Item 3.02: Unregistered Sales of
On or about
In that context, Registrant has engaged counsel to address the improper issuance
by Registrant's transfer agent of shares to certain of Noteholders of a
subsidiary in the circumstances here outlined. Specifically, certain Noteholders
of PMPG's subsidiary
On
Registrant with issue a follow-on Form 8-K as the remedial actions underway and contemplated (namely how to cancel the shares to 3 Noteholders not authorized by Registrant or under the terms of the applicable Notes) as information become available, presumably in the next 2 to 4 weeks.
It is Management's belief the free trading shares affected Registrant's stock over the last 45 to 60 days. Registrant has already demanded the return of the shares from these 3 Noteholders. Moreover, management is in the process of contacting the brokers who currently may have remaining improperly issued Registrant common shares to stop selling and contacting the VHMC Noteholders to return such improperly issued stock immediately. Management will also report more details of the Exploratory Counsel's finding as information become available.
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The shares improperly issued were technically dilutive in character (and therefore potentially dilutive in character, could require particulars as to Item 2.06, "Material Impairment") and, even though not "sales" as defined, constituted the unregistered issuance of securities (Item 3.02). Registrant seeks to have cancelled those improperly issued shares and are working to so accomplish. If we are not successful in getting those shares returned by the affected Noteholder and/or successfully cancelling the Registrant shares at issue, we will file a Form 8-K as events may require, presumably in the next 2 to 4 weeks.
By way of background: · OnFebruary 22, 2018 ,Premier Products Group, Inc. and Valley High Mining Company completed a corporate reorganization pursuant to whichValley High Mining Company , became a direct, wholly-owned subsidiary of a newly formedDelaware corporation, andPremier Products Group, Inc. (the "Holding Company"), which became the successor issuer. In other words, the Holding Company became the public entity. · Under the Holding Company Reorganization Section 251(g) ofDelaware General Corporation Law, VHMC is a private company and a wholly-owned subsidiary of Registrant was reorganized as such back inFebruary 2018 . · This reorganization was the subject of a February Form 8-K filed with theSEC onFebruary 27, 2018 , such Report hereby incorporated by reference. · This reorganization was complex, involving the creation of two new corporations followed by a merger and a share exchange under applicableDelaware law. · The end result is that Registrant (which was previously the public company) becomes a wholly-owned, non-trading subsidiary while one of the newly formed companies, often referred to as the successor issuer, becomes the public entity. As a result, all assets and liabilities of the entity which was previously the public entity (the predecessor issuer) remains the entity with all the assets and all the liabilities. The successor issuer, in this case Registrant had neither assets nor liabilities following the reorganization. Therefore, since the liabilities of the predecessor issuer are now in a non-trading, wholly-owned subsidiary of the successor issuer, its debts should never be satisfied from the share issuances of the successor issuer, Registrant. · This is why, despite the VHMC Noteholder's conversion notice, these improperly issued shares should not have been issued despite the conversion notice. Hence, any Noteholder's claim for monies (or shares) is owed byValley High (the predecessor issuer). Registrant does not owe this money.
Accordingly, Registrant's shares should not be issued in satisfaction of VHMC's liability.
As things stand today, 31,468,820 common shares of Registrant were issued improperly by the TA to VHMC Noteholders. The Registrant is actively working to get those improperly issued common shares of Registrant return, cancelled or sales proceeds remitted to Registrant. If the Registrant is successful in this effort, the Registrant will be demanding the return of the improperly issued shares, and the number of Registrant common will be the same before and after the improper issuance of Registrant's common. If we are not successful in the return of shares, their cancellation or the return of any sales proceeds from the improperly issued shares will the subject of a Form 8-K so addressing, presumably occurring over the next 2 to 4 weeks.
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