Item 1.01 Entry Into A Material Definitive Agreement
Merger Agreement
On October 8, 2020 Innocap, Inc. a Nevada corporation ("Innocap" or the
"Company"), Inno Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Innocap ("Merger Sub"), Unique Logistics Holdings, Inc., a
privately-held Delaware corporation headquartered in New York ("Unique"),
entered into an Acquisition Agreement and Plan of Merger (the "Agreement")
pursuant to which the Merger Sub was merged with and into Unique, with Unique
surviving as a wholly-owned subsidiary of Innocap (the "Merger"). The
transaction (the "Closing") took place on October 8,2020 (the "Closing Date").
The Company acquired, through a reverse triangular merger, all of the
outstanding capital stock of Unique in exchange for issuing Unique's
shareholders (the "Unique Shareholders"), pro-rata, an aggregate of 1,000,000
million shares of preferred stock, with certain of unique shareholders receiving
130,000 shares of the Company's Series A Preferred Stock par value $0.001 per
share, and certain of the Unique shareholders receiving of 870,000 shares of the
Company's Series B Preferred Stock, par value $0.001 per share.. Immediately
after the Merger was consummated, and further to the Agreement, certain
affiliates of the Company cancelled a total of 45,606,489 shares of the
Company's common stock, and 1,000,000 shares of Preferred Stock held by them
(the "Cancellation"). In consideration of the Cancellation of such shares of the
Company's common stock and preferred stock, Unique agreed to assume certain
liabilities of the Company. As a result of the Merger and the Cancellation, the
Unique Shareholders became the majority shareholders of the Company.
The directors of Innocap have approved the Agreement and the transactions
contemplated under the Agreement. The directors and shareholders of Unique have
approved the Agreement and the transactions contemplated thereunder and as of
the Closing Date own 1,000,000 shares of Preferred Stock in the aggregate. Such
Preferred Stock is convertible into an aggregate of 6,546,470,000 shares of the
Company's common stock, subject to beneficial ownership limitations and
authorized capital stock of the Company. On October 9, 2020, the Company's
current Chief Executive Officer, Sunandan Ray, converted 30,000 shares of Series
B Preferred Stock into an aggregate of 196,394,100 shares of the Company's
common stock.
Split Off Agreement
In connection with the Merger, on October 8, 2020, the Company, Star Exploration
Corporation, a Texas corporation and wholly-owned subsidiary of the Company (the
"Split-Off Subsidiary"), and Paul Tidwell, an individual in his capacity as the
Split-Off Subsidiary purchaser, entered into a Split-Off Agreement (the
"Split-Off Agreement"). Pursuant to the terms of the Split-Off Agreement, the
Company, as seller, in consideration of the Cancellation and the assignment and
assumption of $797,000 of the Company's liabilities, sold to Mr. Tidwell all of
the issued and outstanding shares of the Split-Off Subsidiary including and all
assets related to the Company's current business.
General Release Agreement
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets
CLOSING OF THE AGREEMENT
As described in Item 1.01 above, on October 8, 2020, the Company effectuated a
Merger which resulted in Unique, a logistics services company which provides a
range of international services that enable its customers to outsource to it
sections of their supply chain process. On the Closing Date, pursuant to the
terms of the Agreement, we acquired all of the outstanding capital stock of
Unique. In exchange, we issued to the Unique Shareholders, their designees or
assigns, 130,000 shares of Series A Preferred Stock and 870,000 Shares of Series
B Preferred Stock which convert into 6,546,470,000 shares of the Company's
common stock, subject to beneficial ownership limitations and authorized capital
stock of the Company..
Pursuant to the terms of the Agreement, Paul Tidwell, cancelled a total of
45,606,489 shares of the Company's Common Stock, and 1,000,000 shares of the
Company's Preferred Stock held by them.
The directors of the Company have approved the Agreement and the transactions
contemplated under the Agreement. The directors of Unique and Unique
Shareholders have approved the Agreement and the transactions contemplated
thereunder. Immediately following the Closing of the Merger the Company changed
its business plan to that of Unique.
References to "we", "our", "us", or "our Company", from this point forward refer
to Innocap, Inc. as currently constituted with Unique and its subsidiaries as
our operating subsidiaries.
Corporate History of Innocap
We were incorporated in Nevada on January 23, 2004. In May 2011, Paul Tidwell
became Chairman and President and introduced our business plan of researching
the location of and salvaging sunken ships. The Company had been actively
considering and negotiating several projects that had been extensively
researched by its President. Several trips, including to Indonesia, Malaysia and
ships that were sunk during World War ll, have been taken or have been
scheduled. We have not had any significant development of our business nor have
we received any revenue. Due to the lack of results in our attempt to implement
our original business plan, management determined it was in the best interests
of the shareholders to look for other potential business opportunities that
might be available to the Company.
Immediately following the Closing of the Agreement, the Company changed its
business plan to that of Unique. The Company plans to take the steps to
immediately change its name to "Unique Logistics International Holdings, Inc."
as well as its trading symbol to better reflect its current business to its
shareholders.
Corporate History of Unique Logistics
Unique Logistics Holdings, Inc. ("Unique Logistics Holdings"), a Delaware
corporation, was formed on October 28, 2019, for the purpose of conducting a
management buyout of three United States subsidiaries majority owned by Unique
Logistics Holdings Ltd., a Hong Kong company ("UL HK") (the "Management Buy Out
Transaction").
Unique Logistics Holdings Ltd., a Hong Kong company ("ULHK") was incorporated in
Hong Kong in 1983. ULHK commenced its business with a focus on transpacific
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The applicable information set forth in Item 1.01 of this Current Report on Form
8-K is incorporated by reference in this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The applicable information set forth in Item 1.01 of this Current Report on Form
8-K is incorporated by reference in this Item 3.02.Pursuant to the Merger
Agreement dated October 8, 2020, we issued 130,000 shares of our Series A
Preferred Stock and 870,000 shares of the Series B Preferred Stock to the Unique
Logistics Shareholders, their affiliates or assigns, in exchange for 100% of the
outstanding shares of Unique Logistics. Simultaneously with the Closing, the
Company issued the Note and Warrant to the Investor. On October 9, 2020, the
Company's Chief executive Officer converted 30,000 shares of Series B Preferred
Stock into 196,394,100 shares of the Company's common stock
These securities were not registered under the Securities Act. These securities
qualified for exemption under Section 4(2) of the Securities Act since the
issuance of securities by us did not involve a public offering. The offering was
not a "public offering" as defined in Section 4(2) due to the insubstantial
number of persons involved in the deal, size of the offering, manner of the
offering and number of securities offered. We did not undertake an offering in
which we sold a high number of securities to a high number of investors. In
addition, these shareholders had the necessary investment intent as required by
Section 4(2) of the Securities Act since the Conventions Shareholders agreed to
and received share certificates bearing a legend stating that such securities
are restricted pursuant to Rule 144 of the Securities Act. This restriction
ensures that these securities would not be immediately redistributed into the
market and therefore not be part of a "public offering." Based on an analysis of
the above factors, we have met the requirements to qualify for exemption under
Section 4(2) of the Securities Act.
Item 3.03 Material Modification to Rights of Security Holders.
The applicable information set forth in Item 1.01 of this Current Report on Form
8-K is incorporated by reference in this Item 3.03.
On October 6, 2020, the Company filed two certificates of designations with the
Nevada Secretary of State, designating a class of Series A Preferred stock and a
class of Series B Preferred stock, as further described below.
Series A Preferred
The Company has designated 130,000 shares of preferred stock as Series A
Preferred Stock, $0.001 par value per share (the "Series A Preferred"). The
holders of Series A Preferred, subject to the rights of holders of shares of the
Company's Series B Preferred Stock which shares will be pari passu with the
Series A Preferred in terms of liquidation preference and dividend rights, shall
be entitled to receive, at their option, immediately prior an in preference to
any distribution to the holders of the Company's common stock. $0.001 par value
per share and other junior securities, a liquidation preference equal to the
stated value per share. Each share of Series A Preferred shall have a stated
value equal to $0.001.
Holders of Series A Preferred will vote together with the holders of the
Company's Common Stock on an as converted basis on each matter submitted to a
vote of holders of Common Stock. In addition, a majority of holders of Series A
Preferred shares must provide an affirmative vote to (i) amend the Company's
Articles of Incorporation or bylaws in a way that would be adverse to the
holders of the Company's Series A Preferred, (ii) redeem or repurchase any
capital stock of the Company , (iii) declare or pay dividends on any class of
capital stock of the Company, or (iv) issue any securities in parity with (other
than shares of Series B Preferred)_or senior to the rights of the Series A
Preferred with respect to distributions of assets upon liquidation, dissolution
or winding up of the Company.
Each share of the Series A Preferred shall be convertible into fully paid and
non-assessable shares of Common Stock at any time or from time to time at each
Holder's option, and each share of Series A Preferred shall be convertible into
6,546.47 shares of the Company's common stock. Each holder of Series A Preferred
shares shall be subject to limitations on conversions, with such limitations
providing that no conversion shall be effected which would result in the
converting holder beneficially owning in excess of 4.99% of the shares of the
Company's common stock outstanding immediately after giving effect to such
conversion (the "Beneficial Ownership Limitation"). By written notice to the
Company, a holder of Series A Preferred may from time to time increase or
decrease the Beneficial Ownership Limitation upon 60-day written notice to the
Company. The Beneficial Ownership Limitation shall be calculated in accordance
with Section 13(d) of the Exchange Act.
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If and whenever on or after the date on which the holder received shares of
Series A Preferred Stock ("the Series A Issuance Date") through the twelve month
anniversary date of the Series A Issuance Date (the "Anti-Dilution Termination
Date"), the Company issues or sells, or in accordance with the terms herein is
deemed to have issued or sold, any shares of Common Stock or common stock
equivalents (a "Dilutive Issuance"), the number of shares of common stock
issuable upon conversion will be adjusted to entitle the holder to acquire such
number of shares of common stock (the "Adjustment Shares") necessary to
maintain the holders Fully-Diluted Ownership Percentage at the time of the
Series A Issuance Date. "Fully-Diluted Ownership Percentage" shall mean the
percentage ownership calculated by dividing (i) the aggregate number of shares
issuable upon conversion as of the Series A Issuance Date by (ii) the aggregate
number of all issued and outstanding shares of common stock or common stock
equivalents of the Company (including any shares of common stock or common stock
. . .
Item 4.01 Changes in Registrant's Certifying Accountant.
(a) Dismissal of Independent Registered Public Accounting Firm
On October 9, 2020, our board of directors dismissed Marcum LLP ("Marcum"), as
our independent registered public accountant.
Marcum's report on the financial statements for Innocap, Inc. for the fiscal
years ended January 31, 2020 and 2019 contained no adverse opinion or disclaimer
of opinion, and were not qualified or modified as to uncertainty, audit scope or
accounting principle, other than an explanatory paragraph relating to the
Company's ability to continue as a going concern.
During the fiscal years ended January 31, 2020 and 2019, and in the subsequent
interim period through October 9, 2020, the date of dismissal, there were no
disagreements with Marcum on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Marcum would have caused
them to make reference to the subject matter of the disagreements in its reports
on the financial statements for such year. During the fiscal years ended January
31, 2020 and 2019, and in the subsequent interim period through October 9, 2020,
the date of dismissal, there were no reportable events as defined in Item
304(a)(1)(v) of Regulation S-K except for the identified material weaknesses in
its internal control over financial reporting as disclosed in the Company's
Annual Report on Form 10-K for the year ended January 31, 2020.
We have provided a copy of the above disclosures to Marcum and requested Marcum
to provide it with a letter addressed to the U.S. Securities and Exchange
Commission stating whether or not Marcum agrees with the above disclosures. A
copy of Marcum's letter, dated October 13, 2020, confirming its agreement with
the disclosures in this Item 4.01 is attached as Exhibit 16.1 to this Form 8-K.
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(b) New Independent Registered Public Accounting Firm
On October 9, 2020, our board of directors approved the engagement of Baker
Tilly Virchow Krause, LLP, ("Baker Tilly"), as the Company's new independent
registered public accounting firm.
During the fiscal year ended January 31, 2020 and 2019, and the subsequent
interim period prior to the engagement of Baker Tilly, the Company has not
consulted Baker Tilly regarding (i) the application of accounting principles to
any specified transaction, either completed or proposed; (ii) the type of audit
opinion that might be rendered on the Company's financial statements, and either
a written report was provided to the registrant or oral advice was provided that
the new accountant concluded was an important factor considered by the
registrant in reaching a decision as to the accounting, auditing or financial
reporting issue; or (iii) any matter that was either the subject of a
disagreement (as defined in Item 304(o)(1)(iv)) or a reportable event (as
defined in Item 304(a)(1)(v)).
Item 5.01 Changes in Control of Registrant.
As explained more fully in Item 2.01, in connection with the Merger, on October
8, 2020, we issued 130,000 shares of our Series A Preferred Stock and 870,000
shares of our Series B Preferred Stock to the Unique Logistics Shareholders,
their affiliates or assigns, in exchange for 100% of the outstanding shares of
Unique Logistics. As such, immediately following the Merger, the Unique
Shareholders may convert the Series A Preferred Stock and Series B Preferred
Stock into an aggregate of 6,546,470,000 shares of common stock, subject to
beneficial ownership limitations and authorized capital stock of the Company. In
addition, on October 9, 2020, Sunandan Ray our Chief Executive Officer,
converted 30,000 shares of Series B Preferred stock into 196,934,100 shares of
common stock of the Company, or roughly 59.51__% of the issued and outstanding
stock entitled to vote. Reference is made to the disclosures set forth under
Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated
herein by reference.
Further, effective October 8, 2020, Mr. Sunandan Ray, Mr. David Briones and
Patrick Lee, were appointed as members of our board of directors. Finally,
effective October 8, 2020, our Directors appointed Mr. Sunandan Ray our Chief
Executive Officer.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
(a) Resignation of Directors
Effective October 8, 2020, Mr. Paul Tidwell resigned from his position on the
board. There were no disagreements between Mr. Tidwell and us or any officer or
director of the Company.
(b) Resignation of Officers
Effective October 8, 2020, Mr. Tidwell resigned as our Chief Executive Officer,
and Principal Accounting Officer.
(c) Appointment of Directors
Effective October 82020, the following persons were appointed as members of the
Board of Directors:
Name Age Position
Sunandan Ray 62 Director
David Briones 44 Director
Patrick Lee 43 Director
Please see also Section 5.02(d) of this current report, whose information is
herein incorporated by reference.
(d) Appointment of Officers
Effective June 16, the directors appointed the following persons as our
executive officers, with the respective titles as set forth opposite his or her
name below:
Name Age Position
Sunandan Ray 62 Chief Executive Officer
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The business background descriptions of the newly appointed officers and
directors are as follows:
Sunandan Ray, 62. Sunandan has close to 30 years of experience in the logistics
industry. He established and currently manages over 15 of ULHL's offices in the
US and India with over $70 million in revenue. Prior to his partnership with
ULHL, Sunandan established and managed operating companies on behalf of MSAS
Cargo International (now part of DHL/ Deutsche Post) in USA, India, Sri Lanka,
Bangladesh, Mauritius and Turkey from 1989 to 1997. Sunandan successfully
negotiated with MSAS Cargo, a management buyout of the companies under his
management and after building the group over 10 years into a US $50 million
enterprise, it was bought by French transportation company, Group Bollore. From
1992 through 1996, Sunandan built and sold to a strategic investor a group of
software companies, Sunrise Group, which had over US$ 10 million in revenue at
the time of sale.
Sunandan is a qualified Chartered Accountant (London, UK) who worked for 10
years with Price Waterhouse (now PWC) in London, UK, The Hague, Netherlands and
New York, NY from 1979 to 1989. He also holds a Masters in Science (Technology)
in Computer Science from the Birla Institute of Technology & Science, in Pilani,
India.
David Briones, 44, Director
Mr. Briones is the founder and managing member of Brio Financial Group since its
inception in October 2010, with over nineteen years of public accounting and
executive level experience. He consults with various public companies in
financial reporting, internal control development and evaluation, budgeting and
forecasting. Since March 2019, Mr. Briones has also been the Chief Financial
Officer of Hoth Therapeutics, Inc. (NASDAQ: HOTH), a biopharmaceutical company.
From August 2013 to January 2020, Mr. Briones was the Chief Financial Officer
for Petro River Oil Corp., an independent energy company focused on the
exploration and development of conventional oil and gas assets. From October
2017 to May 2018 Mr. Briones was the Chief Financial Officer of Bitzumi, Inc., a
Bitcoin exchange and marketplace.
Patrick Lee, 43, Director
Lee, Patrick Man Bun, age 43, combines over 15 years of experience in freight
forwarding/warehousing senior management. Previously, he had been involved in
two global companies in the logistics industry, holding positions including
Management Trainee, Business Development Coordinator, and Logistics Operations
Coordinator. From 2005 through 2012, Patrick was the Business Development
Director for Unique Logistics Holdings Limited, a freight forwarding company
based in Hong Kong. From 2012 to 2017, Patrick served Unique Logistics Holdings
Limited in his capacity as Executive Vice President. Patrick has taken up the
position of Group COO since 2017 and has become a Board Member. He has Bachelor
of Commerce from University of British Columbia (Canada), and an MSc Supply
Chain Management from Cranfield University (England).
Family Relationships
There are no family relationships with any of our officers and directors.
EMPLOYMENT AGREEMENTS OF THE EXECUTIVE OFFICERS
Unique Logistics
Employment Agreements
On May 29, 2020, Unique Logistics and Sunandan Ray entered into the Ray
Employment Agreement pursuant to which Mr. Ray has been employed by Unique
Logistics to serve as President and Chief Executive Officer. The Ray Employment
Agreement has an initial term of three years, and automatically renews for
successive consecutive one-year period terms, unless either party provides
notice to the other party not more than 270 days and not less than 180 days
before the end of the then existing term. Mr. Ray will receive a base salary of
$250,000 per year with annual increases at the rate of 3% with such increases
applied on January 1 of each year. The Ray Employment Agreement includes a
performance-based bonus of up to 125% of the base salary upon Unique Logistics
achieving certain performance targets as defined in the Ray Employment
Agreement. The Ray Employment Agreement also provides for employment benefits
and reimbursement provisions that are typical of such agreements.
As of the date of the Merger Agreement, the Company assumed the Ray Employment
Agreement.
Item 5.03
As a result of the Merger, the Company is changing its fiscal year end from
January 31 to May 31.
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Item 9.01 Financial Statement and Exhibits.
(a) Financial Statements of Business Acquired. The Audited Financial Statements
of Unique Logistics as well Pro-forma financial statements will be filed within
75 days of this Current Report on Form 8-K.
(d) Exhibits. Exhibit No. Description
Exhibit
No. Description
2.1* Agreement and Plan of Merger and Reorganization, dated October 8, 2020.
3.1* Certificate of Designation of Series A Preferred of Innocap, Inc., dated
October 7, 2020.
3.2* Certificate of Designation of Series B Preferred of Innocap, Inc., dated
October 7, 2020.
4.1* 10% Convertible Promissory Note, dated October 8, 2020.
4.2* Common Stock Purchase Warrant, dated October 8, 2020.
10.1* Securities Purchase Agreement, dated October 8, 2020.
10.2* Registration Rights Agreement, dated October 8, 2020.
10.3* Employment Agreement with Sunandan Ray dated May 29, 2020.
10.4* General Release Agreement, dated October 8, 2020.
10.5* Split-Off Agreement, dated October 8, 2020.
* Filed Herewith.
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