Item 1.01. Entry into a Material Definitive Agreement.
On April 21, 2023, All for One Media Corp., a Utah corporation (the "Company")
and AFOM Acquisition, Inc., a Delaware corporation ("Acquisition") and
wholly-owned subsidiary of the Company, entered into an Agreement and Plan of
Merger (the "Agreement") with All Entertainment Media Group, Inc., a Delaware
corporation ("AEMG").
AEMG is a content creation and marketing company headquartered in New York.
Comprising of three core divisions - PODs Entertainment Group, EMG Music Group,
and Terry D Films. Notably, AEMG's podcast division ranks among the top 3% of
all podcasts globally according to Listen Notes, an independent podcast
database. In August 2022, AEMG released its first feature film, 17 DAYS, which
quickly became one of Tubi's "Most Popular Movies." Management believes that
AEMG will be able to expand its audience and media coverage as a public company
in determining to combine with AFOM and is poised for growth following the
closing.
Under the terms of the Agreement, subject to the satisfaction of certain closing
conditions, Acquisition will acquire AEMG by merger of Acquisition with and into
AEMG, with AEMG as the surviving corporation (the "Merger"). At the Effective
Time of the Merger. all of the issued and outstanding share capital of AEMG will
be exchanged for an aggregate of Seven Million (7,000,000) shares of Company
common stock, par value $0.001 per share, (the "Common Stock"), after giving
effect to a 2,854.18:1 reverse split (the "Reverse Split") of the outstanding
shares of Common Stock. In addition to the Reverse Split the Agreement contains
various additional conditions, which, unless waived, will be required to be
satisfied prior to closing, including continued accuracy of representations and
warranties of the parties, approval by the Company, no violations of law, no
actions brought by any third party to enjoin the transactions, all legal and
regulatory approvals will have been obtained, and approval by the boards of
directors of the Company, Acquisition and AEMG. Exchange agreements with debt
holders of the Company under which the holders will exchange all Company debt
for Series B Convertible Preferred Stock, par value $0.001 per share (the
"Series B Stock") of the Company, unless a lesser percentage is accepted by the
Company and AEMG, and a minimum of five hundred thousand dollars ($500,000) of
investment or bridge financing shall be available upon terms and subject to
conditions acceptable to the parties are also required prior to closing.
Although there can be no assurance of approval by the principal holder of the
Company's convertible debt, such approval has been sought and is anticipated,
provided the terms of the Merger are acceptable, the other closing conditions
are satisfied, and the remaining debt holders agree to exchange their debt for
Series B Stock.
In addition, prior to closing the Company is required to have received a copy of
audited financial statements of AEMG prepared in accordance with US GAAP for
each of the two most recently completed fiscal years and unaudited financial
statements for any interim period for filing with the SEC. Prior to execution
of the Agreement, the Company and AEMG entered into a Letter of Intent dated as
of March 10, 2023, under which the Company advanced bridge loans for preparation
of financial statements and preparation for the Merger and the Company entered
into a Securities Purchase Agreement (the "SPA") and 12% Redeemable Bridge Note
due March 10, 2024 in the amount of $70,000 ($67,000 with a $3,000 original
issue discount) (the "Bridge Note") from a lender in preparation for the
transactions contemplated. Upon closing of the Merger, unless repaid, the lender
will have the right to convert the loan into additional Series B Stock.
The Series B Stock shall have the rights, privileges, preferences, and
limitations as set forth in a Series B Preferred Stock Certificate of
Designation of Rights, Privileges, Preferences and Limitations (the "Certificate
of Designation") which shall be filed with the Secretary of State of the State
of Delaware prior to closing.
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Shares of Series B Stock will be convertible into shares of the Company's Common
Stock, based on a conversion calculation equal to the stated value of Series B
Stock, plus all accrued and unpaid dividends, if any, on such Series B Stock, as
of the date of determination, divided by the conversion price. The conversion
value (stated value) is equal to the value of debt converted into Series B Stock
and the initial conversion price into Common Stock is $0.25 for each dollar of
debt converted (after giving effect to the Reverse Split), each subject to
adjustment for the stated value of Series B Stock, stock splits, stock
dividends, recapitalizations, combinations, subdivisions or other similar
events. Holders of Company debt exchanged for Series B Stock shall receive the
value of Series B Stock equal to the value of the debt exchanged pursuant to
debt exchange agreements to be entered with each holder. In addition, for so
long as any shares of Series B Stock are outstanding, subject to certain
exceptions: (a) in the event the Company issues shares of Common Stock upon
conversion of Series B Stock, AEMG's holders shall be entitled to a post-closing
adjustment and issuance of additional shares of Common Stock in order to retain
seventy (70%) percent ownership in the Company after giving effect to the Common
Stock issued upon conversion of Series B Stock, but not more than seven million
(7,000,000) post Reverse Split shares of Common Stock (subject to adjustment for
stock splits, stock dividends, recapitalizations, combinations, subdivisions or
other similar events); and (b) the Company may not issue or agree to issue any
securities including convertible securities with an purchase price, or
conversion or exercise price, below $0.25 per share without consent of a
majority of the holders of Series B Stock. The Company is prohibited from
effecting a conversion of the Series B Stock to the extent that, as a result of
such conversion, the holder would beneficially own more than 4.99% of the number
of shares of Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon conversion of the Preferred Shares,
which beneficial ownership limitation may be increased by the holder up to, but
not exceeding, 9.99% (the "Beneficial Ownership Limitation"). Each holder of
Series B Stock is entitled to vote on all matters submitted to stockholders of
the Company, and shall have the number of votes equal to the number of shares of
Common Stock issuable upon conversion of such holder's Series B Stock, but not
in excess of the Beneficial Ownership Limitation. The Series B Stock bears no
interest.
The parties have agreed that Brian Lukow shall remain a director and officer of
the Company, and that the Board of directors shall consist of five members
acceptable to AEMG, who shall include Jeffrey Burton (CEO), Todd Napolitano
(President) and Brandon Steiner, as well as one additional member acceptable to
AEMG. At the closing, the Company shall also assign to Brian Lukow certain
assets and the assumption of certain future liabilities in exchange for a 5% net
royalty interest in the Huckapoo, Drama Drama and Dream Street assets of the
Company.
The closing of the Merger is subject to customary closing conditions which
include shareholder approval by Acquisition and AEMG stockholders, approval of
the Reverse Split by FINRA, approval of the terms of the Exchange Agreements for
Company debt by 100% of the holders thereof (unless waived or a lesser amount
agreed by AEMG), completion of an audit and provision of financial and other
information required by SEC rules and regulations. It is anticipated and a
condition to closing that Brian Lukow, who holds 51 shares of Series A Preferred
Stock, par value $0.001 per share (the "Series A Stock"), of the Company with
supermajority voting rights, shall transfer and assign all of the Series A Stock
outstanding to Jeffrey Burton or his designee and in the event any vote is
required of the stockholders of the Company that the Series A Stock will be
voted in favor of the Merger.
The foregoing description of the terms of the Agreement and Plan of Merger, and
Certificate of Designations of Series A Stock, Certificate of Designation of
Series B Stock, the SPA, and the Bridge Note are qualified in their entirety by
reference to the full text of the documents filed as Exhibit 10.1, 10.2, 10.3,
10.4, 10.5 and 10.6 attached as exhibits to this Current Report on Form 8-K.
Following closing of the Transaction, we will continue to be a "smaller
reporting company," as defined in Item 10(f)(1) of Regulation S-K, as
promulgated by the SEC.
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Item 7.01 Regulation FD Disclosure.
On April 25, 2023 the Company issued a press release. A copy of the press
release is included herewith as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
In accordance with General Instruction B.2 of Form 8-K, the information in this
Current Report on Form 8-K under Item 7.01, including Exhibit 99.1 hereto, shall
not be deemed to be "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section, and shall not be deemed to be incorporated by reference into any
of the Company's filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the
date hereof and regardless of any general incorporation language in such
filings, except to the extent expressly set forth by specific reference in such
a filing.
(d) Exhibits
Exhibit
Number Description
Exhibit Agreement and Plan of Merger dated April 21, 2023
10.1
Exhibit Certificate of the Designation of the Rights of Series A Preferred
10.2 Stock as filed with the Secretary of State of the State of Utah August
17, 2017
Exhibit Form of Certificate of the Designation of the Rights, Privileges,
10.3 Preferences and Limitation of Series B Preferred Stock
Exhibit Form of Assignment Agreement
10.4
Exhibit Securities Purchase Agreement dated as of March 10, 2023
10.5
Exhibit Bridge Note dated as of March 10, 2023
10.6
Exhibit Press Release dated April 25, 2023
99.1
Exhibit Cover Page Interactive Data File (formatted as Inline XBRL)
104
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