Item 5.01 Change in Control of Registrant
On
i. TheDecember 19, 2019 acquisition by the Company of all of the capital stock of JAS from Justin and Stacey pursuant to an agreement datedDecember 19, 2019 , by and among the Company, Justin and Stacey, was rescinded. The purchase price paid by the Company for the capital stock of JAS consisted of (a) payments to Justin and Stacey of a total of$250,000 , (b) 3,500,000 shares of the Company's common stock, which were issued to Justin and Stacey and (c) the Company's 8% promissory notes in the total principal amount of$250,000 that were payable to Justin and Stacey. ii. Justin and Stacey returned to the Company for cancelation the 3,500,000 shares of common stock which had been issued to them pursuant to the purchase agreement. iii. Justin returned to the Company for cancelation, 500,000 shares of common stock which had been issued to him pursuant to his employment agreement with the Company and 25,000 shares of common stock which has been issued to him in connection with a loan he made to the Company. iv. Justin and Stacey cancelled the 8% promissory notes in the principal amount of$250,000 . v. The Company transferred to Justin and Stacey the stock of JAS. vi. JAS issued its 2% promissory note dueDecember 31, 2023 in the principal amount of$200,000 , which can be satisfied by payment of$100,000 byDecember 31, 2020 . vii. Justin and Stacey guaranteed payment by JAS of its note, and their guarantee is secured by a pledge of the stock of JAS. viii. Justin's employment agreement with the Company was terminated.
The JAS stock which was transferred by the Company to Justin and Stacey pursuant
to the Rescission Agreement was subject to a security interest in favor of
Justin was the Company's chief executive officer at the time that the Company's acquisition of JAS, and Stacey is Justin's spouse. The 4,025,000 shares of common stock that were transferred to the Company by Justin and Stacey represented approximately 32% of the Company's outstanding common stock on the date of the Rescission Agreement, and they may be deemed to have been controlling parties.
2
As a result of the cancellation of the 4,025,000 shares, the number of outstanding shares of the Company's common stock decreased from 12,560,417 shares to 8,535,417 shares. As of the date of this report, Kruse, owns 1,858,188 shares of common stock, representing 21.8% of the Company's outstanding common stock, and he is the Company's largest stockholder. Zima owns 1,000,000 shares of common stock, representing 11.7% of the Company's common stock.
During 2019, the Company issued 500,000 shares of common stock to each of Kruse
and Zima in connection with the guaranty by Kruse and an affiliate of Zima of
the Company's bank loan, and the Company issued 500,000 to each of Kruse and
Zima in connection with the loans to the Company by each of them in the amount
of
The rescission of JAS will result in a charge reflecting the costs incurred by
JAS during the period from
In connection with the acquisition of JAS, because Justin was the Company's
chief executive officer and sole director and, together with Stacey, the holders
of 32.0% of the Company's common stock after giving effect to the acquisition,
the acquisition would have been treated as a reverse acquisition, with the
result that the Company's historical financial statements would have been the
financial statements of JAS, with the Company being acquired on
Item 9.01 Financial Statements and Exhibits
(d) Exhibits 99.1 Rescission Agreement datedJuly 31, 2020 , by and among the Company,Justin Anderson ,Stacey Anderson andJAS Practice Management, Inc. 99.2 2% Promissory note fromJAS Practice Management, Inc. to the Company. 99.3 Guaranty Agreement datedJuly 31, 2020 fromJustin Anderson andStacey Anderson to the Company. 99.4 Pledge Agreement datedJuly 31, 2020 , among the Company,Justin Anderson andStacey Anderson (included as Exhibit B to the Rescission Agreement (Exhibit 99.1)). 3
© Edgar Online, source