FORM 10-Q
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
☒x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
OR
☐o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 000-52102
Acquired Sales Corp.
(Exact name of registrant as specified in its charter)
Nevada | 87-0479286 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
31 N. Suffolk Lane, Lake Forest, Illinois 60045
(Address of principal executive offices)
(847) 915-2446
(Registrant'sRegistrant’s telephone number, including area code)
n/a
(Former name, former address and former fiscal year, if changed since last report)
Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated filer"” “accelerated filer,” “smaller reporting company,” and "smaller reporting"emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o | Accelerated | |||||
Non-accelerated filer x | Smaller reporting | Emerging growth company o |
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. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]
APPLICABLE ONLY TO CORPORATE ISSUERS
As of November 15, 2019, there were 2,726,669 shares outstanding of each of the issuer's classes of common units, as of the latest practicable date: 2,369,648 shares ofregistrant’s common stock par value $.001 per share, outstanding as of outstanding.
November __, 2016.
TABLE OF CONTENTS- INDEX -
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK20
ITEM 4. CONTROLS AND PROCEDURES20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.23
Item 3. Defaults Upon Senior Securities.23
Item 4. Mine Safety Disclosures.24
PART I — FINANCIAL INFORMATION
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, the financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.
The results for the period ended September 30, 20162019 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto included in the Company'sCompany’s Form 10-K filed with the Securities and Exchange Commission ("SEC"(“SEC”) on March 28, 201613, 2019 for the period ended December 31, 2015.
ACQUIRED SALES CORP.
INDEX TO THE CONDENSED FINANCIAL STATEMENTS
Page | |
Condensed Balance Sheets, September 30, 2019 (Unaudited) and December 31, 2018 | 2 |
Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2019 and 2018 (Unaudited) | 3 |
Condensed Statements of Shareholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2018 and 2019 (Unaudited) | 4 |
Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2019 and 2018 (Unaudited) | 5 |
Notes to the Condensed Financial Statements (Unaudited) | 6 |
ACQUIRED SALES CORP. (Unaudited) | ||||||||
September 30, | December 31, | |||||||
2016 | 2015 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and Cash Equivalents | $ | 428 | $ | 27,781 | ||||
Total Current Assets | 428 | 27,781 | ||||||
Notes Receivable | - | 25,000 | ||||||
Total Assets | $ | 428 | $ | 52,781 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Trade Accounts Payable | $ | 105,078 | $ | 19,295 | ||||
Total Current Liabilities | 105,078 | 19,295 | ||||||
Long Term Liabilities | ||||||||
Note Payable to Related Party | 4,000 | - | ||||||
Total Long Term Liabilities | $ | 4,000 | $ | - | ||||
Shareholders' Equity | ||||||||
Preferred Stock, $0.001 par value; 10,000,000 shares authorized; | ||||||||
none outstanding | - | - | ||||||
Common Stock, $0.001 par value; 100,000,000 shares authorized; | ||||||||
2,369,648 and 2,269,648 shares outstanding, respectively | 2,370 | 2,270 | ||||||
Additional Paid-in Capital | 13,554,524 | 13,554,524 | ||||||
Accumulated Deficit | (13,665,544 | ) | (13,523,308 | ) | ||||
Total Shareholders' Equity (Deficit) | (108,650 | ) | 33,486 | |||||
Total Liabilities and Shareholders' Equity | $ | 428 | $ | 52,781 |
ACQUIRED SALES CORP. | ||||
CONDENSED BALANCE SHEETS | ||||
| ||||
|
|
|
|
|
|
| September 30, |
| December 31, |
|
| 2019 (Unaudited) |
| 2018 |
ASSETS |
|
|
|
|
Current Assets |
|
|
|
|
Cash and Cash Equivalents |
| $ 4,358,556 |
| $ - |
Prepaid Expenses |
| 833 |
|
|
Total Current Assets |
| 4,359,389 |
| - |
Investment in Ablis |
| 399,200 |
| - |
Investment in Bendistillery and Bend Spirits |
| 1,497,000 |
| - |
Note Receivable from CBD LION |
| 300,000 |
| - |
Total Assets |
| $ 6,555,589 |
| $ - |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts Payable - Related Party |
|
|
|
|
Accounts Payable - Related Party - Payable to William C. Jacobs |
| $ - |
| $ 164,417 |
Accounts Payable - Related Party - Payable to Gerard M. Jacobs |
| - |
| 24,583 |
Accounts Payable - Related Party - Payable to Other Related Party |
| - |
| 4,000 |
Accounts Payable - Related Party |
| - |
| 193,000 |
Trade Accounts Payable |
| 6,985 |
| 113,450 |
Notes Payable - Related Party |
|
|
|
|
Notes Payable - Payable to Joshua A. Bloom |
| - |
| 20,025 |
Notes Payable - Payable to Gerard M. Jacobs |
| - |
| 10,766 |
Notes Payable - Related Party |
| - |
| 30,791 |
Interest Payable - Related Party |
|
|
|
|
Interest - Payable to Joshua A. Bloom |
| - |
| 914 |
Interest - Payable to Gerard M. Jacobs |
| - |
| 467 |
Interest Payable - Related Party |
| - |
| 1,381 |
Preferred Stock Dividends Payable |
|
|
|
|
Series A Convertible Preferred Stock Dividends Payable |
| 94,997 |
| - |
Series B Convertible Preferred Stock Dividends Payable |
| 2,232 |
| - |
Preferred Stock Dividends Payable |
| 97,229 |
| - |
Total Current Liabilities |
| $ 104,214 |
| $ 338,622 |
Commitments and Contingencies |
| - |
| - |
Shareholders' Equity |
|
|
|
|
Preferred Stock, $0.001 par value; 10,000,000 total shares authorized; |
| 156 |
| - |
Common Stock, $0.001 par value; 100,000,000 shares authorized; 2,726,669 and 2,369,648 shares outstanding at September 30, 2019 and December 31, 2018, respectively |
| 2,727 |
| 2,370 |
Additional Paid-in Capital |
| 21,639,131 |
| 13,664,697 |
Accumulated Deficit |
| (15,190,639) |
| (14,005,689) |
Total Shareholders' Equity (Deficit) |
| 6,451,375 |
| (338,622) |
Total Liabilities and Shareholders' Equity |
| $ 6,555,589 |
| $ - |
Please see the accompanying notes to the condensed financial statements for more information.
ACQUIRED SALES CORP. | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Selling, General and Administrative Expense | $ | (52,861 | ) | $ | (52,944 | ) | $ | (142,264 | ) | $ | (366,181 | ) | ||||
Bad Debt Expense | - | (835,277 | ) | - | (835,277 | ) | ||||||||||
Interest Income | - | 17,726 | - | 61,501 | ||||||||||||
Other Income | - | - | 28 | 2,267 | ||||||||||||
Net Loss | $ | (52,861 | ) | $ | (870,495 | ) | $ | (142,236 | ) | $ | (1,137,690 | ) | ||||
Basic and Diluted Earnings Loss per Share | $ | (0.02 | ) | $ | (0.38 | ) | $ | (0.06 | ) | $ | (0.50 | ) |
ACQUIRED SALES CORP. | |||||||
CONDENSED STATEMENTS OF OPERATIONS | |||||||
(UNAUDITED) | |||||||
|
|
|
|
|
|
|
|
| For the Three Months Ended |
| For the Nine Months Ended | ||||
| September 30, |
| September 30, | ||||
| 2019 |
| 2018 |
| 2019 |
| 2018 |
Selling, General and Administrative Expense | $ (61,697) |
| $ (16,549) |
| $ (132,919) |
| $ (50,123) |
Stock Compensation Expense | (37,961) |
| - |
| (872,147) |
| (72,500) |
Professional Fees | (52,142) |
| (13,237) |
| (97,112) |
| (18,632) |
Loss From Operations | (151,800) |
| (29,786) |
| (1,102,178) |
| (141,255) |
Other Income |
|
|
|
|
|
|
|
Gain on Settlement | - |
| - |
| 29,196 |
| - |
Interest Income | 5,334 |
| - |
| 13,259 |
| - |
Interest Expense | - |
| (5,021) |
| (27,998) |
| (5,021) |
Total Other Income | 5,334 |
| (5,021) |
| 14,457 |
| (5,021) |
Loss Before Provision for Income Taxes | (146,466) |
| (34,807) |
| (1,087,721) |
| (146,276) |
Provision for Income Taxes | - |
| - |
| - |
| - |
Net Loss | $ (146,466) |
| $ (34,807) |
| $ (1,087,721) |
| $ (146,276) |
|
|
|
|
|
|
|
|
Basic and Diluted Earnings Net Loss per Share | $ (0.06) |
| $ (0.01) |
| $ (0.43) |
| $ (0.06) |
|
|
|
|
|
|
|
|
Basic and Diluted Weighted Average Number of Common Shares Outstanding: | 2,597,302 |
| 2,369,648 |
| 2,527,576 |
| 2,369,648 |
Please see the accompanying notes to the condensed financial statements for more information.
ACQUIRED SALES CORP. (UNAUDITED) | ||||||||||||||||||||
Additional | Total | |||||||||||||||||||
Common Stock | Paid-in | Accumulated | Shareholders' | |||||||||||||||||
Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
Balance, December 31, 2014 | 2,269,648 | $ | 2,270 | $ | 13,554,524 | $ | (12,347,428 | ) | $ | 1,209,366 | ||||||||||
Net Loss | - | - | - | (1,137,690 | ) | (1,137,690 | ) | |||||||||||||
Balance, September 30, 2015 | 2,269,648 | $ | 2,270 | $ | 13,554,524 | $ | (13,485,118 | ) | $ | 71,676 | ||||||||||
Balance, December 31, 2015 | 2,269,648 | $ | 2,270 | $ | 13,554,524 | $ | (13,523,308 | ) | $ | 33,486 | ||||||||||
Exercise of Stock Options | 100,000 | 100 | $ | 100 | ||||||||||||||||
Net Loss | - | - | - | (142,236 | ) | (142,236 | ) | |||||||||||||
Balance, September 30, 2016 | 2,369,648 | $ | 2,370 | $ | 13,554,524 | $ | (13,665,544 | ) | $ | (108,650 | ) |
ACQUIRED SALES CORP. | |||||||||||||
CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) | |||||||||||||
(UNAUDITED) | |||||||||||||
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|
|
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|
|
|
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|
| Additional |
|
|
| Total |
| Preferred Stock |
| Common Stock |
| Paid-in |
| Accumulated |
| Shareholders' | ||||
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity |
Balance, December 31, 2017 | - |
| $ - |
| 2,369,648 |
| $ 2,370 |
| $ 13,554,524 |
| $ (13,785,068) |
| $ (228,174) |
Net Loss |
|
|
|
|
|
|
|
|
|
| $ (20,068) |
| $ (20,068) |
Balance, March 31, 2018 | - |
| $ - |
| 2,369,648 |
| $ 2,370 |
| $ 13,554,524 |
| $ (13,805,136) |
| $ (248,242) |
Stock Compensation Expense |
|
|
|
|
|
|
|
| $ 72,500 |
|
|
| $ 72,500 |
Net Loss |
|
|
|
| - |
| - |
| - |
| $ (91,401) |
| $ (91,401) |
Balance, June 30, 2018 | - |
| $ - |
| 2,369,648 |
| $ 2,370 |
| $ 13,627,024 |
| $ (13,896,537) |
| $ (267,143) |
Issuance of warrants to purchase common stock |
|
|
|
|
|
|
|
| $ 4,550 |
|
|
| $ 4,550 |
Net Loss |
|
|
|
|
|
|
|
|
|
| $ (34,807) |
| $ (34,807) |
Balance, September 30, 2018 | - |
| $ - |
| 2,369,648 |
| $ 2,370 |
| $ 13,631,574 |
| $ (13,931,344) |
| $ (297,400) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2018 | - |
| $ - |
| 2,369,648 |
| $ 2,370 |
| $ 13,664,697 |
| $ (14,005,689) |
| $ (338,622) |
Exercise of rights to purchase warrants to purchase shares of common stock |
|
|
|
| 210,000 |
| $ 210 |
| $ 1,892 |
|
|
| $ 2,102 |
Issuance of warrants to purchase common stock |
|
|
|
|
|
|
|
| $ 26,773 |
|
|
| $ 26,773 |
Issuance of Series A Convertible Preferred Stock for cash | 29,900 |
| $ 30 |
|
|
|
|
| $ 2,989,970 |
|
|
| $ 2,990,000 |
Series A Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
| $ (18,552) |
| $ (18,552) |
Net Loss |
|
|
|
| - |
| - |
|
|
| $ (44,440) |
| $ (44,440) |
Balance, March 31, 2019 | 29,900 |
| $ 30 |
| 2,579,648 |
| $ 2,580 |
| $ 16,683,332 |
| $ (14,068,681) |
| $ 2,617,261 |
Issuance of Series A Convertible Preferred Stock for cash | 36,250 |
| $ 36 |
|
|
|
|
| $ 3,624,964 |
|
|
| $ 3,625,000 |
Stock Compensation Expense |
|
|
|
|
|
|
|
| $ 834,186 |
|
|
| $ 834,186 |
Series A Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
| $ (26,425) |
| $ (26,425) |
Net Loss |
|
|
|
| - |
| - |
|
|
| $ (896,815) |
| $ (896,815) |
Balance, June 30, 2019 | 66,150 |
| $ 66 |
| 2,579,648 |
| $ 2,580 |
| $ 21,142,482 |
| $ (14,991,921) |
| $ 6,153,207 |
Exercise of warrants |
|
|
|
| 147,021 |
| $ 147 |
| $ 8,778 |
|
|
| $ 8,925 |
Issuance of Series B Convertible Preferred Stock for cash | 90,000 |
| $ 90 |
|
|
|
|
| $ 449,910 |
|
|
| $ 450,000 |
Series A Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
| $ (50,020) |
| $ (50,020) |
Series B Preferred Stock dividend payable |
|
|
|
|
|
|
|
|
|
| $ (2,232) |
| $ (2,232) |
Stock Compensation Expense |
|
|
|
|
|
|
|
| 37,961 |
|
|
| $ 37,961 |
Net Loss |
|
|
|
|
|
|
|
|
|
| $ (146,466) |
| $ (146,466) |
Balance, September 30, 2019 | 156,150 |
| $ 156 |
| 2,726,669 |
| $ 2,727 |
| $ 21,639,131 |
| $ (15,190,639) |
| $ 6,451,375 |
Please see the accompanying notes to the condensed financial statements for more information.
ACQUIRED SALES CORP. (UNAUDITED) | ||||||||
For the Nine Months Ended | ||||||||
September 30, | ||||||||
2016 | 2015 | |||||||
Cash Flows From Operating Activities | ||||||||
Net Loss | $ | (142,236 | ) | $ | (1,137,690 | ) | ||
Adjustments to Reconcile Loss to net Cash Used in Operating Activities: | ||||||||
Changes in Operating Assets and Liabilities: | ||||||||
Bad Debt Expense | - | 835,277 | ||||||
Prepaid Expenses | - | 7,985 | ||||||
Accrued Interest Receivable | - | (61,501 | ) | |||||
Accounts Payable | 85,783 | (12,336 | ) | |||||
Net Cash Used in Operating Activities | (56,453 | ) | (368,265 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Note Receivable | 25,000 | (135,350 | ) | |||||
Net Cash Provided by (Used in) Investing Activities | 25,000 | (135,350 | ) | |||||
Cash Flows From Financing Activities | ||||||||
Proceeds From Borrowing Under Related Party Note Payable | 4,000 | - | ||||||
Exercise of Stock Options | 100 | - | ||||||
Net Cash Provided by Financing Activities | 4,100 | - | ||||||
Net Decrease in Cash | (27,353 | ) | (503,615 | ) | ||||
Cash and Cash Equivalents at Beginning of Period | 27,781 | 587,937 | ||||||
Cash and Cash Equivalents at End of Period | $ | 428 | $ | 84,322 |
ACQUIRED SALES CORP. | ||||
CONDENSED STATEMENTS OF CASH FLOWS | ||||
(UNAUDITED) | ||||
|
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| ||||
|
| For the Nine Months Ended | ||
|
| September 30, | ||
|
| 2019 |
| 2018 |
Cash Flows From Operating Activities |
|
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|
|
Net Loss |
| $ (1,087,721) |
| $ (146,276) |
Adjustments to Reconcile Loss to Net Cash Used in Operating Activities: |
|
|
|
|
Financing Cost - Issuance of Warrants to Purchase Common Stock |
| 26,773 |
| 4,550 |
Stock Compensation Expense |
| 872,147 |
| 72,500 |
Changes in Operating Assets and Liabilities: |
|
|
|
|
Prepaid Expenses |
| (833) |
| - |
Accounts Payable to Related Parties |
| (191,776) |
| 50,075 |
Trade Accounts Payable |
| (106,465) |
| 3,889 |
Net Cash Used in Operating Activities |
| (487,875) |
| (15,262) |
Cash Flows From Investing Activities |
|
|
|
|
Investment in Ablis |
| (399,200) |
| - |
Investment in Bendistillery and Bend Spirits |
| (1,497,000) |
| - |
Note Receivable From CBD Lion |
| (300,000) |
| - |
Net Cash Used in Investing Activities |
| (2,196,200) |
| - |
Cash Flows From Financing Activities |
|
|
|
|
Financing Cost - Proceeds From Borrowings Under Notes Payable to Related Parties |
| 14,772 |
| 14,791 |
Financing Cost - Repayment of Borrowings Under Notes Payable to Related Parties |
| (45,562) |
| - |
Financing Cost - Repayment of Interest Payable to Related Parties |
| (2,606) |
| - |
Financing Cost - Interest Payable to Related Parties |
| - |
| 471 |
Exercise of Warrants |
| 11,027 |
| - |
Issuance of Series A Convertible Preferred Stock |
| 6,615,000 |
| - |
Issuance of Series B Convertible Preferred Stock |
| 450,000 |
| - |
Net Cash Provided by Financing Activities |
| 7,042,631 |
| 15,262 |
Net Increase/(Decrease) in Cash |
| 4,358,556 |
| - |
Cash and Cash Equivalents at Beginning of Period |
| - |
| - |
Cash and Cash Equivalents at End of Period |
| $ 4,358,556 |
| $ - |
|
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|
|
|
|
| For the Nine Months Ended | ||
|
| September 30, | ||
|
| 2019 |
| 2018 |
Supplemental Cash Flow Information |
|
|
|
|
Cash paid for interest |
| $ 2,606 |
| $ - |
Cash paid for income taxes |
| $ - |
| $ - |
Please see the accompanying notes to the condensed financial statements for more information.
(Unaudited)
NOTE 1 – DESCRIPTION OF THE BUSINESS OF ACQUIRED SALES CORP.
Acquired Sales Corp. (hereinafter sometimes referred to as "Acquired Sales"“Acquired Sales”, "AQSP" or the "Company"“Company”, “AQSP”, “Acquired”, the “Company”, “we”, “us”, “our”, etc.) was organized under the laws of the State of Nevada on January 2, 1986.
For the past many years, the Company’s stated objective has been to acquire all or a portion of one or more operating businesses. In the past year, the Company was involvedhas been exploring potential acquisitions of all or a portion of one or more operating businesses involving the manufacture and sale of cannabidiol (CBD)-infused products such as beverages, muscle/joint rubs, oils, tinctures, bath bombs, isolate, relief balms, elixirs, body washes, med sticks, lotions, vape pens, vape cartridges, shatter, gummies, pet food, soap and edibles (a “CBD-Infused Products Company”). In order to consummate or to enhance a particular acquisition of a CBD-Infused Products Company, management of the Company is open-minded to the concept of also acquiring all or a portion of one or more operating businesses and/or assets that are related to such CBD-Infused Products Company or that enhance such CBD-Infused Products Company, for example operating businesses and/or assets involving distilled spirits, beer, wine, hemp growing, hemp processing/extraction, paraphernalia, cannabis, tetrahydrocannabinol (THC)-infused products, marijuana growing, marijuana dispensaries, and real estate. The Company has entered into agreements with a number of operating business to acquire some or all of the businesses.
Merger Agreement – CBD Lion LLC
On August 15, 2019, the Company, along with GJacobs and WJacobs, entered into an Agreement and Plan of Merger ("Merger Agreement") with CBD Lion LLC (“Lion”) and its owners to, subject to a number of conditions, acquire 100% of the ownership of Lion in selling software licensesa merger (the “Merger”). On November 14, 2019, the Company terminated the Merger Agreement with Lion. See Note 9 “Subsequent Events”.
Letter of Intent – Warrender Enterprise Inc. d/b/a Lifted Liquids
On May 23, 2019, the Company entered into a Letter of Intent with Warrender Enterprise Inc. d/b/a Lifted Liquids (“Lifted”), and hardware,its owner Nicholas S. Warrender to, subject to a number of conditions, acquire 100% of the ownership of Lifted. The consideration to be paid by the Company in the proposed purchase of Lifted is (i) cash in the amount of $7,500,000; and (ii) equity in the amount of 4,545,455 shares of the Company’s common stock (“Stock Consideration”). In the event that the acquisition of Lifted occurs, Warrender shall, subject to certain conditions, enjoy so-called “piggyback registration rights” in regard to the Stock Consideration, and provided further that Warrender shall enjoy so-called "demand registration rights" in regard to the Stock Consideration if no piggyback registration statement is filed with the SEC within 120 days following the closing of the proposed acquisition.
Closing of the acquisition of Lifted is subject to a number of conditions, including but not limited to the completion of a due diligence investigation of Lifted by the Company that is acceptable to the Company, completion of a capital raise by us of at least $9 million, completion of an audit of Lifted acceptable to the Company, execution of definitive acquisition documents, execution of an employment agreement with Nicholas S. Warrender, obtaining necessary third-party approvals, including a tax opinion to be provided by Lifted’s tax counsel indicating that the proposed acquisition will qualify as a tax-free merger, execution of a shareholders agreement among GJacobs, WJacobs, Nicholas S. Warrender and Erik S. Lundgren, and completion of all necessary securities filings. In the event that most of the foregoing conditions are met, as detailed in the Letter of Intent, prior to the closing of the proposed acquisition, but only if the Company is requested by Lifted in writing to do so, the Company will make a $300,000 loan to Lifted to be used by Lifted exclusively for growth capital.
The Company is currently engaged in due diligence of Lifted, Lifted’s financial statements are currently being audited and the provisionCompany is negotiating a definitive merger agreement for the proposed acquisition. The Letter of consulting and maintenance services.
The Letter of Intent contains customary provisions prohibiting Lifted from soliciting or encouraging any other acquisition proposal or entering into any negotiations or agreements for information relatedan alternative acquisition transaction prior to the acquisitionstermination of the Letter of Intent.
In the event that the proposed acquisition of Lifted is completed, the Letter of Intent requires that Lifted shall operate as a wholly-owned subsidiary of the Company under the Lifted brand, led by Nicholas S. Warrender as Lifted’s CEO.
The terms of the proposed Lifted Liquids transaction must be set forth in a definitive agreement. There are no assurances that the Company will be successful in negotiating an acceptable definitive agreement, when or whether a definitive agreement will be reached between the parties, or that the proposed acquisition will be consummated. Even if a definitive agreement is executed, the terms of the proposed acquisition may change materially from the terms set forth in the Letter of Intent. There will be many conditions to closing, many of which are outside of the parties’ control and salesthe Company cannot predict whether these conditions will be satisfied. There are no assurances when or if closing will occur, even if the parties successfully negotiate and sign a definitive agreement.
Acceptance of Defense & Security Technology Group, Inc. ("DSTG"Subscriptions From Accredited Investors to Purchase Newly Issued Series A Convertible Preferred Stock (“Series A Preferred Stock”)
Between February 27, 2019 and Cogility Software Corporation ("Cogility"May 13, 2019, the Company accepted subscriptions from accredited investors to purchase 66,150 shares of newly issued Series A Preferred Stock for an aggregate purchase price of $6,615,000 in cash. These 66,150 shares of Series A Preferred Stock are convertible at the option of the holders into 6,615,000 shares of newly issued common stock of the Company, or $1.00 per share of common stock of the Company. The Company has covenanted to file a registration statement covering the shares of newly issued common stock of the Company into which the Series A Preferred Stock can be converted (the "Registration Statement"). The Series A Preferred Stock will receive an annual dividend, and will be subject to mandatory conversion, under terms and conditions set forth in the Certificate of Designation of the Series A Preferred Stock.
On June 28, 2019, the Company commenced a private placement to accredited investors, offering to sell up to 5,000,000 shares of Series B Preferred Stock convertible into 5,000,000 shares of our common stock at an exercise price of $5.00 per share. As of the date of this report, the Company has accepted subscriptions from three accredited investors to purchase 90,000 shares of Series B
Preferred Stock for an aggregate purchase price of $450,000 in cash, convertibleat the option of the holder into 90,000 shares of newly issued common stock of the Company, or $5.00 per share of common stock of the Company.
Stock Sale and Purchase Agreement - Ablis Holding Company
On April 30, 2019, the Company entered into a Stock Sale and Purchase Agreement with Ablis Holding Company, an Oregon corporation (“Ablis HC”), Ablis, Inc., an Oregon corporation (“Ablis”), and James A. Bendis (“Bendis”) wherein the Company
paid $399,200 for a post transaction 4.99% ownership of Ablis HC’s equity. Ablis HC is in the business of manufacturing and sale of CogilityCBD-infused beverages, and DSTG eliminatedCBD-infused products. The Stock Sale and Purchase Agreement requires that Ablis HC use a portion of the Company's sourcespurchase proceeds to pay off at least $381,000 of revenue.
The Stock Sale and Purchase Agreement also sets out terms for an additional equity purchase of Ablis HC such that the Company may purchase up to an additional 15% of Ablis HC for $1,200,000 so that the Company would then own 19.99% of the ownership equity of Ablis HC. However, the option to purchase the additional equity in the company expired on July 31, 2019. As a result, the Company does not have a contractual right to purchase any more of Ablis HC than 4.99%.
The terms of the Stock Sale and Purchase Agreement entitle Gerard M. Jacobs (“GJacobs”), CEO of the Company, to be a member of the board of directors of Ablis HC and entitles William C. Jacobs (“WJacobs), President and CFO of the Company, to be provided with access to financial information and grants WJacobs financial oversight functions over Ablis HC. It further allows WJacobs the right to provide consulting/advisory services. WJacobs’ reasonable expenses will be covered by Ablis HC. The Stock Sale and Purchase Agreement also requires that GJacobs and WJacobs be introduced to the owners of Ablis’ CBD isolate suppliers, and any other companies in the hemp, CBD and cannabis industries with whom Ablis HC and/or Bendis have relationships, and whom may potentially be interested in entering into a stock sale or merger with the Company.
The Stock Sale and Purchase Agreement requires that Ablis HC evaluate and seriously consider a sale of Ablis HC or taking Ablis HC public within 60 months from April 30, 2019 and that it use commercially reasonable best efforts, to close a mutually acceptable alternative exit opportunity for the Company within 72 months from April 30, 2019.
Stock Purchase Agreement Bendistillery Inc. and Bend Spirits
On April 30, 2019, the Company, GJacobs, and WJacobs entered into a Stock Purchase Agreement with Bendistillery Inc., an Oregon corporation (“Bendistillery”), Bend Spirits, Inc., an Oregon corporation (“Bend Spirits”), Bendis Homes Pinehurst, LLC, an Oregon limited liability company (“Landowner”), Bendis, and Alan T. Dietrich (“Dietrich”) wherein the Company paid $1,347,300 for a post transaction 4.99% ownership of Bendistillery’s equity and $149,700 for a post transaction 4.99% ownership of Bend Spirits’ equity. Bendistillery and Bend Spirits are in the business of manufacturing and sale of alcoholic beverages, CBD-infused beverages, and CBD-infused products. The Stock Purchase Agreement requires that Bendistillery and Bend Spirits use a portion of the purchase proceeds to pay off at least $835,000 of their collective liabilities.
The Stock Purchase Agreement also sets out terms for an additional equity purchase of Bendistillery such that the Company may purchase up to an additional 15% of Bendistillery for $4,050,000 so that the Company would then own 19.99% of the ownership equity of Bendistillery. Per the terms of the Agreement, the Company may also purchase up to an additional 15% of Bend Spirits for $450,000 such that the Company would then own 19.99% of the ownership equity of Bend Spirits. However, the option to purchase the additional equity in the company expired on July 31, 2019. As a result, the Company does not have a contractual right to purchase any more of Bendistillery or Bend Spirits than 4.99%. In addition, any purchase of by the Company of more than 4.99% of Bendistillery or Bend Spirits would require approval by the Oregon Liquor Control Commission.
Landowner (as landlord) and Bendistillery (as tenant) have entered into a long-term recorded lease (the “Lease”) of the 23 acres in Tumalo outside Bend, Oregon, where Bendistillery and Bend Spirits conduct their businesses (the “Real Estate”) The initial term of the Lease is 20 years at a rent of $17,500 per month; Tenant has the right, in its sole discretion, to exercise a series of options to extend the term of the Lease up to a maximum of 99 years; and Tenant has a 60-day right of first refusal if Landowner ever decides to sell all or any portion of the Real Estate. Bendis is the owner of Landowner.
The terms of the Stock Purchase Agreement entitle GJacobs to be a member of the board of directors of Bendistillery and Bend Spirits and entitles WJacobs to be provided with access to financial information. The Stock Purchase Agreement also grants WJacobs financial oversight functions over Bendistillery and Bend Spirits and allows WJacobs the right to provide consulting/advisory services. WJacobs’ reasonable expenses will be covered by Bendistillery and Bend Spirits as well as an advisory fee of not less than $5,000 per quarter. The Stock Purchase Agreement also requires that GJacobs and WJacobs be introduced to the owners of Deschutes Brewery, Silver Moon Brewing, LBD Beverage, and any other companies in the distilled spirits, beer, wine, hemp, CBD and cannabis industries with whom Bendistillery, Bend Spirits, Bendis and/or Dietrich have relationships, and whom may potentially be interested in entering into a stock sale or merger with the Company.
The Stock Purchase Agreement requires that Bendistillery and Bend Spirits evaluate and seriously consider a sale of Bendistillery and Bend Spirits or taking them public within 60 months from April 30, 2019 and that they use commercially reasonable best efforts, to close a mutually acceptable alternative exit opportunity for the companies within 72 months from April 30, 2019.
Acquisition Process
The structure of the Company’s participation in business opportunities and ventures will continue to be situational. The Company is likely to structure future acquisitions as a purchase of 19.99% or less, or 50.01% or more, of a target company’s equity ownership interest, or as a so-called tax-free reorganization. It is likely that the anticipated value of the business and/or securities that the Company acquires relative to the current value of the Company’s securities will result in the issuance of a relatively large number of newly issued shares of the Company, and, as a result, substantial additional dilution to the percentage ownership of our current stockholders. Moreover, the Company’s present management and shareholders may not have control of a majority of our voting shares following a merger or purchase of stock. It is possible that the shareholders of the acquired entity or the persons who provide the capital to the Company to finance a merger or purchase of stock will gain control of the Company’s voting stock and the Company’s directors may resign and new directors may be appointed without any vote by the shareholders. Those directors are entitled to replace the Company’s officers without stockholder vote.
In regard to nearly all of the Company’s potential acquisitions, the Company is typically focused upon acquiring 19.99% or less, or 50.01% or more, of existing privately held businesses whose owners are willing to consider selling a percentage of the equity ownership interest of their businesses, or merging their entire businesses into the Company or a wholly-owned subsidiary of the Company in a so-called tax-free reorganization, and whose management teams are enthusiastic about continuing to operate their businesses following the transactions with the Company.
Closing such purchases of stock or so-called tax-free reorganizations will likely require the Company to raise millions of dollars of capital, in order to pay the cash portion of the transaction consideration. The Company can provide no assurance or guaranty whatsoever that it will be able to raise such millions of dollars of capital on acceptable terms and conditions, if at all.
An Investment Committee appointed by the Company’s Board of Directors, currently consisting of GJacobs, director Thomas W. Hines, CPA CFA, and WJacobs, CPA, will review material furnished to it and will vote whether or not the Investment Committee believes a potential acquisition is in the Company’s best interests and the interests of the Company’s shareholders. If the Investment Committee votes unanimously to approve a potential acquisition, then such acquisition will be presented to the Board of Directors of the Company for their review and a vote. The Company does not intend to proceed forward with a potential acquisition without the unanimous approval of the Investment Committee and approval by a majority of the Company’s Board of Directors.
The Company intends to source acquisition opportunities through GJacobs and directors and their contacts, and in some cases through finders. These contacts include the shareholders of Lifted, Ablis, professional advisors such as attorneys and accountants, securities broker dealers, venture capitalists, members of the financial community, other businesses and others who may present solicited and unsolicited proposals. Management believes that business opportunities may become available to us due to a number of factors, including, among others: (1) the Company’s ownership of shares in one or more CBD-Infused ProductsCompanies; (2) management’s historical experience building large public companies; (3) management’s contacts and acquaintances; and (4) the
Company’s flexibility with respect to the manner in which the Company may be able to structure, finance, merge with or acquire any business opportunity.
The analysis of new business opportunities will be undertaken by or under the supervision of the Investment Committee appointed by our Board of Directors. Inasmuch as the Company will have limited funds available to search for business opportunities, the Company will not be able to expend significant funds on a complete and exhaustive investigation of such business or opportunity. The Company will, however, investigate, to the extent believed reasonable by the Investment Committee, such potential business opportunities by conducting a so-called “due diligence investigation”.
In a due diligence investigation, the Company intends to obtain and review materials regarding the business opportunity. Typically, such materials will include information regarding a target business’ products, services, contracts, management, ownership, and financial information. In addition, the Company intends to cause the Investment Committee to meet personally with management and key personnel of target businesses, ask questions regarding the target businesses’ prospects, tour facilities,
and conduct other reasonable investigation of the target businesses to the extent of the Company’s limited financial resources and management and technical expertise.
There is no guarantee that the Company can obtain or maintain the funding needed for its operations, including the funds necessary to search for and investigate acquisition candidates, and to close an acquisition including paying the substantial costs of legal, accounting and other relevant professional services.
As of November 15, 2019, the Company has cash on hand of approximately $4,312,165, which are proceeds from the sale of Series A Preferred Stock between February 27, 2019 and May 13, 2019, and proceeds from the sale of Series B Preferred Stock starting on June 28, 2019. In prior years, the Company’s payables have been greater than their cash on hand. The Company has inconsistent income generating ability and is therefore reliant on raising money from loans or stock sales.
NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
– The accompanying financial statements include the accounts and operations ofCondensed Financial Statements
– The accompanying financial statements are condensed and do not include all disclosures normally required by generally accepted accounting principles. These statements should be read in conjunction with the annual financial statements included in Form 10-K filed with theUse of Estimates
– The preparation of financial statements in conformity with Generally Accepted Accounting Principlesevents that have been recognized for financial reporting purposes. Actual results and outcomes may differ from our estimates and assumptions.
Basic and Diluted Earnings (Loss) Per Common Share
– Basic earnings (loss) per common share is determined by dividing earnings (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per common share is calculated by dividing earnings (loss) by the weighted-average number of common shares and dilutive common share equivalents outstanding during the period. When dilutive, the incremental potential common shares issuable upon exercise of stock options and warrants are determined by the treasury stock method. The following table summarizes the calculations of basic and diluted earnings (loss) per common share for the three and nine months ended September 30,
|
| For the Three Months |
| For the Nine Months | ||||
|
| Ended |
| Ended | ||||
|
| September 30, |
| September 30, | ||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 |
Net Loss |
| $ (146,466) |
| $ (34,807) |
| $ (1,087,721) |
| $ (146,276) |
Weighted-Average Shares Outstanding |
| 2,597,302 |
| 2,369,648 |
| 2,527,576 |
| 2,369,648 |
|
|
|
|
|
|
|
|
|
Basic and Diluted Earnings Loss per Share |
| $ (0.06) |
| $ (0.01) |
| $ (0.43) |
| $ (0.06) |
For the Three Months | For the Nine Months | |||||||||||||||
Ended | Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net Loss | $ | (52,861 | ) | $ | (870,495 | ) | $ | (142,236 | ) | $ | (1,137,690 | ) | ||||
Weighted -Average Shares Outstanding | 2,318,035 | 2,269,648 | 2,293,842 | 2,269,648 | ||||||||||||
Basic and Diluted Earnings Loss per Share | $ | (0.02 | ) | $ | (0.38 | ) | $ | (0.06 | ) | $ | (0.50 | ) |
At January 1, 2016 through May 17, 2016,September 30, 2019, there were 4,848,7744,211,019 stock options and 478,000warrants, and 31,250 financing warrants outstanding that were excluded from the computation of diluted earnings loss per share because their effects would have been anti-dilutive. On May 18, 2016, 100,000 of these stock options were exercised. As a result,In comparison, at September 30, 2016,2018, there were 4,748,7744,181,415 stock options and 478,000warrants, and 17,500 financing warrants outstanding that were excluded from the computation of diluted earnings loss per share because their effects would have been anti-dilutive.
The Company hasSeries A Preferred Stockoutstanding convertible into 6,615,000 shares of common stock. In comparison, there were 4,848,774 employeeaddition, to date, the Company has accepted subscriptions from three accredited investors to purchase 90,000 shares of Series B Preferred Stock for an aggregate purchase price of $450,000 in cash, convertible at the option of the holder into 90,000 shares of newly issued common stock options and 938,000 warrants outstanding duringof the three and nine months ended September 30, 2015 that were excluded from the computation of diluted earnings (loss)Company, or $5.00 per share because their effects would have been anti-dilutive.
Recent Accounting Pronouncements
– InIn February 2016, the Financial Accounting Standards Board ("FASB"(“FASB”) issued Accounting Standards Update ("ASU") No. 2014-12, Compensation-Stock Compensation (Topic 718)-Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force). ASU No. 2014-122016-02, “Leases” (Topic 842) (“ASU 2016-02”). The amended guidance, which is effective for the Company on January 1, 2019, requires that a performance target that affects vestingthe recognition of lease assets and couldlease liabilities on the balance sheet for those leases with terms in excess of 12 months and currently classified as operating leases. Disclosure of key information about leasing arrangements will also be achieved after the requisite service period shall be treated as a performance condition. The effective date is the first quarter of fiscal year 2016.required. The Company recently adopted ASU No. 2014-12; the adoption of this hasand implemented ASC 842; however, it had no effectdirect impact on the financial statements.
Going Concern–
The Company has a history of recurring losses which have resulted in an accumulated deficit ofAlso, the Company has Series A Preferred Stock and Series B Preferred Stock outstanding that is currently accruing dividends at the rate of 3% per year. The Company used net cashhas no income to pay these dividends. The Company does not have any business or any sources of $56,453 inrevenue to pay these dividends or its other operating activities during the nine months ended September 30, 2016. As discussed in Note 4, on September 1, 2015, the Company determined that the note and related interest receivable due from the William Noyes Webster Foundation, Inc. (the "Foundation") would not be collectible. As such, the Company wrote off the note totaling $737,850 and interest receivable totaling $97,427 as bad debt expense on September 1, 2015.
will be able to continue as a going concern. Bankruptcy of the Company at some point in the future is a possibility. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded
asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company currently has no revenue-generating subsidiaries. Management plans to sustain the Company as a going concern by taking the following actions: (1) acquiring and/or developing profitable businesses that will create positive income from operations; and/or (2) completing private placements of the Company'sCompany’s common stock and/or preferred stock. Management believes that by taking these actions, the Company will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurances or guarantees whatsoever that the Company will be successful in consummating such actions on acceptable terms, if at all. Moreover, any such actions can be expected to result in substantial dilution to the existing shareholders of the Company.
NOTE 4 – THE COMPANY’S INVESTMENTS IN ABLIS, BENDISTILLERY AND BEND SPIRITS
The Company’s investments in Ablis, Bendistillery and Bend Spirits made the Company a minority owner of these companies. As a minority owner, the Company will not be able to recognize any portion of Ablis’, Bendistillery’s or Bend Spirits’ revenues or
earnings in the Company’s financial statements. Ablis, Bendistillery and Bend Spirits are not audited and the Company has limited ability to comment on these companies’ operations and financial performance.
NOTE 45 – NOTES RECEIVABLE
Loan Made to CBD Lion LLC (“Lion”)
On August 8, 2019, the Company made an unsecured $300,000 loan to Lion (the “Loan”) evidenced by a promissory note (the “Note”) in connection with the proposed Merger Agreement with Lion. Per the terms of the Note, if the Transaction does not close and the merger agreement is terminated, then the Loan shall be repaid by Lion to the Company in six equal monthly installments of principal, together with accrued interest at the rate of 6% per year, with the first such installment due and payable by Lion to the Company on the first day of the first calendar month following the termination of the merger agreement. As of September 30, 2019, the Transaction had not yet been terminated by the Company. However, the Merger Agreement was terminated by the Company on November 14, 2019 and the Note became payable with interest. See Note 9 “Subsequent Events”.
The William Noyes Webster Foundation, Inc.
The Foundation, a non-profit Massachusetts corporation, has received a provisional registration from the Commonwealth of Massachusetts to own and operate a medical marijuana cultivation facility in Plymouth, Massachusetts, and a medical marijuana dispensary in Dennis, Massachusetts. Jane W. Heatley ("Heatley"(“Heatley”) is the founder and a member of the board of directors of the Foundation.
Teaming Agreement
– The Company believes it is highly likely that the board of directors of the Foundation will only approve contracts that have been negotiated and approved by Heatley. Consequently, on July 8, 2014, the Company entered into a Teaming Agreement (the "Teaming Agreement") with Heatley, in which, among other things: (1) the Company and Heatley agreed to use their respective best efforts, working exclusively together as a team, and not as a partnership or other entity, in order to consummate transactions, agreements, contracts or other arrangements pursuant to which the Company will provide capital andexpertise to the Foundation; and (2) Heatley agreed that Heatley shall not, and shall not permit the Foundation to, discuss or negotiate for debt or equity financing, or consulting services or other expertise, from any third party. The Company claims that
Heatley violated the Teaming Agreement by discussing and negotiating for debt or equity financing, or consulting services or other expertise, from at least one third party. Heatley claims that the Company violated the Teaming Agreement alleging that the
Company failed to lend funds to the Foundation in accordance with the Teaming Agreement. The Company believes Heatley's claim to be baseless. No assurances whatsoever can be made that Heatley will comply with the terms of the Teaming Agreement, nor that the Company will be able to adequately enforce the terms of the Teaming Agreement if it is ever the subject of litigation.
Promissory Note
– On July 14, 2014, the Foundation signed and delivered to the Company a Secured Promissory Note (the "Note") which is in the stated loan amount of $1,500,000, and is secured by a Security Agreement of even date therewith (theBetween April and July 2015, the Company loaned an additional $135,350 to the Foundation, evidenced by the Note and secured by the Security Agreement. Following such additional loans, the principal of the loan from the Company to the Foundation, evidenced by the Note and secured by the Security Agreement, is now $737,850.
than one year after the Foundation commences operations. The principal of the Note would be payable in eight consecutive equal quarterly installments, commencing on the last day of the calendar quarter in which the Foundation commences operations. Principal on the Note and related accrued interest would be considered past due if the aforementioned payments were not received by their due dates.
Uncollectable Note and Interest Receivable
– The Company assessed the collectability of the Note based on the adequacy of theNOTE 6 – AMOUNTS OWED TO RELATED PARTIES AND THIRD PARTIES
Consulting Salaries to make equity and/or debt investments in privately held and/or publicly traded companies from timebe Paid to time. On October 9, 2015, the Company's chief executive officer, Gerard M. Jacobs, loaned money to One-Seven. Gerard M. Jacobs obtained a 50% economic interest in One-Seven,GJacobs and therefore One-Seven is a related party to Gerard M. Jacobs. On November 4, 2015,WJacobs
Effective as of June 19, 2019, the Company, GJacobs and WJacobs entered into an Agreement with One-Seven, its Managing Partner Douglas Stukel ("Stukel"), and Gerard M. Jacobs pursuanta compensation agreement relating to which the Company loaned $50,000 interest-free to One-Seven. As of December 31, 2015, $25,000 of the loan had been repaidservice to the Company by One-Seven,Company. GMJ and the balanceWCJ receive consulting fees of $25,000 was still held by the Company as a receivable from One-Seven. The loan was repaid in full as of January 5, 2016. In consideration of such $50,000 loan$7,500 per month and $5,000 per month, respectively.
Amounts Owed to One-Seven, One-Seven and Stukel agreed that if One-Seven is successful in securing additional funding, then Stukel and One-Seven are obligated to use good faith efforts to work with Gerard M. Jacobs and the Company, as a team and not as a partnership, joint venture or other entity, in order to explore and hopefully close transactions pursuant to which: (a) One-Seven may provide debt, convertible debt and/or equity to the Company, all on mutually acceptable terms and conditions; (b) One-Seven may provide debt, convertible debt and/or equity to business entities that may be wholly or partly purchased by, or merged into, the Company, all on mutually acceptable terms and conditions; and (c) Stukel may participate in the management of the Company and obtain a salary and a package of stock options and/or warrants to purchase shares of common stock of the Company, all on mutually acceptable terms and conditions.
On June 21, 2016, a company affiliated with Gerard M. Jacobs, CEO of Acquired Sales,GJacobs made a non-interest bearing loan of $4,000 to the Company, which iswas payable upon demand. This loan was outstanding at September 30, 2018, but was not outstanding as of September 30, 2019.
At September 30, 2019, there were no expense reimbursements owed to GJacobs. In comparison, at September 30, 2018, there were expense reimbursements owed GJacobs totaling $18,746.
There were no independent contractor fees or expense reimbursements owed to WJacobs at September 30, 2019. In comparison, at September 30, 2018, there were independent contractor fees of $145,000 and expense reimbursements of $4,077 owed to WJacobs totaling $149,077.
Financing Warrants – On July 13, 2018, the Audit Committee, Compensation Committee, and full Board of Directors of the Company approved by unanimous written consent borrowings by the Company on the following terms: (1) proceeds of the borrowings will be used to pay professional fees owed to our outside auditors, our stock transfer agent, and our securities counsel, and to pay other obligations of the Company; (2) the borrowings will be evidenced by promissory notes of the Company, accruing interest at the rate of 15% annually; (3) the notes will be jointly secured by a first lien security interest in all of the assets of the Company, pursuant to a security agreement signed by the Company in favor of the lenders, UCC filings in favor of the lenders, and a pledge to the Condensed Financial Statements
As of December 31, 2018, a total of $30,791 had been borrowed by the Company on such terms, and warrants to purchase 25,000 shares of common stock of the Company had been issued to director Joshua A. Bloom and warrants to purchase 12,500 shares of common stock of the Company had been issued to the Company's CEO GJacobs. As of December 31, 2018, there was also a total of $1,381 in interest payable to Joshua A. Bloom and GJacobs, related to these borrowings.
Between January 7, 2019 and February 6, 2019, an additional $14,772 was lent by GJacobs to the Company on such terms, and warrants to purchase 18,750 shares of common stock of the Company were issued to GJacobs.
On March 13, 2019, all of these borrowings and the related interest payable to Joshua A. Bloom and GJacobs was repaid. In total, $21,540 was paid to Joshua A. Bloom, and $26,628 was paid to GJacobs.
Amounts Owed to Third Parties
At September 30, 2019, there were accounts payable of $6,985 owed to third parties for professional fees. In comparison, at September 30, 2018, there were accounts payable of $110,315 owed to third parties for professional fees.
On March 15, 2019, the Company settled and paid its debt of $61,500 to its previous independent registered public accounting firm, Eide Bailly LLP, and the Company recognized a gain on the settlement of $29,196.
NOTE 67 – SHAREHOLDERS'SHAREHOLDERS’ EQUITY
Issuance of Series A Preferred Stock – The Company has authorized 400,000 shares of its Series A Preferred Stock. Each share ofSeries APreferred Stock may be converted into 100 shares of common stock. TheSeries APreferred Stock pays dividends at the rate of 3% annually. TheSeries APreferred Stock dividends are cumulative if the Company does not have the necessary cash to pay the dividend when due. TheSeries APreferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $3.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 25,000 shares traded on each of those 20 consecutive trading days. TheSeries APreferred Stock have no voting rights. The holders of theSeries APreferred Stock shall have voluntary conversion rights. Shares ofSeries APreferred Stock are subject to mandatory conversion (in the discretion of the Company) at such time as the Company’s common stock has closed at $5.00 per share or higher for 20 consecutive trading days after the first date that the Series A Registration Statement is effective, and there have been, on average, at least 50,000 shares traded on each of those 20 consecutive trading days.
Between February 27, 2019 and May 13, 2019, the Company accepted subscriptions from accredited investors to purchase 66,150 shares of newly issuedSeries APreferred Stock for an aggregate purchase price of $6,615,000 in cash. These 66,150 shares of
Series APreferred Stock are convertible at the option of the holders into 6,615,000 shares of newly issued common stock of the Company, or $1.00 per share of common stock of the Company. On August 2, 2019, the Company filed a Form S-1 Series A Registration Statement covering the shares of newly issued common stock of the Company into which theSeries APreferred Stock can be converted. The Series A Registration Statement has not yet been approved by the SEC. TheSeries APreferred Stock will receive an annual dividend, and will be subject to mandatory conversion, under terms and conditions set forth in the Certificate of Designation of theSeries APreferred Stock. As of September 30, 2019, the Company has accrued a liability of $94,997 as dividends payable to holders of the Series A Preferred Stock. Although no dividends have been declared by the Board of Directors, the Company fully intends on paying the annual dividends to the holders of the Series A Preferred Stock, and as such, the Company has accrued the liability.
Issuance of Series B Preferred Stock – The Company has authorized 5,000,000 shares of its Series B Preferred Stock. Each share ofSeries BPreferred Stock may be converted into one share of common stock. TheSeries BPreferred Stock pays dividends at the rate of 3% annually. TheSeries BPreferred Stock dividends are cumulative if the Company does not have the necessary cash to pay the
Summarydividend when due. TheSeries BPreferred Stock dividends shall cease to accrue at such time as the Company’s Common Stock has closed at $7.00 per share or higher for 20 consecutive trading days after the first date that the Series B Registration Statement is effective, and there have been, on average, at least 25,000 shares traded on each of those 20 consecutive trading days. TheSeries BPreferred Stock have no voting rights. The holders of theSeries BPreferred Stock shall have voluntary conversion rights. Shares ofSeries BPreferred Stock are subject to mandatory conversion (in the discretion of the Company) at such time as the Company’s common stock has closed at $9.00 per share or higher for 20 consecutive trading days after the first date that the Series B Registration Statement is effective, and there have been, on average, at least 50,000 shares traded on each of those 20 consecutive trading days.
On June 28, 2019, we commenced a private placement to accredited investors, offering to sell up to 5,000,000 shares of Series B Preferred Stock convertible into 5,000,000 shares of our common stock at an exercise price of $5.00 per share. As of the date of this report, the Company has accepted subscriptions from three accredited investors to purchase 90,000 shares of Series B Preferred Stock for an aggregate purchase price of $450,000 in cash, convertibleat the option of the holder into 90,000 shares of newly issued common stock of the Company, or $5.00 per share of common stock of the Company.
As of September 30, 2019, the Company has accrued a liability of $2,232 as dividends payable to holders of the Series B Preferred Stock. Although no dividends have been declared by the Board of Directors, the Company fully intends on paying the annual dividends to the holders of the Series B Preferred Stock, and as such, the Company has accrued the liability.
Issuance of Financing Warrants – On July 13, 2018, the Audit Committee, Compensation Committee, and full Board of Directors of AQSP approved by unanimous written consent borrowings by AQSP on the following terms: (1) proceeds of the borrowings will be used to pay professional fees owed to our outside auditors, our stock transfer agent, and our securities counsel, and to pay other obligations of AQSP; (2) the borrowings will be evidenced by promissory notes of AQSP, accruing interest at the rate of 15% annually; (3) the notes will be jointly secured by a first lien security interest in all of the assets of AQSP, pursuant to a
security agreement signed by AQSP in favor of the lenders, UCC filings in favor of the lenders, and a pledge to the lenders of the note payable by the William Noyes Webster Foundation Inc. to AQSP; (4) the notes shall be due and payable upon demand by the lenders delivered to AQSP; and (5) for each $1,000 loaned by AQSP on these terms, the lender of such $1,000 shall receive warrants to purchase 1,250 shares of common stock of AQSP, at an exercise price of $0.03 per share, exercisable at the discretion of such lender any time on or before July 16, 2023.
During the quarter ended March 31, 2019, a total of $14,772 was borrowed by AQSP on such terms from GJacobs, and warrants to purchase 18,750 shares of common stock of AQSP were issued to GJacobs. The warrants to purchase common stock that were issued to GJacobs during the quarter ended March 31, 2019 were valued using the Black-Scholes valuation model as of the date they were issued. The values of these warrants were fully expensed because the notes are payable upon demand. The expense recognized related to the issuance of the warrants to GJacobs during the quarter ended March 31, 2019 was $26,773, which was a debit to interest expense and credit to additional paid-in capital.
Share-Based Compensation – During the three months ended September 30, 2019, the Company recognized stock compensation expense of $37,961. All of this related to the value of 5,400 warrants to purchase unregistered shares of common stock of the Company issued to brokers for the capital that they raised in the Series B private placement during the quarter ended September 30, 2019. During the nine months ended September 30, 2019, the Company recognized stock compensation expense of $872,147. Of this, $831,439 related to the value of 402,300 warrants to purchase unregistered shares of common stock of the Company issued to brokers for the capital raised for the Company by the brokers. The difference, $40,708, was the value of a total of 14,042 warrants to purchase unregistered shares of common stock of the Company, issued to two finders (7,021 warrants were issued to each finder) in regard to the purchase of 4.99% of the stock of Ablis.
In comparison, there was $72,500 of share-based compensation recognized during the six months ended June 30, 2018.
On April 1, 2018, the Company issued to a director and to an independent contractor rights to purchase warrants, for an aggregate purchase price of $2.00, an aggregate of 250,000 shares of common stock of the Company, at an exercise price of $0.01 per share, such warrants to be fully vested and to be exercisable on or prior to December 31, 2024; we recorded stock compensation expense of $72,500 related to these rights to purchase warrants during the three and six months ended June 30, 2018.
Stock Option and Warrant Activity–The following is a summary of the Company's stock option and warrant activity as of SeptemberJune 30, 20162019 and changes during the period then ended:
Weighted-Average | Aggregate | |||||||||||||||
Weighted-Average | Remaining Contractual | Intrinsic | ||||||||||||||
Shares | Exercise Price (a) | Term (Years) | Value | |||||||||||||
Outstanding, December 31, 2015 | 4,848,774 | $ | 1.56 | |||||||||||||
Exercised options | 100,000 | $ | - | |||||||||||||
Outstanding, September 30, 2016 | 4,748,774 | $ | 1.59 | 5.91 | $ | 2,048,975 | ||||||||||
Exercisable, September 30, 2016 | 3,498,774 | $ | 1.50 | 5.07 | $ | 2,048,975 | ||||||||||
Note: | ||||||||||||||||
(a) The Weighted-Average Exercise Price column excludes those warrants that have an exercise price for the common stock priced at the Capital Raise Price Per Share. | ||||||||||||||||
|
|
| Weighted-Average | Aggregate |
|
| Weighted-Average | Remaining Contractual | Intrinsic |
| Shares | Exercise Price (a) | Term (Years) | Value |
Exercisable Options, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, December 31, 2018 | 2,923,632 | $ 0.87 | 4.93 | $ 2,410,100 |
Financing Warrants Issued During Q1 2019 | 18,750 |
|
|
|
Warrants Granting the Right to Purchase Shares of Common Stock Issued During Q2 2019 | 410,942 |
|
|
|
Options that Expired During Q2 2019 | (9,434) |
|
|
|
Rights to Purchase Warrants to Purchase Shares of Common Stock Exercised During Q1 2019 | (210,000) |
|
|
|
Warrants Granting the Right to Purchase Shares of Common Stock Issued During Q3 2019 | 5,400 |
|
|
|
Warrants exercised during Q3 2019 | (147,021) |
|
|
|
Exercisable Options, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants Outstanding, September 30, 2019 | 2,992,269 | $ 0.97 | 3.72 | $ 8,444,074 |
Outstanding Options, Rights to Purchase Warrants to Purchase Common Stock and Financing Warrants, September 30, 2019 | 4,242,269 | $ 1.23 | 4.17 | $ 10,881,574 |
Exercise of Stock Option Agreement
On July 25, 2019, a warrant holder exercised his assignees or heirs was granted the rightwarrant to purchase 100,0007,021 shares of common stock of Acquired Sales at the Company for a purchase price of $0.001 per share, or$7,021.
On September 23, 2019, directors Joshua A. Bloom, James S. Jacobs and Richard E. Morrissy exercised their rights to purchase, for an aggregate purchase price of $100.
the Company issued 938,000 warrants in connection with the issuance of notes payable primarily to related parties. 460,000 of these warrants expired on March 31, 2016 and 478,000 of these warrants were outstanding at September 30, 2016. At September 30, 2016, the financing warrants had a weighted-averagean exercise price of $2.63$0.01 per share a weighted-average remaining contractual term(total of 0.69 years$1,150), and they immediately exercised those warrants. Joshua A. Bloom also exercised warrants to purchase an aggregate intrinsic value of $0.
NOTE 78 – CONTINGENT CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS
Payment of Finders’ Fees Related to Ablis
The Company has agreed to pay finders’ fees to two finders in Massachusetts:
common stock so purchased (a maximum issuance of warrants to purchase an aggregate of 42,210 unregistered shares of common stock of the Company makes certain loansat an exercise price of $1 per share).
Payment of Brokers’ Fees Related to the Foundation which was found by Parare Partners Inc., (2)Sale of Preferred Stock
The Company has committed to pay brokers’ fees in regard to the Foundation constructs and brings into operation its planned medical marijuana cultivation facility in Plymouth, Massachusetts and a medical marijuana dispensary in Dennis, Massachusetts, (3)capital being raised for the Company directly or via subsidiaries enters into certain consulting agreements withby such brokers in the Foundation, and (4) all necessary approvals are obtained. If allCompany’s private placements of preferred stock, such fee to consist of warrants to purchase unregistered shares of common stock of the Company at an exercise price equal to the conversion price per share of such conditions occur, thenpreferred stock, exercisable at any time during a five year period; the finder's feenumber of such shares will be calculated as follows:
Potential Issuance of Warrants to Purchase Shares of Common Stock of the second $1,000,000Company
The Compensation Committee of the aggregate principal amountCompany's Board of such loans
Amounts Payable to Gerard M. Jacobs and William C. Jacobs
The Company’s CEO GJacobs runs the Company’s operations on a part-time basis and is compensated with equity. GJacobs has not historically received cash compensation, and, historically, the Company’s President and CFO WJacobs has worked for $5,000 per month. Effective as of June 19, 2019 through the $23,000 byearlier of the closing of the Company’s acquisition of CBD Lion LLC, which is now terminated (see Note 9 “Subsequent Events”) or the closing of the Company’s acquisition of Warrender Enterprise Inc. d/b/a Lifted Liquids, the Company subjecthas agreed to pay GJacobs and WJacobs consulting fees of $7,500 and $5,000 per month, respectively. In addition, upon the executionclosing of the acquisition described herein, their salaries, equity incentives, expense reimbursements and delivery bybonuses will increase. There are also to be significant bonuses awarded to GJacobs and WJacobs in the Foundation toevent that the Company of loan documents evidencingcloses on the acquisition Warrender Enterprise Inc. d/b/a Lifted Liquids, and in the event that the principal amount ofCompany raises $15 million and $25 million, as described in the loan fromcurrent report on Form 8-K, and its exhibit, filed with the SEC on or about June 25, 2019.
Professional Contracts
In June 2019, the Company to the Foundation, evidenced by the Noteexecuted annual engagement contracts with its stock transfer agent and secured by the Security Agreement, had been increased by $23,000. The execution and delivery of such loan documents occurred on July 15, 2015, and MVJ Realty was reimbursed for the $23,000 in August 2015.
NOTE 89 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date of filing this quarterly report on Form 10-Q. The10-Q and have identified the following for disclosure:
Termination of the Merger Agreement Between the Company expectsand CBD Lion LLC
On November 14, 2019, the Company terminated the Merger Agreement with Lion. Pursuant to issuethe terms of the Merger Agreement executed on August 15, 2019, the Company agreed to acquire 100% of the ownership of Lion, subject to a consultant multi-year options or warrants to purchase 100,000number of conditions, for consideration of two million dollars ($2,000,000) in cash, plus five million (5,000,000) shares of unregistered common stock of the Company. To date, the Company withhas not paid any of the foregoing cash or stock consideration to Lion.
The material circumstances surrounding the termination of the Merger Agreement are set out in the letter dated November 14, 2019 from the Company’s legal counsel to Lion. The letter is attached as Exhibit 99.1 to the current report filed on Form 8-K on November 15, 2019.
Due to termination of the Merger Agreement, and per Section 5.15 of the Merger Agreement, commencing on December 1, 2019, the Company’s $300,000 loan to Lion is now required to be repaid. The repayment is required by agreement to be made in six equal monthly installments of principal and interest due and payable on the first day of each calendar month. Interest on the principal balance is calculated at an exercise priceannual rate of $1.85 per share.
ITEM 2. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As used in this Form 10-Q, references to the "Company," "Acquires“Company,” “Acquires Sales," "AQSP," "we," "our"” “AQSP,” “we,” “our” or "us"“us” refer to Acquired Sales Corp., unless the context otherwise indicates.
We have a history of recurring losses, which has resulted in an accumulated deficit of $13,665,544$15,190,639 as of September 30, 2016.2019. In addition, we suffered losses from continuing operations during the nine months ended SeptemberJune 30, 20162019 and 20152018. Also, the Company has Series A Preferred Stock and we used cash inSeries B Preferred Stock outstanding that is currently accruing dividends at the rate of 3% per year. We do not have any business or any sources of revenue to pay these dividends or our other operating activities during the nine months ended September 30, 2016 and 2015. Additionally, as discussed in Note 3, we sold 100% of the capital stock of our subsidiaries, Cogility and DSTG, which were our primary source of revenue.expenses. These matters raise substantial doubt about our ability to continue as a going concern.
This Management'sManagement’s Discussion and Analysis or Plan of Operations ("(“MD&A"&A”) section discusses our results of operations, liquidity and financial condition, contractual relationships and certain factors that may affect our future results. You should read this MD&A in conjunction with our financial statements and accompanying notes included for Acquired Sales Corp.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains statements that are considered forward-looking statements. Forward-looking statements give the Company's current expectations and forecasts of future events. All statements other than statements of current or historical fact contained in this quarterly report, including statements regarding the Company's future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. The words "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "plan,"“anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. These statements are based on the Company's current plans, and the Company's actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. Any or all of the forward-looking statements in this annual report may turn out to be inaccurate. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events occurring after the date hereof. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this quarterly report.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear in our annual report on Form 10-K filed U.S. Securities and Exchange Commission ("SEC") with the SEC on March 28, 2016.13, 2019. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include the "Risk Factors"“Risk Factors” included herein and in our annual report on Form 10-K filed with the SEC on March 28, 2016,13, 2019, that can be read at www.sec.gov.
Overview
Acquired Sales Corp. (hereinafter sometimes referred to as “Acquired Sales”, the “Company”, “AQSP”, “Acquired”, the “Company”, “we”, “us”, “our”, etc.) was organized under the laws of the State of Nevada on January 2, 1986.
For the past many years, our stated objective has been to acquire all or a portion of one or more operating businesses. In the past year, we have been exploring potential acquisitions of all or a portion of one or more operating businesses involving the manufacture and sale of cannabidiol (CBD)-infused products such as beverages, muscle/joint rubs, oils, tinctures, bath bombs, isolate, relief balms, elixirs, body washes, med sticks, lotions, vape pens, vape cartridges, shatter, gummies, pet food, soap and edibles (a “CBD-Infused Products Company”). In order to consummate or to enhance a particular acquisition of a CBD-Infused Products Company, we are open-minded to the concept of also acquiring all or a portion of one or more operating businesses and/or assets that are related to such CBD-Infused Products Company or that enhance such CBD-Infused Products Company, for example operating businesses and/or assets involving distilled spirits, beer, wine, hemp growing, hemp processing/extraction, paraphernalia, cannabis, tetrahydrocannabinol (THC)-infused products, marijuana growing, marijuana dispensaries, and real estate. We have entered into agreements with a number of operating business to acquire some or all of the businesses.
Merger Agreement – CBD Lion LLC
On August 15, 2019, the Company, along with GJacobs and WJacobs, entered into an Agreement and Plan of Merger ("Merger Agreement") with CBD Lion LLC (“Lion”) and its owners to, subject to a number of conditions, acquire 100% of the ownership of Lion in a merger (the “Merger”). On November 14, 2019, the Company terminated the Merger Agreement with Lion. See Note 9 “Subsequent Events”.
Letter of Intent to Acquire Sports 1 Marketing Corp., Processing for – Warrender Enterprise Inc. d/b/a CauseLifted Liquids
On May 23, 2019, we entered into a Letter of Intent with Warrender Enterprise Inc. and d/b/a Related Management Company
Closing of the acquisitionsacquisition of Lifted is subject to a number of conditions, including but not limited to the completion of mutually acceptablea due diligence deliveryinvestigation of audited financial statements,Lifted by us that is acceptable to us, completion of a capital raise by us of at least $4.5$9 million, completion of an audit of Lifted acceptable to us, execution of definitive acquisition documents, execution of an employment agreement with Nicholas S. Warrender, obtaining necessary third partythird-party approvals, including a tax opinion to be provided by Lifted’s tax counsel indicating that the proposed acquisition will qualify as a tax-free merger, execution of a shareholders agreement among GJacobs, WJacobs, Nicholas S. Warrender and Erik S. Lundgren, and completion of all necessary securities filings.
We are currently engaged in connection with the game.
The Letter of Intent contains customary provisions prohibiting Lifted from soliciting or encouraging any other acquisition proposal or entering into any negotiations or agreements for an alternative acquisition transaction prior to the next three seasons. S1MC will host 17 games per year for each team. The virtual gift bags offered to attendeestermination of the gamesLetter of Intent.
In the event that the proposed acquisition of Lifted is completed, the Letter of Intent requires that Lifted shall operate as a wholly-owned subsidiary of the Company. under the Lifted brand, led by Nicholas S. Warrender as Lifted’s CEO.
The terms of the proposed Lifted Liquids transaction must be set forth in a definitive agreement. There are expected to include various promotional offers from advertisers who are expected to pay S1MC to participate in the virtual gift bags. S1MC will pay the Barclays Center, the Islanders and the Nets a fee in connection with each game.
Acceptance of Subscriptions From Accredited Investors to Purchase Newly Issued Series A Convertible Preferred Stock (“Series A Preferred Stock”)
Between February 27, 2019 and May 13, 2019, we accepted subscriptions from accredited investors to purchase 66,150 shares of newly issued Series A Preferred Stock for an aggregate purchase price of $6,615,000 in cash. These 66,150 shares of Series A Preferred Stock are convertible at the option of the holders into 6,615,000 shares of newly issued common stock of the Company, or $1.00 per share of common stock of the Company. We have been informed by PFAC thatcovenanted to date 23 companies have been successfully enrolled infile a registration statement covering the PFAC program.
Acceptance of Subscriptions From Accredited Investors to Purchase Newly Issued Series B Convertible Preferred Stock (“Series B Preferred Stock”)
On June 28, 2019, we commenced a private placement to accredited investors, offering to sell up to 5,000,000 shares of Series B Preferred Stock convertible into 5,000,000 shares of our common stock at an exercise price of $5.00 per share. As of the date of this
report, we have accepted subscriptions from three accredited investors to purchase 90,000 shares of Series B Preferred Stock for an aggregate purchase price of $450,000 in cash, convertibleat the option of the holder into 90,000 shares of newly issued common stock of the Company, or $5.00 per share of common stock of the Company.
Stock Sale and Purchase Agreement - Ablis Holding Company
On April 30, 2019, we entered into a Stock Sale and Purchase Agreement with Ablis Holding Company, an Oregon corporation (“Ablis HC”), Ablis, Inc., an Oregon corporation (“Ablis”), and James A. Bendis (“Bendis”) wherein the Company paid $399,200 for a post transaction 4.99% ownership of Ablis HC’s equity. Ablis HC is in the business of manufacturing and sale of CogilityCBD-infused beverages, and DSTG eliminatedCBD-infused products. The Stock Sale and Purchase Agreement requires that Ablis HC use a portion of the Company's sourcespurchase proceeds to pay off at least $381,000 of revenue.
The Stock Sale and Purchase Agreement also sets out terms for an additional equity purchase of Ablis HC such that the Company may purchase up to an additional 15% of Ablis HC for $1,200,000 so that the Company would then own 19.99% of the ownership equity of Ablis HC. However, the option to purchase the additional equity in the company expired on July 31, 2019. As a result, we do not have a contractual right to purchase any more of Ablis HC than 4.99%.
The terms of the Stock Sale and Purchase Agreement entitle Gerard M. Jacobs (“GJacobs”), CEO of the Company, to be a member of the board of directors of Ablis HC and entitles William C. Jacobs (“WJacobs), President and CFO of the Company, to be provided with access to financial information and grants WJacobs financial oversight functions over Ablis HC. It further allows WJacobs the right to provide consulting/advisory services. WJacobs’ reasonable expenses will be covered by Ablis HC. The Stock Sale and Purchase Agreement also requires that GJacobs and WJacobs be introduced to the owners of Ablis’ CBD isolate suppliers, and any other companies in the hemp, CBD and cannabis industries with whom Ablis HC and/or Bendis have relationships, and whom may potentially be interested in entering into a stock sale or merger with us.
The Stock Sale and Purchase Agreement requires that Ablis HC evaluate and seriously consider a sale of Ablis HC or taking Ablis HC public within 60 months from April 30, 2019 and that it use commercially reasonable best efforts, to close a mutually acceptable alternative exit opportunity for the Company within 72 months from April 30, 2019.
Stock Purchase Agreement Bendistillery Inc. and Bend Spirits
On April 30, 2019, we, GJacobs, and WJacobs entered into a Stock Purchase Agreement with Bendistillery Inc., an Oregon corporation (“Bendistillery”), Bend Spirits, Inc., an Oregon corporation (“Bend Spirits”), Bendis Homes Pinehurst, LLC, an Oregon limited liability company (“Landowner”), Bendis, and Alan T. Dietrich (“Dietrich”) wherein we paid $1,347,300 for a post transaction 4.99% ownership of Bendistillery’s equity and $149,700 for a post transaction 4.99% ownership of Bend Spirits’ equity. Bendistillery and Bend Spirits are in the business of manufacturing and sale of alcoholic beverages, CBD-infused beverages, and CBD-infused products. The Stock Purchase Agreement requires that Bendistillery and Bend Spirits use a portion of the purchase proceeds to pay off at least $835,000 of their collective liabilities.
The Stock Purchase Agreement also sets out terms for an additional equity purchase of Bendistillery such that we may purchase up to an additional 15% of Bendistillery for $4,050,000 so that we would then own 19.99% of the ownership equity of Bendistillery. Per the terms of the Agreement, we may also purchase up to an additional 15% of Bend Spirits for $450,000 such that we would then own 19.99% of the ownership equity of Bend Spirits. However, the option to purchase the additional equity in the company expired on July 31, 2019. As a result, we do not have a contractual right to purchase any more of Bendistillery or Bend Spirits than 4.99%. In addition, any purchase of by the Company of more than 4.99% of Bendistillery or Bend Spirits would require approval by the Oregon Liquor Control Commission.
Landowner (as landlord) and Bendistillery (as tenant) have entered into a long-term recorded lease (the “Lease”) of the 23 acres in Tumalo outside Bend, Oregon, where Bendistillery and Bend Spirits conduct their businesses (the “Real Estate”) The initial term of the Lease is 20 years at a rent of $17,500 per month; Tenant has the right, in its sole discretion, to exercise a series of options to extend the term of the Lease up to a maximum of 99 years; and Tenant has a 60-day right of first refusal if Landowner ever decides to sell all or any portion of the Real Estate. Bendis is the owner of Landowner.
The terms of the Stock Purchase Agreement entitle GJacobs to be a member of the board of directors of Bendistillery and Bend Spirits and entitles WJacobs to be provided with access to financial information. The Stock Purchase Agreement also grants WJacobs financial oversight functions over Bendistillery and Bend Spirits and allows WJacobs the right to provide consulting/advisory services. WJacobs’ reasonable expenses will be covered by Bendistillery and Bend Spirits as well as an advisory fee of not less than $5,000 per quarter. The Stock Purchase Agreement also requires that GJacobs and WJacobs be introduced to the owners of Deschutes Brewery, Silver Moon Brewing, LBD Beverage, and any other companies in the distilled spirits, beer, wine, hemp, CBD and cannabis industries with whom Bendistillery, Bend Spirits, Bendis and/or Dietrich have relationships, and whom may potentially be interested in entering into a stock sale or merger with us.
The Stock Purchase Agreement requires that Bendistillery and Bend Spirits evaluate and seriously consider a sale of Bendistillery and Bend Spirits or taking them public within 60 months from April 30, 2019 and that they use commercially reasonable best efforts, to close a mutually acceptable alternative exit opportunity for the companies within 72 months from April 30, 2019.
Liquidity and Capital Resources
The following table summarizes our current assets, current liabilities, and working capital as of September 30, 20162019 and December 31, 2015,2018, as well as cash flows for the nine months ended September 30, 20162019 and 2015.
September 30, 2016 | December 31, 2015 | |||||||
Current Assets | $ | 428 | $ | 27,781 | ||||
Current Liabilities | 105,078 | 19,295 | ||||||
Working Capital | (104,650 | ) | 8,486 |
| September 30, 2019 | December 31, 2018 |
Current Assets | $ 4,359,389 | $ - |
Current Liabilities | 104,214 | 338,622 |
Working Capital | 4,255,175 | (338,622) |
| For the Nine Months Ended | ||
| September 30, | ||
| 2019 |
| 2018 |
Net Cash Used in Operating Activities | $ (487,875) |
| $ - |
Net Cash Used in Investing Activities | (2,196,200) |
| - |
Net Cash Provided by Financing Activities | 7,042,631 |
| 15,262 |
15Results of Operations
For the Nine Months Ended | ||||||||
September 30, | ||||||||
2016 | 2015 | |||||||
Net Cash Used in Operating Activities | $ | (56,453 | ) | $ | (368,265 | ) | ||
Net Cash Provided by (Used in) Investing Activities | 25,000 | (135,350 | ) | |||||
Net Cash Provided by Financing Activities | 4,100 | - |
Comparison of September 30, 20162019 to September 30, 2015
At September 30, 2016,2019, we had cash and cash equivalents of $428; this cash was derived$4,358,556. Our other assets include our investments in Ablis, Bendistillery and Bend Spirits, which total $1,896,200. We also have a note receivable of $300,000 due to us from proceeds of non-interest bearing loan made by our CEO, Gerard M. Jacobs, to the Company on June 21, 2016. AtCBD Lion LLC. In comparison, at September 30, 2015,2018, we had no cash, and cash equivalents, of $84,322; this cash was derived from the sale of our subsidiaries.
Total current assets at September 30, 20162019 of $428$4,359,389 are adequate to fund current operations for the next 12 months. In comparison, total current assets at September 30, 2018 of $0 were not adequate to fund current operations noror to fulfill corporate obligations or to fund growth and potential acquisitions. This is compared to total current assets at September 30, 2015 of $84,322.
Current liabilities at September 30, 20162019 of $104,214 consisted entirely of dividends payable of $94,997 to our Series A Preferred Stock shareholders, dividends payable of $2,232 to our Series B Preferred Stock shareholders, and trade accounts payable of $105,078; accounts payable consisted mainly of liabilities for professional fees. This is compared to$6,985. In comparison, current liabilities at September 30, 20152018 of $12,646; these current liabilities$297,400 consisted entirely of accounts payable forto related parties of $171,823, notes payable to related parties of $14,791, interest payable to related parties of $471 and trade accounts payable of $110,315. Accounts payable to related parties consisted of independent contractor fees payable to William C. Jacobs and expense reimbursements to William C. Jacobs and Gerard M. Jacobs. Trade accounts payable primarily consisted of professional fees.
Comparison of the three and nine months ended September 30, 20162019 to September 30, 2015
During the three and nine months ended September 30, 2016,2019, we incurred selling, general and administrative expenses of $52,861$61,697 and $142,264,$132,919, respectively. Selling, general and administrative expenses primarily consisted of professional fees, consulting fees and independent contractor fees.In comparison, during the three and nine months ended September 30, 2018, we incurred selling, general and administrative expenses of $16,549 and $122,623, respectively. Selling, general and administrative expenses primarily consisted of independent contractor fees and the reimbursement for expenses incurred by our CEO and independent contractor.
During the nine months ended September 30, 2016,2019, we earned other incomeused net cash in operating activities of $28, resulting in a net loss of $142,236.
During the nine months ended September 30, 2015, the Company earned interest income of $61,501 and other income of $2,267, and incurred a loss from continuing operations of $1,137,690.
Net cash provided by financing activities was $7,042,361 for the nine months ended September 30, 20162019; this cash was primarily provided by the issuance of Series A Preferred Stock and Series B Preferred Stock, and was primarily offset by the repayment of borrowings under notes payable to pay professional fees, independent contractor fees and to reimburse our CEO and independent contractor for expenses that they incurred during the period. related parties. In comparison, duringnet cash provided by financing activities for the nine months ended September 30, 2015, net2018 was $15,262; $14,791 of the cash provided by financing activities was used in operating activities of continuing operations totaled $368,265. This cash was primarily used forto pay professional fees and for reimbursing expenses incurred by the Company's chief executive officer and independent contractors.
At September 30, 2016, cash decreased by $27,353, leaving us with $4282019, we had $4,358,556 in unrestricted cash; in comparison, we had $0 in unrestricted cash at September 30, 2016. In comparison, during the nine months ended September 30, 2015, cash decreased by $503,615, leaving us with $84,322 in unrestricted cash at September 30, 2015.
We currently have no revenue-generating subsidiaries. We plan to sustain the Company as a going concern by taking the following actions: (1) acquiring and/or developing profitable businesses that will create positive income from operations; (2) acquiring valuable real estate in exchange for common stock and/or (2)preferred stock; and/or (3) completing private placements of our common stock and/or preferred stock. We believe that by taking these actions, we will be provided with sufficient future operations and cash flow to continue as a going concern. However, there can be no assurances or guarantees whatsoeverassurance that we will be successful in consummating such actions on acceptable terms, if at all. Moreover, any such actions can be expected to result in substantial dilution to the existing shareholders of the Company.
Our investments in Ablis, Bendistillery and Bend Spirits made us a minority owner of these companies. As a minority owner, we are not be able to recognize any portion of Ablis’, Bendistillery’s or Bend Spirits’ revenues or earnings in our financial statements. The Company is monitoring its investments in Ablis, Bendistillery and Bend Spirits, and from time to time will evaluate whether there has been a potential impairment of value.
Critical Accounting Policies
Use of Estimates – The preparationPlease refer to Note 2 – Basis of financial statements in conformity with Generally AcceptedPresentation and Significant Accounting Principles ("GAAP") requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. In the past, significant estimates included share-based compensation forfeiture rates and the potential outcome of future tax consequences of events that have been recognized for financial reporting purposes. Actual results and outcomes may differ from our estimates and assumptions.
Income Taxes
– Provisions for income taxes are based on taxes payable or refundable for the current year and deferred income taxes. Deferred income taxes are provided on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements and on tax carry forwards. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation allowance is provided against deferred income tax assets when it is not more likely than not that the deferred income tax assets will be realized.Basic and Diluted Earnings (Loss) Per Common Share
–Recent Accounting Pronouncements
–Off Balance Sheet Arrangements
– We have no off-balance sheet arrangements.Investments in Ablis Holding Company, Bendistillery Inc. and Bend Spirits, Inc.
Please refer to Note 4 – The Company’s Investments in Ablis, Bendistillery and Bend Spirits.
The William Noyes Webster Foundation, Inc.
Please refer to own and operate a medical marijuana cultivation facility in Plymouth, Massachusetts, and a medical marijuana dispensary in Dennis, Massachusetts. Heatley is the founder and a member of the board of directors of the Foundation.
Other Matters
We believe it is highly likely that the board of directors of the Foundation will only approve contracts that have been negotiated and approved by Heatley. Consequently, on July 8, 2014, we entered into a Teaming Agreement (the "Teaming Agreement") with Heatley, in which, among other things: (1) we and Heatley agreed to use our respective best efforts, working exclusively together as a team, and not as a partnership or other entity, in order to consummate transactions, agreements, contracts or other arrangements pursuant to which we will provide capital and expertise to the Foundation; and (2) Heatley agreed that Heatley shall not, and shall not permit the Foundation to, discuss or negotiate for debt or equity financing, or consulting services or other expertise, from any third party. We claim that Heatley violated the Teaming Agreement by discussing and negotiating for debt or equity financing, or consulting services or other expertise, from at least one third party. Heatley claims that we violated the Teaming Agreement alleging that we failed to lend funds to the Foundation in accordance with the Teaming Agreement. We believe Heatley's claim to be baseless. No assurances whatsoever can be made that Heatley will comply with the terms of the Teaming Agreement, nor that we will be able to adequately enforce the terms of the Teaming Agreement if it is ever the subject of litigation.
As a smaller reporting company, we are not required to provide the information required by this Item.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officerChief Executive Officer and chief financial officer,Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on that evaluation, our chief executive officerChief Executive Officer and chief financial officerChief Financial Officer concluded that, as of September 30, 2016,2019, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange CommissionSEC rules, regulations and forms, and that such information is accumulated and communicated to our management, including our chief executive officerChief Executive Officer and chief financial officer,Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As indicated in our Form 10-K for the year ended December 31, 2015,2018, management concluded that our internal control over financial reporting was not effective. Management'sManagement’s assessment of internal controls over financial reporting has not changed at September 30, 2016.2019. There existed a lack of segregation of duties in regard to the Company'sCompany’s financial reporting, procedures for depositing of funds, procedures for cash disbursements, procedures for checkbook entries, period close procedures, and procedures for financial statement preparation that result in material weaknesses in internal control over financial reporting.
Changes in Internal Control overOver Financial Reporting
Our management, with the participation of the chief executive officerChief Executive Officer and chief financial officer, hasChief Financial Officer have concluded that there were no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the best knowledgeordinary course of the officersbusiness. However, litigation is subject to inherent uncertainties, and directors, the Company isan adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a party to any legal proceedingmaterial adverse effect on our business, financial condition or litigation.
Prohibition, banning or regulation of vaping products, or lawsuits related to the use of Lifted Liquids’ vaping products, could have a material adverse effect on Lifted Liquids, and could have a material adverse effect on the trading price of our common stock
Federal, state and local authorities are investigating deaths and illnesses apparently related to vaping. We can provide no guarantees or assurances that vaping will not be prohibited, banned and/or heavily regulated in response to these deaths and illnesses, nor that Lifted Liquids will not be sued by customers who use Lifted Liquids vaping products. Prohibition, banning or regulation of vaping products, or lawsuits related to the use of Lifted Liquids’ vaping products, could have a material adverse effect on Lifted Liquids, and could have a material adverse effect on the trading price of our common stock.
Any unfavorable verdict or settlement of the lawsuit between Lifted Liquids and Mile High Labs could have a material adverse effect upon Lifted Liquids, and upon the trading price of AQSP’s common stock
Lifted Liquids has been sued by CBD isolate supplier Mile High Labs in connection with alleged contractual commitments between the two companies that are in dispute. AQSP can provide no guarantees or assurances that Lifted Liquids will be able to win or settle this lawsuit on favorable terms, if at all. Any unfavorable verdict or settlement of this lawsuit could have a material adverse effect upon Lifted Liquids, and upon the trading price of AQSP’s common stock.
The target companies may rely on contract manufacturers to manufacturer their products. If the target companies are unable to maintain good relationships with their existing contract manufacturers and/or secure such contract manufacturers, their businesses could suffer
Many of the target companies’ contract manufacturers are affiliated with and manufacture other CBD-infused product brand products. In many cases, such products compete directly with the target companies’ products. If the target companies are unable to maintain good relationships with their existing contract manufacturers and/or secure such contract manufacturers, their businesses, financial conditions and results of operations could be adversely affected. This could have a material adverse effect on our Company and the trading price of our common stock.
The US FDA considers the sale of most CBD-infused products to be illegal
The US Food and Drug Administration (the “FDA”) appears to believe that CBDs are drugs, and that the sale of most CBD-infused products without FDA approval is illegal. In deference to the FDA’s position, various states and municipalities have similarly declared that the sale of certain CBD-infused products are illegal. There can be no guarantee or assurance whatsoever that this regulatory hostility to CBDs will be resolved favorably to the CBD products industry. Aggressive law enforcement against the CBD industry by federal, state or local authorities and agencies could have a material adverse effect upon our Company and the trading price of our common stock.
CBD-infused products may be shown to have negative health and/or safety impacts upon consumers
The health and safety impacts of CBDs have not yet been established via traditional scientific and/or clinical studies. If scientific and/or clinical studies ultimately demonstrate negative health and/or safety impacts upon consumers, the CBD industry and AQSP, and the price of AQSP’s stock, could be materially adversely affected.
Hemp and CBD-infused products are illegal if they exceed 0.3% THC
Hemp and CBD-infused products which exceed a THC concentration of 0.3% are illegal. Any failure to keep the THC concentration in hemp or CBD-infused products below 0.3% could subject us to action by regulatory authorities and/or to lawsuits by consumers, which could have a material adverse effect upon our Company's business and the trading price of our common stock.
In addition, the approval of medical and recreational marijuana by many states has created a situation in which it may be difficult or impossible for regulators and courts to determine whether the THC levels reflected in consumers’ blood tests are the result of CBD-infused products or THC-infused products. This may result in regulatory actions or lawsuits that could have a material adverse effect upon our Company's business and the trading price of our common stock.
Also, certain hemp products may, over time, gradually increase their THC concentration, and this may ultimately cause such products to exceed the 0.3% THC concentration level, making such products illegal in certain jurisdictions. If this happens, we could be subject to regulatory action that could have a material adverse effect upon our Company and the trading price of our common stock.
The price of CBD raw materials could spike as demand for CBD-infused products increases dramatically
Although considerable additional hemp acreage is being developed around the country which is expected to increase the supply of CBD isolate, distillate and water-soluble CBD, the demand for these raw materials is also growing dramatically, and any spike in the price of these raw materials could materially adversely affect our Company and the trading price of our common stock.
Target companies may not be of the same caliber company as previous acquisitions, or target companies' management may not fit well into our corporate culture
If we acquire a company that is not of the same caliber company as previous acquisitions, or if we acquire a company that does not have management that is as high energy as our management, or for whatever reason the management of the acquired company does not fit in well with the rest of our team, we may become less attractive for potential investors, future acquisition targets may be uninterested in merging into our company, and the overall camaraderie among the players in the company may disappear, which could materially adversely affect our company and the price of our stock.
Large competitors are expected to enter the CBD-infused product industry
We expect that over the next few years several major beverage and other consumer products companies with tremendous financial resources will emerge to compete against our Company in the CBD-infused products industry. We may not have the personnel, products, marketing and distribution capabilities, and/or financial resources to compete effectively against such larger companies, which could materially adversely affect our Company and the trading price of our common stock.
Alcoholic beverage sales are subject to slowdowns and are seasonal
Bendistillery Inc. and Bend Spirits, Inc. are involved in the sale of a variety of distilled alcoholic beverages including vodka, whiskey and gin, and their sales of such beverages are subject to occasional slowdowns and are seasonal. Also, some health-conscious consumers are reducing or eliminating their alcohol consumption entirely. These factors could adversely affect the value of our ownership interest in those companies, which could materially adversely affect our Company and the trading price of our common stock.
Alcoholic beverage distributors are powerful and control much of the marketplace
Bendistillery Inc. and Bend Spirits, Inc. distribute their distilled alcoholic beverages through a limited number of powerful distributors that control much of the marketplace for alcoholic beverages. The loss of such distributors, or disruptions to the operations of such distributors, could adversely affect the value of our ownership interest in those companies, which could materially adversely affect our Company and the trading price of our common stock.
Increases in labor costs could harm the target companies' businesses
The U.S. in general, and Bend, Oregon in particular, are experiencing very low unemployment, which generally results in rising labor costs. Such rising labor costs are adversely affecting the expenses of Bendistillery Inc. and Bend Spirits, Inc., and may adversely affect the expenses of other target companies' businesses, which could materially adversely affect our Company and the trading price of our common stock.
Unregistered sales of equity securities during the period were disclosed in Item 3.02 of the current report on Form 8-K filed on May 10, 2019.
None; not applicable.
None; not applicable.
Termination of Agreement and Plan of Merger – CBD Lion LLC
On November 14, 2019, the Company terminated the Merger Agreement with Lion. Pursuant to the terms of the Merger Agreement executed on August 15, 2019, the Company agreed to acquire 100% of the ownership of Lion, subject to a number of conditions, for consideration of two million dollars ($2,000,000) in cash, plus five million (5,000,000) shares of unregistered common stock of the Company. To date, the Company has not applicable.
The material circumstances surrounding the termination of the Merger Agreement are set out in the letter dated November 14, 2019 from the Company’s legal counsel to Lion. The letter is attached as Exhibit 99.1 to the current report filed on Form 8-K on November 15, 2019.
Due to termination of the Merger Agreement, and per Section 5.15 of the Merger Agreement, commencing on December 1, 2019, the Company’s $300,000 loan made to Lion on August 8, 2019 is now required to be repaid. The repayment is required by agreement to be made in six equal monthly installments of principal and interest due and payable on the first day of each calendar month. Interest on the principal balance is calculated at an annual rate of 6% commencing as of August 8, 2019.
There are no material early termination penalties incurred by the Company as a result of the termination of the Merger Agreement. Due to the termination, the Company no longer intends to change its name to CBD Lion Corp. The termination of the Merger Agreement is not currently anticipated to have a negative impact on the previously disclosed, proposed acquisition of Warrender Enterprise Inc. d/b/a Lifted Liquids.
The following Exhibits have been previously filed in the below referenced filings or have been attached hereto, and in any case, as is stated on the cover of this Report, all of the below Exhibits are incorporated herein by reference.
Form 10-K | March 12, |
10.35.2 | |
10.37 | |
10.38 | Demand Promissory Note Payable to Joshua A. Bloom dated July 16, 2018 |
10.39 | Common Stock Purchase Warrants – Joshua A. Bloom – dated July 16, 2018 |
10.40 | Demand Promissory Note Payable to Gerard M. Jacobs dated July 18, 2018 |
10.41 | Common Stock Purchase Warrants – Gerard M. Jacobs – dated July 18, 2018 |
10.42 | Common Stock Purchase Warrants – Gerard M. Jacobs – dated November 8, 2018 |
10.43 | Common Stock Purchase Warrants – Joshua A. Bloom – dated November 12, 2018 |
10.44 | Common Stock Purchase Warrants – Gerard M. Jacobs – dated January 7, 2019 |
10.45 | Common Stock Purchase Warrants – Gerard M. Jacobs – dated January 21, 2019 |
10.46 | Common Stock Purchase Warrants – Gerard M. Jacobs – dated February 6, 2019 |
Form 8-K | May 8, 2019 |
10.51 | |
Form 8-K | May 23, 2019 |
10.52 | |
Form | June |
10.53 | |
Form 8-K 10.54 10.55 | |
August 20, 2019 | |
This 10-Q | November 15, |
31.1* | |
Certification of | |
31.2* | |
32.1* | |
101.INS** | XBRL Instance |
101.SCH** | XBRL Taxonomy Extension Schema Document. |
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.LAB** | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE** | XBRL Taxonomy Extension Presentation |
101.DEF** | |
XBRL Taxonomy Extension Definition |
* | Included herewith. |
** | |
Filed with this report in accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subjected to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. |
SIGNATURESSIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November | ||
ACQUIRED SALES CORP. | ||
By: | /s/ Gerard M. Jacobs | |
Gerard M. Jacobs | ||
Chief Executive Officer |
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