKIMAS, the Sellers (as defined below) and Nordicus. Pursuant to the Contribution Agreement the Sellers contributed, transferred, assigned and conveyed to the Company all right, title and interest in and to one hundred percent (100%) of the issued and outstanding capital stock of Nordicus for an aggregate of 2,500,000 shares of the Company’s common stock, par value $0.001 per share, (such transaction, the “Business Combination”). As a result of the Business Combination, Nordicus became a 100% wholly owned subsidiary of EKIMAS Corporation.
NOTE 3 - PRO FORMA ADJUSTMENTS
The following pro forma adjustments are included in the Company’s unaudited pro forma condensed combined financial information:
| (1) | Adjustment to eliminate the common stock of Nordicus | |
| (2) | Adjustment to account for the issuance of 2,500,000 shares of the Company’s common stock, at $1.00 per share, per the Contribution Agreement. |
Exhibit 99.3
NORDICUS PARTNERS A/S COMPLETES REVERSE ACQUISITION TRANSACTION WITH EKIMAS CORPORTION
Las Vegas, Nevada. March 1, 2023…Nordicus Partners A/S (“Nordicus”), a financial consulting company, specializing in providing Nordic companies with the best possible conditions to establish themselves on the U.S. market, today announced the completion of a reverse acquisition with EKIMAS Corporation (“EKIMAS”) (OTC PINK: ASNB). The transaction was effected pursuant to a Contribution Agreement whereby EKIMAS issued 2,500,000 shares of its common stock to the shareholders of Nordicus, representing a 30.1% interest in EKIMAS. As a result of the transaction, Nordicus became a wholly-owned subsidiary of EKIMAS. Over the next several weeks, the combined company (the “Company”) intends to change the name of EKIMAS to Nordicus Partners Corporation and file necessary applications to change its ticker symbol.
Tom Glaesner Larsen and Christian Hill-Madsen, board members of Nordicus, were appointed to EKIMAS’ board of directors. Henrik Rouf, another Nordicus board member, became the Chief Executive Officer of EKIMAS. Bennett Yankowitz, EKIMAS’s former CEO, will remain on the board of directors and will become Chief Financial Officer of EKIMAS.
Nordicus was formed in 2020 with a mission to assist the right Nordic companies realize their growth strategy by fine tuning systems and processes, sharpening the commercial focus and providing companies with the best possible guidance and setup suited to successfully establish themselves on the U.S. market. The companies Nordicus primarily services are in the Green Energy, Clean Tech, Life Science, E-commerce, Blockchain and SaaS industries.
Tom Glaesner Larsen, CEO of Nordicus and incoming board member of EKIMAS, said, “We are very excited to become part of a publicly traded company listed in the U.S., leveraging of our expertise and knowledge of the Nordic technology sectors and assisting our client companies gain access to exponential growth potential in the U.S. markets”.
Henrik Rouf, a board member of Nordicus and incoming CEO of the Company, added, “We believe that with Nordicus and its team launching in and now having a presence in the U.S., will attract numerous high growth technology companies throughout the Nordic and Scandinavian regions looking to engage Nordicus’ services and offerings”.
About Nordicus Partners A/S
Nordicus Partners A/S is a Denmark-based financial consulting company, specializing in providing Nordic companies with the best possible conditions to establish themselves on the U.S. market, taking advantage of management’s combined +90 years of experience in the corporate sector, serving in different capacities both domestically and globally. The company’s core competencies lie in assisting Danish as well as other Nordic and international companies in different areas of corporate finance activities, such as: business valuations, growth strategies, attracting capital for businesses & company acquisitions and sales.
Forward-Looking Statements
The Company believes that this press release contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of these terms) may identify forward-looking statements. Such forward-looking statements, including but not limited to statements regarding the plans and objectives of management for future operations, are based on management’s current expectations and are subject to risks and uncertainties that could cause results to differ materially from the forward-looking statements. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the accuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, market acceptance of the company’s products and services; competition from existing products or new products that may emerge; the implementation of the company’s business model and strategic plans for its business and our products; estimates of the company’s future revenue, expenses, capital requirements and need for financing; current and future government regulations; and developments relating to the company’s competitors. Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them. For further information on such risks and uncertainties, you are encouraged to review the Company’s filings with the Securities and Exchange Commission (“SEC”), including its Current Report on Form 8-K relating to the reverse acquisition and related transactions which will be filed with the SEC on or before March 1, 2023. The Company assumes no obligation to update any forward-looking statements as a result of new information or future events or developments, except as required by law.
For further information contact:
Mr. Henrik Rouf
Chief Executive Officer
Phone +1 310 666.0750
Email hr@nordicuspartners.com