Form 1-A/A Square Chain Corp.
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E-mail1-A/A LIVE 0001027235 XXXXXXXX 024-10835 true Square Chain Corporation NV 1994 0001027235 7374 86-0779928 1 0 Square Chain Corporation 3609 Hammerkop Drive North Las Vegas NV 89084 727-510-9525 John E. Lux, Esq. Other 0.00 0.00 0.00 0.00 0.00 75978.00 0.00 75978.00 -75.97 0.00 0.00 75978.00 81040.00 -157018.00 0.00 0.00 Common Stock 186248501 85221L107 OTCMarkets, Pink Open Market None 30000 000000000 None None 0 000000000 None true true Tier1 Unaudited Equity (common or preferred stock) Y N Y Y N N 80000000 186248501 0.0500 4000000.00 0.00 0.00 0.00 4000000.00 John E. Lux, Esq. 25000.00 New York State Regulatory Filing Fees 2500.00 true NY Square Chain Corporation Common Stock 8500000 0 05 (per share) X 8,500,000 (shares) = $425,000 Exempt from registration under Section 4(2) Securities Act and Rules promulgated thereunder.
PART II — INFORMATION REQUIRED IN OFFERING CIRCULAR
Preliminary Offering Circular dated June __, 2018
An Offering Statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the Offering Statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the Offering Statement in which such Final Offering Circular was filed may be obtained.
Square Chain Corporation
$4,000,000
80,000,000 SHARES OF COMMON STOCK
$0.05 PER SHARE
This is the public offering of securities of Square Chain Corporation, a Nevada corporation. We are offering 80,000,000 shares of our common stock, par value $0.001 (“Common Stock”), at an offering price of $0.05 per share (the “Offered Shares”) by the Company. This Offering will terminate on twelve months from the day the Offering is qualified or the date on which the maximum offering amount is sold (such earlier date, the “Termination Date”). The minimum purchase requirement per investor is 20,000 Offered Shares ($1,000); however, we can waive the minimum purchase requirement on a case-by-case basis in our sole discretion.
These securities are speculative securities. Investment in the Company’s stock involves significant risk. You should purchase these securities only if you can afford a complete loss of your investment. See the “Risk Factors” section on page 4 of this Offering Circular.
We are a shell company pursuant to Rule 405 of the Securities Act. This will have a material impact on our ability to attract additional capital. See “Risk Factors – We are a shell company pursuant to Rule 405 of the Securities Act. This may impact our ability to attract additional capital.
No Escrow
The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best efforts basis. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.
Subscriptions are irrevocable and the purchase price is non-refundable as expressly stated in this Offering Circular. All proceeds received by the Company from subscribers for this Offering will be available for use by the Company upon acceptance of subscriptions for the Securities by the Company.
The Company, by determination of the Board of Directors, in its sole discretion, may issue the Securities under this Offering for cash, promissory notes, services, and/or other consideration without notice to subscribers. The aggregate offering price is based on the price at which the securities are offered for cash. Any portion of the aggregate offering price or aggregate sales attributable to cash received in a foreign currency will be translated into United States currency at a currency exchange rate in effect on, or at a reasonable time before, the date of the sale of the securities. If securities are not sold for cash, the aggregate offering price or aggregate sales will be based on the value of the consideration as established by bona fide sales of that consideration made within a reasonable time, or, in the absence of sales, on the fair value as determined by an accepted standard. Valuations of non-cash consideration will be reasonable at the time made.
Sale of these shares will commence within two calendar days of the qualification date and it will be a continuous Offering pursuant to Rule 251(d)(3)(i)(F).
This Offering will be conducted on a “best-efforts” basis, which means our Officers will use their commercially reasonable best efforts in an attempt to offer and sell the Shares. Our Officers will not receive any commission or any other remuneration for these sales. In offering the securities on our behalf, the Officers will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended.
This Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the laws of any such state.
Our Common Stock is traded in the OTCMarket Pink Open Market under the stock symbol “SQCC.”
Investing in our Common Stock involves a high degree of risk. See “Risk Factors” beginning on page 4 for a discussion of certain risks that you should consider in connection with an investment in our Common Stock.
| Per Share | Total Maximum | |||||||
| Public Offering Price (1)(2) | $ | 0.005 | $ | 4,000,000 | ||||
| Underwriting Discounts and Commissions (3) | $ | 0.00 | $ | 0 | ||||
| Proceeds to Company | $ | 0.005 | $ | 4,000,000 | ||||
(1) We are offering shares on a continuous basis. See “Distribution – Continuous Offering.
(2) This is a “best efforts” offering. The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best efforts basis primarily through an online platform. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds. See “How to Subscribe.”
(3) We are offering these securities without an underwriter.
(4) Excludes estimated total offering expenses, including underwriting discount and commissions, will be approximately $400,000 assuming the maximum offering amount is sold.
Our Board of Directors used its business judgment in setting a value of $0.05 per share to the Company as consideration for the stock to be issued under the Offering. The sales price per share bears no relationship to our book value or any other measure of our current value or worth.
No sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or your net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
THE U.S. SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.
The date of this Offering Circular is June __, 2018.
TABLE OF CONTENTS
We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where such offers and sales are permitted. You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with any information other than the information contained in this Offering Circular. The information contained in this Offering Circular is accurate only as of its date, regardless of the time of its delivery or of any sale or delivery of our securities. Neither the delivery of this Offering Circular nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this Offering Circular. This Offering Circular will be updated and made available for delivery to the extent required by the federal securities laws.
In this Offering Circular, unless the context indicates otherwise, references to “Square Chain”, “we”, the “Company”, “our” and “us” refer to the activities of and the assets and liabilities of the business and operations of Square Chain Corporation.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under “Summary”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Our Business” and elsewhere in this Offering Circular constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “should”, “will” and “would” or the negatives of these terms or other comparable terminology.
You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Offering Circular, including in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:
| ● | The speculative nature of the business we intend to develop; and |
| ● | Our reliance on suppliers and customers; and |
| ● | Our dependence upon external sources for the financing of our operations, particularly given that there are concerns about our ability to continue as a “going concern; and |
| ● | Our ability to effectively execute our business plan; and |
| ● | Our ability to manage our expansion, growth and operating expenses; and |
| ● | Our ability to finance our businesses; and |
| ● | Our ability to promote our businesses; and |
| ● | Our ability to compete and succeed in highly competitive and evolving businesses; and |
| ● | Our ability to respond and adapt to changes in technology and customer behavior; and |
| ● | Our ability to protect our intellectual property and to develop, maintain and enhance strong brands. |
Although the forward-looking statements in this Offering Circular are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as maybe be required by law, to re-issue this Offering Circular or otherwise make public statements updating our forward-looking statements.
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This summary highlights selected information contained elsewhere in this Offering Circular. This summary is not complete and does not contain all the information that you should consider before deciding whether to invest in our Common Stock. You should carefully read the entire Offering Circular, including the risks associated with an investment in the company discussed in the “Risk Factors” section of this Offering Circular, before making an investment decision. Some of the statements in this Offering Circular are forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”
Company Information
The Company, sometimes referred to herein as “we,” “us,” “our,” and the “Company” and/or “Square Chain Corporation” was incorporated under the laws of the State of Arizona on November 14, 1994 under the name of Piranha Interactive Publishing, Inc. On November 22, 1996, the Company reincorporated under the laws of the State of Nevada and effected a forward split of its common stock on a basis of approximately 242 shares of the Nevada corporation for each share of the Arizona corporation. On October 28, 2009, the Company filed Amended and Restated Articles of Incorporation effectively changing the name of the corporation to Piranha Ventures, Inc. On November 21, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation changing the name of the corporation to Realgold International, Inc. On May 16, 2013, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name from Realgold International, Inc. to Asia Travel Corporation. On March 8, 2018, the Company filed a Certificate of Amendment with the State of Nevada to effectively change the name of the Company to Square Chain Corporation.
The trading symbol for our Common Stock is ‘SQCC.” Our previous trading symbol was “ATSR” prior to our filing a name change with the State of NV and an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority in March 2018.
The Issuer’s offices are located at 3609 Hammerkop Dr., N. Las Vegas, NV 89084, Phone: 727-510-9525, Email [email protected]. We maintain a website at http://www.squarechain.io. We do not incorporate the information on or accessible through our website into this Offering Circular, and you should not consider any information on, or that can be accessed through, our website a part of this Offering Circular.
Section 15(g) of the Securities Exchange Act of 1934
Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one-page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as bid and offer quotes, a dealers spread and broker/dealer compensation; the broker/dealer compensation, the broker/dealers’ duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers’ rights and remedies in cases of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Securities Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
Dividends
The Company has not declared or paid a cash dividend to stockholders since it was organized and does not intend to pay dividends in the foreseeable future. The board of directors presently intends to retain any earnings to finance our operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon the Company’s earnings, capital requirements and other factors.
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Trading Market
Our Common Stock is quoted on the OTC Markets’ Pink Open Market under the symbol “SQCC.”
| Issuer: | Square Chain Corporation | |
| Securities offered: | A maximum of 80,000,000 shares of our common stock, par value $0.001 (“Common Stock”) at an offering price of $0.05 per share (the “Offered Shares”). (See “Distribution.”) | |
| Number of shares of Common Stock outstanding before the offering | 186,248,501 issued and outstanding as of April 30, 2018 | |
| Number of shares of Common Stock to be outstanding after the offering | 266,248,501 shares, if the maximum amount of Offered Shares are sold | |
| Price per share: | $0.05 | |
| Maximum offering amount: | 80,000,000 shares at $0.05 per share, or $4,000,000 (See “Distribution.”) | |
| Trading Market: | Our Common Stock is trading on the OTC Markets Pink Open Market Sheets division under the symbol “SQCC.” |
| Use of proceeds: | If we sell all of the shares being offered, our net proceeds (after our estimated offering expenses) will be $3,600,000. We will use these net proceeds for working capital and other general corporate purposes. | |
| Risk factors: | Investing in our Common Stock involves a high degree of risk, including:
Immediate and substantial dilution.
Limited market for our stock.
Competition
Limited operational history
Doubts about our ability to continue in business
See “Risk Factors.” |
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An investment in our Common Stock involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this Offering Circular, before purchasing our Common Stock. Any of the following factors could harm our business, financial condition, results of operations or prospects, and could result in a partial or complete loss of your investment. Some statements in this Offering Circular, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements”.
Risks Relating to Our Financial Condition
Our independent registered accounting firm has expressed concerns about our ability to continue as a going concern.
The report of our independent registered accounting firm expresses concern about our ability to continue as a going concern based on the absence of significant revenues, our significant losses from operations and our need for additional financing to fund all of our operations. It is not possible at this time for us to predict with assurance the potential success of our business. The revenue and income potential of our proposed business and operations are unknown. If we cannot continue as a viable entity, we may be unable to continue our operations and you may lose some or all of your investment in our common stock.
We have limited operational history in an emerging industry, making it difficult to accurately predict and forecast business operation.
As we have less than ten years of corporate operational history and have yet to generate revenue under our new business model, it is extremely difficult to make accurate predictions and forecasts on our finances. This is compounded by the fact that we operate in both the alternative investments and blockchain technology sectors, which is a rapidly transforming technological sector. There is no guarantee that we will properly execute our business model in either sector.
As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We have not yet produced a net profit and may not in the near future, if at all. While we expect our revenue to grow, we have not achieved profitability and cannot be certain that we will be able to sustain our current growth rate or realize sufficient revenue to achieve profitability. Further, many of our competitors in the field of blockchain technology have a significantly larger user base and revenue stream, but have yet to achieve profitability. Our ability to continue as a going concern may be dependent upon raising capital from financing transactions, increasing revenue throughout the year and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.
We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.
We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new features and products or enhance our existing products, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we may need to engage in continued equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of our common stock. Any debt financing we secure in the future, could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be impaired, and our business may be harmed.
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We expect our quarterly financial results to fluctuate.
We expect our net sales and operating results to vary significantly from quarter to quarter due to a number of factors, including changes in:
| ● | Demand for our products; and | |
| ● | Our ability to obtain and retain existing customers; and | |
| ● | Our ability to develop our blockchain applications; and | |
| ● | General economic conditions, both domestically and in foreign markets; and | |
| ● | Advertising and other marketing costs; and | |
| ● | Costs of creating our blockchain applications; and | |
| ● | Retaining key personnel | |
| ● | Positive returns on our alternative investments. |
As a result of the variability of these and other factors, our operating results in future quarters may be below the expectations of our stockholders.
Risks Relating to Our Business and Industry
The Company has an evolving business model
As digital assets and blockchain technologies become more widely available, the Company expects the services and products associated with them to evolve. As a result, to stay current with the industry, the Company’s business model may need to evolve as well. From time to time, the Company may modify aspects of its business model relating to its product mix and service offerings. The Company cannot offer any assurance that these or any other modifications will be successful or will not result in harm to the business. The Company may not be able to manage growth effectively, which could damage its reputation, limit its growth and negatively affect its operating results. Such circumstances would have a material adverse effect on the ability of the Company to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on the business, prospects or operations of the Company .
We will need to raise additional capital to continue operations over the coming year.
We anticipate the need to raise approximately $4,000,000 in capital to fund our operations through December 31, 2019 . We expect to use these cash proceeds, primarily to acquire other blockchain based companies, joint ventures, retain additional key personnel and remain in full legal and accounting compliance with the SEC. We cannot guarantee that we will be able to raise these required funds or generate sufficient revenue to remain operational.
Our monetization strategy is dependent on many factors outside our control.
There is no guarantee that our efforts to monetize Square Chain Corporation, nor any of the companies we plan on acquiring, will be successful. Furthermore, our competitors may introduce more advanced consumer and business to business applications that deliver a greater value proposition to customers. Customers may stop using our business applications for many reasons, including the addition of advertising, preventing any monetization from occurring. The development of our busness plan may take longer than expected and cost more money than projected. As blockchain technology and the businesses developed around this technology are new technology, we anticipate there will be many changes and developments to occur around this technology that may disrupt our business model. All these factors individually or collectively may preclude us from effectively monetizing our business.
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Government actions or digital distribution platform restrictions could result in our products and services being unavailable in certain geographic regions, harming future growth.
Due to our connections to the blockchain industry, governments and government agencies could ban or cause our network or future apps to become unavailable in certain regions and jurisdictions. This could greatly impair or prevent us from registering new customers at our online portal in affected areas and prevent current customers from accessing the network. In addition, government action taken against our service providers, suppliers or partners could cause our network to become unavailable for extended periods of time.
Failure to identify and acquire technology and assets in the blockchain sector could greatly harm our business model.
Our business model is reliant on our ability to identify and acquire technology and assets within the blockchain sector. There is no guarantee that we will be successful in identifying viable companies or successful in acquiring any companies.
We may be unable to manage growth, which may impact our potential profitability.
Successful implementation of our business strategy requires us to manage our growth. Growth could place an increasing strain on our management and financial resources. To manage growth effectively, we will need to:
| ● | Establish definitive business strategies, goals and objectives; | |
| ● | Maintain a system of management controls; and | |
| ● | Attract and retain qualified personnel, as well as, develop, train and manage management-level and other employees. |
If we fail to manage our growth effectively, our business, financial condition or operating results could be materially harmed, and our stock price may decline.
We may not be able to compete successfully with other established companies offering the same or similar services and, as a result, we may not achieve our projected revenue and user targets.
If we are unable to compete successfully with other businesses in our existing market, we may not achieve our projected revenue and/or targets. We compete with both start-up and established financial and technology companies. Compared to our business, some of our competitors may have greater financial and other resources, have been in business longer, have greater name recognition and be better established in the traditional joint b investments and blockchain technology sectors.
We expect to operate in a highly competitive industry, and if we are not able to compete effectively, our business and operating results will be harmed.
We expect that many companies, large and small, will enter the market for blockchain applications. Blockchain users may also develop their own applications.
We anticipate that the software for blockchain services will continue to become more sophisticated and effective and that demand for our services could be adversely affected.
Our target market may be dominated by large, well-financed, and technologically sophisticated entities that have focused on blockchain solutions. We expect large integrated technology companies to become more active in our markets, both through acquisition and internal investment. As costs fall and technology improves, increased market saturation may change the competitive landscape in favor of competitors with greater scale than we possess. In addition, a few smaller companies may provide blockchain software using a model similar to ours; the offerings of these smaller companies may reduce the perceived competitive advantage of our services and impact our market share. If we fail to distinguish our offerings from the other options available, the demand for and market share of those offerings may decrease.
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We anticipate that certain of our future competitors will have greater name recognition, longer operating histories, and significantly greater resources than we do. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, or client requirements. In addition, current and potential competitors have established, and may in the future establish, cooperative relationships with vendors of complementary products, technologies, or services to increase the availability of their products to the marketplace. Current or future competitors may consolidate to improve the breadth of their products, directly competing with our integrated offerings. Accordingly, new competitors or alliances may emerge that have greater market share, larger client bases, more widely adopted proprietary technologies, broader offerings, greater marketing expertise, greater financial resources, and larger sales forces than we have, which could put us at a competitive disadvantage. Further, in light of these advantages, even if our services are more effective than the product or service offerings of our competitors, current or potential clients might accept competitive products and services in lieu of purchasing our services. Increased competition is likely to result in pricing pressures, which could negatively impact our sales, profitability, or market share. In addition to new niche vendors, who offer stand-alone products and services, we face competition from existing enterprise vendors, including those currently focused on software solutions, which have information systems in place with clients in our target market. These existing enterprise vendors may now, or in the future, offer or promise products or services with less functionality than our services, but that offer ease of integration with existing systems and that leverage existing vendor relationships.
Competing blockchain platforms and technologies.
The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or an alternative to distributed ledgers altogether. This may adversely affect the Company and its exposure to various blockchain technologies. Such circumstances would have a material adverse effect on the ability of the Company to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on the business, prospects or operations of the Company .
If we do not continue to innovate and provide services that are useful to users, we may not remain competitive, and our revenues and operating results could suffer.
Our success depends on providing services that our prospective users find valuable. Our competitors will constantly develop products and services that may become more efficient or appealing to our clients. As a result, we must continue to invest significant resources in research and development in order to enhance our existing services and introduce new high-quality services that clients will want. If we are unable to predict user preferences or industry changes, or if we are unable to modify our services on a timely basis, we may lose clients. Our operating results would also suffer if our innovations are not responsive to the needs of our clients, are not appropriately timed with market opportunity, or are not effectively brought to market. As technology continues to develop, our competitors may be able to offer results that are, or that are perceived to be, substantially similar to or better than those generated by our services. This may force us to compete on additional service attributes and to expend significant resources in order to remain competitive.
Failure to manage our rapid growth effectively could increase our expenses, decrease our revenue, and prevent us from implementing our business strategy.
After funding, we expect to experience a period of rapid growth. To manage our anticipated future growth effectively, we must continue to maintain, and may need to enhance, our information technology infrastructure and financial and accounting systems and controls, as well as manage expanded operations in geographically distributed locations. We also must attract, train, and retain a significant number of qualified sales and marketing personnel, professional services personnel, software engineers, technical personnel, and management personnel. Failure to manage our rapid growth effectively could lead us to over-invest or under-invest in technology and operations; result in weaknesses in our infrastructure, systems, or controls; give rise to operational mistakes, losses, or loss of productivity or business opportunities; and result in loss of employees and reduced productivity of remaining employees. Our growth could require significant capital expenditures and may divert financial resources and management attention from other projects, such as the development of new services. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our revenue could decline or may grow more slowly than expected, and we may be unable to implement our business strategy.
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We depend on key employees and face competition in hiring and retaining qualified employees.
Our employees are vital to our success, and our key management and other employees are difficult to replace. We currently do not have employment contracts with our key employees. We may not be able to retain highly qualified employees in the future which could adversely affect our business.
Our lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and officers.
We may in the future be subject to additional litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers liability (“D&O”) insurance. While neither Nevada law nor our Articles of Incorporation or bylaws require us to indemnify or advance expenses to our officers and directors involved in such a legal action, we have entered into an indemnification agreement with our President and intend to enter into similar agreements with other officers and directors in the future. Without adequate D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business.
We may experience significant losses from operations.
Even if we do generate operating income in one or more quarters in the future, subsequent developments in our industry, customer base, business or cost structure or an event such as significant litigation or a significant transaction may cause us to again experience operating losses. We may not become profitable for the long-term, or even for any quarter.
Because competition for our target employees is intense, we may not be able to attract and retain the highly skilled employees we need to support our planned growth.
To continue to execute on our growth plan, we must attract and retain highly qualified personnel. Competition for these personnel is intense, especially for senior sales executives and engineers with high levels of experience in designing and developing software and Internet-related services. We may not be successful in attracting and retaining qualified personnel. We have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we have. In addition, in making employment decisions, particularly in the Internet and high-technology industries, job candidates often consider the value of the equity awards they are to receive in connection with their employment. Volatility in the price of our stock or failure to obtain stockholder approval for increases in the number of shares available for grant under our equity plans may, therefore, adversely affect our ability to attract or retain key employees. Furthermore, the requirements to expense equity awards may discourage us from granting the size or type of equity awards that job candidates require to join our company. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely harmed.
If we acquire companies or technologies in the future, they could prove difficult to integrate, disrupt our business, dilute stockholder value, and adversely affect our operating results and the value of our common stock.
As part of our business strategy, we may acquire, enter into joint ventures with, or make investments in complementary companies, services, and technologies in the future. Acquisitions and investments involve numerous risks, including:
| ● | difficulties in identifying and acquiring products, technologies, or businesses that will help our business; |
| ● | difficulties in integrating operations, technologies, services, and personnel; |
| ● | diversion of financial and managerial resources from existing operations; |
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| ● | the risk of entering new markets in which we have little to no experience; |
| ● | risks related to the assumption of known and unknown liabilities; |
| ● | the risk of write-offs and the amortization of expenses related to purchased intangible assets; and |
| ● | delays in client purchases due to uncertainty and the inability to maintain relationships with clients of the acquired businesses. |
As a result, if we fail to properly evaluate acquisitions or investments, we may not achieve the anticipated benefits of any such acquisitions, we may incur costs in excess of what we anticipate, and management resources and attention may be diverted from other necessary or valuable activities.
We may choose to expand by strategic acquisitions of technology and assets. Completion of the any proposed acquisition is subject to various closing conditions, involves significant costs, and will require considerable attention from our management. Failure to complete the acquisition could adversely affect our stock price and our future business and operations.
The completion of the any proposed acquisition is subject to the satisfaction of various closing conditions, including the approval by target stockholders, and we cannot assure you that such conditions will be satisfied and that the acquisition will be successfully completed. In the event that the acquisition is not consummated, we will have spent considerable time and resources, and incurred substantial costs, including costs related to the acquisition, many of which must be paid even if the merger is not completed. If the acquisition is not consummated, our reputation in our industry and in the investment community could be damaged and, as a result, the market price of our common stock could decline.
We may fail to realize the anticipated benefits of any acquisition.
The success of any acquisition will depend on, among other things, our ability to combine our businesses in a manner that does not materially disrupt existing relationships and that allows us to achieve operational synergies and capitalize on the increased brand recognition and customer base of the combined company. If we are not able to achieve these objectives, the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected. In particular, the acquisition may not be accretive or accelerate sales in near or long term.
The integration process could result in the loss of key employees; the disruption of our ongoing businesses; or inconsistencies in standards, controls, procedures, or policies that could adversely affect our ability to maintain relationships with third parties and employees or to achieve the anticipated benefits of the acquisition. Integration efforts between the two companies will also divert management’s attention from our core business and other opportunities that could have been beneficial to our shareholders. An inability to realize the full extent of, or any of, the anticipated benefits of the acquisition, as well as any delays encountered in the integration process, could have an adverse effect on our business and results of operations, which may affect the value of the shares of our common stock after the completion of the acquisition.
Further, the actual integration may result in additional and unforeseen expenses. Operational improvements and actual cost synergies, if achieved at all, may be lower than we expect and may take longer to achieve than we anticipate. If we are not able to adequately address these challenges, we may be unable to realize the anticipated benefits of the integration of any acquisition.
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Risk Related to the Blockchain Business
We expect to derive revenue from a limited number of products and do not have a broadly-diversified product base.
We expect that a majority of our revenue will be derived from the sale of blockchain products. We also anticipate that a substantial portion of our future revenue, if any, will also be derived from these products and related services. If the sale of these products and services is impeded for any reason and we have not diversified our product offerings, our business and results of operations would be negatively impacted. This includes a diversification from hardware products to software solutions and related services; which transformation, if not successfully executed, could lead to reduced revenue.
The sales cycle for our products and technology may be long, and we may incur substantial expenses for sales that do not occur when anticipated.
The sales cycle for our products, which is the period of time between the identification of a potential customer and completion of the sale, is typically lengthy and subject to a number of significant risks over which we have little control. If revenue falls significantly below anticipated levels, our business would be seriously harmed.
Purchasing decisions for our products and systems may be subject to delays due to many factors that are not within our control, such as: (1) The time required for a prospective customer to recognize the need for our products; (2) The significant expense of many data products and network systems; (3) Customers’ internal budgeting processes; and (4) Internal procedures customers may require for the approval of large purchases.
As our operating expenses are based on anticipated revenue levels, a small fluctuation in the timing of sales can cause our operating results to vary significantly between periods.
We have a great dependence on a limited number of suppliers and the loss of their manufacturing capability could materially impact our operations.
In the event that the supply of components or finished products is interrupted or relations with any of our principal vendors is terminated, there could be increased costs and considerable delay in finding suitable replacement sources to manufacture our products.
We depend significantly upon our proprietary technology and intellectual property and the loss of or the successful challenge to our proprietary rights could require us to divert management attention and could reduce revenue and increase our operating costs.
From time to time, we may receive claims that we have infringed the intellectual property rights of others, including claims regarding patents, copyrights, and trademarks. Because of constant technological change in the segments in which we compete, the extensive patent coverage of existing technologies, and the rapid rate of issuance of new patents, it is possible that the number of these claims may grow. In addition, former employers of our former, current, or future employees may assert claims that such employees have improperly disclosed to us the confidential or proprietary information of these former employers. Any such claim, with or without merit, could result in costly litigation and distract management from day-to-day operations. If we are not successful in defending such claims, we could be required to stop selling, delay shipments of, or redesign our products, pay monetary amounts as damages, enter into royalty or licensing arrangements, or satisfy indemnification obligations that we have with our customers. We cannot assure you that any royalty or licensing arrangements that we may seek in such circumstances will be available to us on commercially reasonable terms or at all. We have made and expect to continue making significant expenditures to establish our intellectual property rights and to investigate, defend and settle claims related to the use of technology and intellectual property rights as part of our strategy to manage this risk. In addition, we license and use software from third parties in our business. These third-party software licenses may not continue to be available to us on acceptable terms or at all, and may expose us to additional liability. This liability, or our inability to use any of this third-party software, could result in shipment delays or other disruptions in our business that could materially and adversely affect our operating results.
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We will rely principally on trade secrets to protect much of our intellectual property in cases where we do not believe that patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. Although our employees are subject to confidentiality obligations, this protection may be inadequate to deter or prevent misappropriation of our confidential information. We may be unable to detect unauthorized use of our intellectual property or otherwise take appropriate steps to enforce our rights. Failure to obtain or maintain trade secret protection could adversely affect our competitive business position. If we are unable to prevent third parties from infringing or misappropriating our copyrights, trademarks or other proprietary information, our competitive position could be adversely affected. In the course of conducting our business, we may inadvertently infringe the intellectual property rights of others, resulting in claims against us or our customers. Our contracts generally indemnify our customers for third-party claims for intellectual property infringement by the services and products we provide. The expense of defending these claims may adversely affect our financial results.
Our patents and those of our partners may not provide us with competitive advantages.
Our partners may hold, and we may develop, several patents in the United States and in other countries, which cover multiple aspects of our technology. If these patents expire, this will affect revenues, profitability, or increase competition. In addition to the issued patents, there may also be several patents pending in the United States, Europe and other countries. There can be no assurance that we or our partners will continue to develop proprietary products or technologies that are patentable, that any issued patent will provide us with any competitive advantages or will not be challenged by third parties, or that patents of others will not hinder our competitive advantage.
We are subject to warranty and product liability risks.
A malfunction of or design defect in our products which results in a breach of a customer’s data security or physical harm or damage from our products could result in tort or warranty claims against us. We seek to reduce the risk of these losses by attempting to negotiate warranty disclaimers and liability limitation clauses in our sales agreements. However, these measures may ultimately prove ineffective in limiting our liability for damages.
In addition to any monetary liability for the failure of our products, an actual or perceived breach of network or data security at one of our customers could adversely affect the market’s perception of us and our products and could have an adverse effect on our reputation and the demand for our products. Similarly, an actual or perceived breach of network or data security within our own systems could damage our reputation and have an adverse effect on the demand for our products.
If we are unable to sell additional products and services to our end-customers, our future revenue and operating results will be harmed.
Our future success depends, in part, on our ability to expand the deployment of our platform with existing end-customers. This may require increasingly sophisticated and costly sales efforts that may not result in additional sales. The rate at which our end-customers purchase additional products and services depends on a number of factors, including the perceived need for additional security products and services as well as general economic conditions. Further, existing end-customers have no contractual obligation to and may not renew their subscription and support and maintenance contracts after the completion of their initial contract period. Our end-customers’ renewal rates may decline or fluctuate as a result of a number of factors, including their satisfaction with our services and our end-customer support, the frequency and severity of subscription outages, our product uptime or latency, and the pricing of our, or competing, services. Additionally, our end-customers may renew their subscription and support and maintenance services for shorter contract lengths or on other terms that are less economically beneficial to us. We also cannot be certain that our end-customers will renew their subscription and support and maintenance services. If our efforts to sell additional products and services to our end-customers are not successful or our end-customers do not renew their subscription and support and maintenance agreements or renew on less favorable terms, our revenues may grow more slowly than expected or decline.
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A network or data security incident may allow unauthorized access to our network or data, harm our reputation, create additional liability and adversely impact our financial results.
Increasingly, companies are subject to a wide variety of attacks on their networks on an ongoing basis. In addition to traditional computer “hackers,” malicious code (such as viruses and worms), phishing attempts, employee theft or misuse, and denial of service attacks, sophisticated nation-state and nation-state supported actors now engage in intrusions and attacks (including advanced persistent threat intrusions) and add to the risks to our internal networks and the information they store and process. Despite significant efforts to create security barriers to such threats, it is virtually impossible for us to entirely mitigate these risks. Furthermore, as a well-known provider of security solutions, we may be a more attractive target for such attacks. A breach in our data security could compromise our networks or networks secured by our products, creating system disruptions or slowdowns and exploiting security vulnerabilities of our products, and the information stored on our networks could be accessed, publicly disclosed, altered, lost, or stolen, which could subject us to liability and cause us financial harm. Although we have not yet experienced significant damages from unauthorized access by a third party of our internal network, any actual or perceived breach of network security in our internal systems could result in damage to our reputation, negative publicity, loss of channel partners, end-customers and sales, loss of competitive advantages over our competitors, increased costs to remedy any problems, and costly litigation. Any of these negative outcomes could adversely impact the market perception of our products and services and investor confidence in our company and could seriously harm our business or operating results.
If we are unable to hire, integrate, train, retain, and motivate qualified personnel and senior management, our business could suffer.
Our future success depends, in part, on our ability to continue to attract, integrate, and retain qualified and highly skilled personnel. We will be substantially dependent on the service of engineering personnel because of the complexity of our platform. Additionally, any failure to hire, train, and adequately incentivize our sales personnel or the inability of our recently hired sales personnel to effectively ramp to target productivity levels could negatively impact our growth and operating margins. Competition for highly skilled personnel, particularly in engineering, is often intense. Our geographical location, being outside the San Francisco Bay Area, may put us at a disadvantage. In addition, the industry in which we operate generally experiences high employee attrition. Although we have entered into employment offer letters with our key personnel, these agreements have no specific duration and constitute at-will employment. We do not maintain key person life insurance policies on any of our employees. The loss of one or more of our key employees could seriously harm our business. If we are unable to attract, integrate, or retain the qualified and highly skilled personnel required to fulfill our current or future needs, our business, financial condition, and operating results could be harmed.
Our future performance also depends on the continued services and continuing contributions of our senior management to execute on our business plan and to identify and pursue new opportunities and product innovations. The loss of services of senior management or the ineffective management of any leadership transitions, especially within in our sales organization, could significantly delay or prevent the achievement of our development and strategic objectives, which could adversely affect our business, financial condition, and operating results.
Further, we believe that a critical contributor to our success and our ability to retain highly skilled personnel has been our corporate culture, which we believe fosters innovation, teamwork, passion for end-customers, focus on execution, and the facilitation of critical knowledge transfer and knowledge sharing. As we grow and change, we may find it difficult to maintain these important aspects of our corporate culture. Any failure to preserve our culture as we grow could limit our ability to innovate and could negatively affect our ability to retain and recruit personnel, continue to perform at current levels or execute on our business strategy.
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Defects, errors, or vulnerabilities in our products or services, the failure of our products or services to block a virus or prevent a security breach, misuse of our products, or risks of product liability claims could harm our reputation and adversely impact our operating results.
Because our products and services are complex, they have contained and may contain design or manufacturing defects or errors that are not detected until after their commercial release and deployment by our end-customers. For example, from time to time, certain of our end-customers have reported defects in our products related to performance, scalability, and compatibility. Additionally, defects may cause our products or services to be vulnerable to security attacks, cause them to fail to help secure networks, or temporarily interrupt end-customers’ networking traffic. Because the techniques used by computer hackers to access or sabotage networks change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques and provide a solution in time to protect our end-customers’ networks. Furthermore, provider of blockchain solutions, our networks, products, including cloud-based technology, and services could be targeted by attacks specifically designed to disrupt our business and harm our reputation. In addition, defects or errors in our subscription updates or our products could result in a failure of our services to effectively update end-customers’ hardware and cloud-based products. Our data centers and networks may experience technical failures and downtime, may fail to distribute appropriate updates, or may fail to meet the increased requirements of a growing installed end-customer base, any of which could temporarily or permanently expose our end-customers’ networks, leaving their networks unprotected against the latest security threats. Moreover, our products must interoperate with our end-customers’ existing infrastructure, which often have different specifications, utilize multiple protocol standards, deploy products from multiple vendors, and contain multiple generations of products that have been added over time. As a result, when problems occur in a network, it may be difficult to identify the sources of these problems.
The occurrence of any such problem in our products, whether real or perceived, could result in:
| ● | expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate, or work-around errors or defects or to address and eliminate vulnerabilities; loss of existing or potential end-customers or channel partners; |
| ● | delayed or lost revenue; delay or failure to attain market acceptance; an increase in warranty claims compared with our historical experience, or an increased cost of servicing warranty claims, either of which would adversely affect our gross margins; and |
| ● | litigation, regulatory inquiries, or investigations that may be costly and harm our reputation. |
Further, our products may be misused by end-customers or third parties that obtain access to our products. For example, our products could be used to censor private access to certain information on the Internet. Such use of our products for censorship could result in negative press coverage and negatively affect our reputation.
The limitation of liability provisions in our standard terms and conditions of sale may not fully or effectively protect us from claims as a result of federal, state, or local laws or ordinances, or unfavorable judicial decisions in the United States or other countries. The sale and support of our products also entails the risk of product liability claims. Although we may be indemnified by our third-party manufacturers for product liability claims arising out of manufacturing defects, because we control the design of our products, we may not be indemnified for product liability claims arising out of design defects. We maintain insurance to protect against certain claims associated with the use of our products, but our insurance coverage may not adequately cover any claim asserted against us. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation, divert management’s time and other resources, and harm our reputation.
We will rely on our channel partners to sell substantially all of our products, and if these channel partners fail to perform, our ability to sell and distribute our products and services will be limited, and our operating results will be harmed.
A substantial amount of our revenue will be generated by sales through our channel partners, including distributors and resellers. We will provide our channel partners with specific training and programs to assist them in selling our products, but there can be no assurance that these steps will be effective. In addition, our channel partners may be unsuccessful in marketing, selling, and supporting our products and services. We may not be able to incentivize these channel partners to sell our products to end-customers and, in particular, to large enterprises. These channel partners may also have incentives to promote our competitors’ products and may devote more resources to the marketing, sales, and support of such competitive products. Our agreements with our channel partners may generally be terminated for any reason by either party with advance notice prior to each annual renewal date. We cannot be certain that we will retain these channel partners or that we will be able to secure additional or replacement channel partners. In addition, any new channel partner requires extensive training and may take several months or more to achieve productivity. Our channel partner sales structure could subject us to lawsuits, potential liability, and reputational harm if, for example, any of our channel partners misrepresent the functionality of our products or services to end-customers or violate laws or our corporate policies. If we fail to effectively manage our sales channels or channel partners, our ability to sell our products and services and operating results will be harmed.
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Our research and development efforts may not produce successful products or platform features that result in significant revenue, cost savings or other benefits in the near future, if at all.
Developing our products, platform features and related enhancements is expensive. Our investments in research and development may not result in significant design improvements, marketable products or platform features, or may result in products or platform features that are more expensive than anticipated. Additionally, we may not achieve the cost savings or the anticipated performance improvements we expect, and we may take longer to generate revenue, or generate less revenue, than we anticipate. Our future plans include significant investments in research and development and related product opportunities. We believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain our competitive position. However, we may not receive significant revenue from these investments in the near future, if at all, or these investments may not yield the expected benefits, either of which could adversely affect our business and operating results.
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A portion of our revenue may be generated by sales to government entities, which are subject to a number of challenges and risks.
Sales to government entities are subject to a number of risks. Selling to government entities can be highly competitive, expensive, and time-consuming, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale. The substantial majority of our sales to date to government entities have been made indirectly through our channel partners. Government certification requirements for products like ours may change, thereby restricting our ability to sell into the federal government sector until we have attained the revised certification. If our products are late in achieving or fail to achieve compliance with these certifications and standards, or our competitors achieve compliance with these certifications and standards, we may be disqualified from selling our products to such governmental entity, or be at a competitive disadvantage, which would harm our business, operating results, and financial condition. Government demand and payment for our products and services may be impacted by public sector budgetary cycles, contracting requirements, and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our products and services. Government entities may have statutory, contractual, or other legal rights to terminate contracts with our distributors and resellers for convenience or due to a default, and any such termination may adversely impact our future operating results. Governments routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government refusing to continue buying our products and services, a reduction of revenue, or fines or civil or criminal liability if the audit uncovers improper or illegal activities, which could adversely impact our operating results in a material way. Finally, for purchases by the U.S. government, the U.S. government may require certain products to be manufactured in the United States and other relatively high cost manufacturing locations, and we may not manufacture all products in locations that meet such requirements, affecting our ability to sell these products to the U.S. government.
Our ability to sell our products is dependent on the quality of our technical support services and those of our channel partners, and the failure to offer high-quality technical support services could have a material adverse effect on our end-customers’ satisfaction with our products and services, our sales, and our operating results.
After our products are deployed within our end-customers’ networks, our end-customers depend on our technical support services, as well as the support of our channel partners, to resolve any issues relating to our products. Our channel partners often provide similar technical support for third parties’ products and may therefore have fewer resources to dedicate to the support of our products. If we or our channel partners do not effectively assist our end-customers in deploying our products, succeed in helping our end-customers quickly resolve post-deployment issues, or provide effective ongoing support, our ability to sell additional products and services to existing end-customers would be adversely affected and our reputation with potential end-customers could be damaged. Many larger enterprise, service provider, and government entity end-customers have more complex networks and require higher levels of support than smaller end-customers. If we or our channel partners fail to meet the requirements of these larger end-customers, it may be more difficult to execute on our strategy to increase our coverage with larger end-customers. Additionally, if our channel partners do not effectively provide support to the satisfaction of our end-customers, we may be required to provide direct support to such end-customers, which would require us to hire additional personnel and to invest in additional resources. It can take several months to recruit, hire, and train qualified technical support employees. We may not be able to hire such resources fast enough to keep up with unexpected demand, particularly if the sales of our products exceed our internal forecasts. As a result, our and our channel partners’ ability to provide adequate and timely support to our end-customers will be negatively impacted, and our end-customers’ satisfaction with our products and services will be adversely affected. Additionally, to the extent that we may need to rely on our sales engineers to provide post-sales support while we are ramping our support resources, our sales productivity will be negatively impacted, which would harm our revenues. Our or our channel partners’ failure to provide and maintain high-quality support services could have a material adverse effect on our business, financial condition, and operating results.
Claims by others that we infringe their proprietary technology or other rights could harm our business.
Companies in the enterprise security industry own large numbers of patents, copyrights, trademarks, domain names, and trade secrets and frequently enter into litigation based on allegations of infringement, misappropriation, or other violations of intellectual property or other rights. Third parties have asserted and may in the future assert claims of infringement of intellectual property rights against us.
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Third parties may also assert such claims against our end-customers or channel partners, whom our standard license and other agreements obligate us to indemnify against claims that our products infringe the intellectual property rights of third parties. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited, that they have divulged proprietary or other confidential information, or that their former employers own their inventions or other work product. Furthermore, we may be unaware of the intellectual property rights of others that may cover some or all of our technology or products. As the number of products and competitors in our market increases and overlaps occur, infringement claims may increase. While we intend to increase the size of our patent portfolio, our competitors and others may now and in the future have significantly larger and more mature patent portfolios than we have. In addition, litigation may involve patent holding companies or other adverse patent owners who have no relevant product revenue and against whom our own patents may therefore provide little or no deterrence or protection. In addition, we have not registered our trademarks in all of our geographic markets and failure to secure those registrations could adversely affect our ability to enforce and defend our trademark rights. Any claim of infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim, could distract our management from our business, and could require us to cease use of such intellectual property. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. A successful claimant could secure a judgment or we may agree to a settlement that prevents us from distributing certain products or performing certain services or that requires us to pay substantial damages, royalties, or other fees. Any of these events could seriously harm our business, financial condition, and operating results.
Our proprietary rights may be difficult to enforce or protect, which could enable others to copy or use aspects of our products without compensating us.
We rely and expect to continue to rely on a combination of confidentiality and license agreements with our employees, consultants, and third parties with whom we have relationships, as well as trademark, copyright, patent, and trade secret protection laws, to protect our proprietary rights. We have filed various applications for certain aspects of our intellectual property. Valid patents may not issue from our pending applications, and the claims eventually allowed on any patents may not be sufficiently broad to protect our technology or products. We cannot be certain that we were the first to make the inventions claimed in our pending patent applications or that we were the first to file for patent protection, which could prevent our patent applications from issuing as patents or invalidate our patents following issuance. Additionally, the process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. Any issued patents may be challenged, invalidated or circumvented, and any rights granted under these patents may not actually provide adequate defensive protection or competitive advantages to us. Additional uncertainty may result from changes to patent-related laws and court rulings in the United States and other jurisdictions. As a result, we may not be able to obtain adequate patent protection or effectively enforce any issued patents.
Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we regard as proprietary. We generally enter into confidentiality or license agreements with our employees, consultants, vendors, and end-customers, and generally limit access to and distribution of our proprietary information. However, we cannot be certain that we have entered into such agreements with all parties who may have or have had access to our confidential information or that the agreements we have entered into will not be breached. We cannot guarantee that any of the measures we have taken will prevent misappropriation of our technology. Because we may be an attractive target for computer hackers, we may have a greater risk of unauthorized access to, and misappropriation of, our proprietary information. In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of the United States, and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the United States. From time to time, we may need to take legal action to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Such litigation could result in substantial costs and diversion of resources and could negatively affect our business, operating results, and financial condition. Attempts to enforce our rights against third parties could also provoke these third parties to assert their own intellectual property or other rights against us or result in a holding that invalidates or narrows the scope of our rights, in whole or in part. If we are unable to protect our proprietary rights (including aspects of our software and products protected other than by patent rights), we may find ourselves at a competitive disadvantage to others who need not incur the additional expense, time, and effort required to create the innovative products that have enabled us to be successful to date. Any of these events would have a material adverse effect on our business, financial condition, and operating results.
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Our use of open source software in our products could negatively affect our ability to sell our products and subject us to possible litigation.
Our products contain software modules licensed to us by third-party authors under “open source” licenses. Some open source licenses contain requirements that we make available applicable source code for modifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competitors to create similar products with lower development effort and time and ultimately could result in a loss of product sales for us.
Although we monitor our use of open source software to avoid subjecting our products to conditions we do not intend, the terms of many open source licenses have not been interpreted by United States courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products. From time to time, there have been claims against companies that distribute or use open source software in their products and services, asserting that open source software infringes the claimants’ intellectual property rights. We could be subject to suits by parties claiming infringement of intellectual property rights in what we believe to be licensed open source software. If we are held to have breached the terms of an open source software license, we could be required to seek licenses from third parties to continue offering our products on terms that are not economically feasible, to re-engineer our products, to discontinue the sale of our products if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, operating results, and financial condition.
In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or assurance of title or controls on origin of the software. In addition, many of the risks associated with usage of open source software, such as the lack of warranties or assurances of title, cannot be eliminated, and could, if not properly addressed, negatively affect our business. We have established processes to help alleviate these risks, including a review process for screening requests from our development organizations for the use of open source software, but we cannot be sure that our processes for controlling our use of open source software in our products will be effective.
We license technology from third parties, and our inability to maintain those licenses could harm our business.
We incorporate technology that we license from third parties, including software, into our products and services. We cannot be certain that our licensors are not infringing the intellectual property rights of third parties or that our licensors have sufficient rights to the licensed intellectual property in all jurisdictions in which we may sell our products. In addition, some licenses may be non-exclusive, and therefore our competitors may have access to the same technology licensed to us. Some of our agreements with our licensors may be terminated for convenience by them. If we are unable to continue to license any of this technology because of intellectual property infringement claims brought by third parties against our licensors or against us, or if we are unable to continue our license agreements or enter into new licenses on commercially reasonable terms, our ability to develop and sell products and services containing such technology would be severely limited, and our business could be harmed. Additionally, if we are unable to license necessary technology from third parties, we may be forced to acquire or develop alternative technology, which we may be unable to do in a commercially feasible manner or at all, and we may be required to use alternative technology of lower quality or performance standards. This would limit and delay our ability to offer new or competitive products and services and increase our costs of production. As a result, our margins, market share, and operating results could be significantly harmed.
Our failure to adequately protect personal information could have a material adverse effect on our business.
A wide variety of provincial, state, national, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data. These data protection and privacy-related laws and regulations are evolving and being tested in courts and may result in ever-increasing regulatory and public scrutiny as well as escalating levels of enforcement and sanctions. Further, the interpretation and application of foreign laws and regulations in many cases is uncertain, and our legal and regulatory obligations in foreign jurisdictions are subject to frequent and unexpected changes, including the potential for various regulatory or other governmental bodies to enact new or additional laws or regulations, to issue rulings that invalidate prior laws or regulations, or to increase penalties significantly. For example, the recently adopted E.U. General Data Protection Regulation imposes more stringent data protection requirements and provides for greater penalties for noncompliance. Our failure to comply with applicable laws and regulations, or to protect personal data, could result in enforcement action against us, including fines, imprisonment of company officials and public censure, claims for damages by end-customers and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing end-customers and prospective end-customers), any of which could have a material adverse effect on our operations, financial performance, and business. Evolving and changing definitions of personal data and personal information, within the E.U., the United States, and elsewhere, especially relating to classification of IP addresses, machine identification, location data, and other information, may limit or inhibit our ability to operate or expand our business, including limiting strategic partnerships that may involve the sharing of data. Even the perception of privacy concerns, whether or not valid, may harm our reputation and inhibit adoption of our products by current and future end-customers.
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If we do not effectively hire and train our direct sales force, we may be unable to add new customers or increase sales to our existing customers, and our business will be adversely affected.
We will be substantially dependent on our direct sales force to obtain new customers and increase sales with existing customers. There is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our growth, particularly in international markets. New hires require significant training and may take significant time before they achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. In addition, a large percentage of our sales force is new to our Company. If we are unable to hire and train a sufficient number of effective sales personnel, or the sales personnel we hire are not successful in obtaining new customers or increasing sales to our existing customer base, our business will be adversely affected.
Our future technology alliance partners may expose us to a range of business risks and uncertainties that could have a material adverse impact on our business and financial results.
We intend to enter into technology alliance partnerships with third parties to support our future growth plans. Such relationships include technology licensing, joint technology development and integration, research cooperation, co-marketing activities and sell-through arrangements. We face a number of risks relating to our technology alliance partnerships that could prevent us from realizing the desired benefits from such partnerships on a timely basis or at all, which, in turn, could have a negative impact on our business and financial results.
Technology alliance partnerships require significant coordination between the parties involved, particularly if a partner requires that we integrate its products with our products. This could involve a significant commitment of time and resources by our technical staff and their counterparts within our technology alliance partner. The integration of products from different companies may be more difficult than we anticipate, and the risk of integration difficulties, incompatible products and undetected programming errors or defects may be higher than the risks normally associated with the introduction of new products. It may also be more difficult to market and sell products developed through technology alliance partnerships than it would be to market and sell products that we develop on our own. Sales and marketing personnel may require special training, as the new products may be more complex than our other products.
We
will invest significant time, money and resources to establish and maintain relationships with our technology alliance partners,
but we have no assurance that any particular relationship will continue for any specific period of time. Generally, our agreements
with these technology alliance partners are terminable without cause with no or minimal notice or penalties. If we lose a significant
technology alliance partner, we could lose the benefit of our investment of time, money and resources in the relationship. In
addition, we could be required to incur significant expenses to develop a new strategic alliance or to determine and implement
an alternative plan to pursue the opportunity that we targeted with the former partner.
If our products do not effectively interoperate with our customers’ IT infrastructure, installations could be delayed or cancelled, which would harm our business.
Our products must effectively interoperate with our customers’ existing or future IT infrastructure, which often has different specifications, utilizes multiple protocol standards, deploys products from multiple vendors, and contains multiple generations of products that have been added over time. As a result, when problems occur in a network, it may be difficult to identify the sources of these problems. If we find errors in the existing software or defects in the hardware used in our customers’ infrastructure or problematic network configurations or settings, we may have to modify our software or hardware so that our products will interoperate with our customers’ infrastructure. In such cases, our products may be unable to provide significant performance improvements for applications deployed in our customers’ infrastructure. These issues could cause longer installation times for our products and could cause order cancellations, either of which would adversely affect our business, results of operations and financial condition. In addition, government and other customers may require our products to comply with certain security or other certifications and standards. If our products are late in achieving or fail to achieve compliance with these certifications and standards, or our competitors achieve compliance with these certifications and standards, we may be disqualified from selling our products to such customers, or may otherwise be at a competitive disadvantage, either of which would harm our business, results of operations, and financial condition.
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We may not be able to compete successfully with other established companies offering the same or similar services and, as a result, we may not achieve our projected revenue and user targets.
If we are unable to compete successfully with other businesses in our existing market, we may not achieve our projected revenue and/or customer targets. We compete with both start-up and established blockchain technology companies. Compared to our business, some of our competitors may have greater financial and other resources, have been in business longer, have greater name recognition and be better established in the blockchain or technological markets.
Government regulation of the Blockchain industry and digital assets is evolving, and unfavorable changes could substantially harm our business and results of operations.
We are subject to general business regulations and laws as well as Federal and state regulations and laws specifically governing securities and digital assets. Existing and future laws and regulations may impede the growth of the Internet, e-commerce or other online services, and increase the cost of providing online services. These regulations and laws may cover taxation, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, broadband residential Internet access and the characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales, use and other taxes, libel and personal privacy apply to the Internet and e-commerce. Unfavorable resolution of these issues may harm our business and results of operations.
The failure to enforce and maintain our intellectual property rights could enable others to use names confusingly similar to Square Chain Corporation and other names and marks used by our business, which could adversely affect the value of the brand.
The success of our business depends on our continued ability to use our existing trade name in order to increase our brand awareness. In that regard, we believe that our trade name is valuable asset that is critical to our success. As of the date of this prospectus, we have not submitted our trademark application for our name, Square Chain Corporation In the event we elect to submit an application to the U.S. Patent and Trademark Office, there is no guarantee that they will grant us a trademark. The unauthorized use or other misappropriation of our trade name could diminish the value of our business concept and may cause a decline in our revenue.
We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.
We estimate that it will cost approximately $50,000 annually to maintain the proper management and financial controls for our filings required as a public reporting company. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock price and adversely affect our ability to raise capital.
Due to our involvement in the blockchain industry, we may have a difficult time obtaining the various insurances that are desired to operate our business, which may expose us to additional risk and financial liabilities.
Insurance that is otherwise readily available, such as general liability, and directors and officer’s insurance, may become more difficult for us to find and more expensive, because we are a service provider to companies in the digital asset sector. There are no guarantees that we will be able to find such insurances in the future, or that the cost will be affordable to us. If we are forced to go without such insurances, it may prevent us from entering into certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities. In 2018, Square Chain Corporation expects to begin offering health, dental and vision insurance to its employees at an estimated monthly cost of $1,000-$2,000 . Square Chain Corporation will carry general liability insurance. We do not currently hold any other forms of insurance, including directors’ and officers’ insurance. Because we do not have any other types of insurance, if we are made a party of a legal action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations.
Forms of Attack Against the Ethereum Network
Exploitation of Flaws in the Ethereum Network’s Source Code
As with any other computer code, the Ethereum Network source code may contain certain flaws. Several errors and defects have been found and corrected, including those that disabled some functionality for users, exposed users’ information, or allowed users to create multiple views of the Ethereum Network. Such flaws have been discovered and quickly corrected by the Core Developers or the Ethereum community, thus demonstrating one of the advantages of open source codes that are available to the public: open source codes rely on transparency to promote community-sourced identification and solution of problems within the code.
Greater than Fifty Percent of Network Computational Power
Malicious actors can structure an attack whereby such actor gains control of more than half of the Ethereum Network’s processing power or “hashrate.” Computer scientists and cryptographers believe that the immense collective processing power of the Ethereum Network makes it impracticable for an actor to gain control of computers representing a majority of the processing power on the Ethereum Network.
If a malicious actor acquired sufficient computational power necessary to control the Ethereum Network (which amount would be well in excess of fifty percent), it would be able to engage in double-spending, or prevent some or all transactions from being confirmed, and prevent some or all other miners from mining any valid new blocks. The malicious actor or group of actors, however, would not be able to reverse other people’s transactions, change the fixed number of Ethers generated per new block, or transfer previously existing Ether that belong to other users.
Cancer Nodes
This form of attack involves a malicious actor propagating “cancer nodes” to isolate certain users from the legitimate Ethereum Network. A target user functionally surrounded by cancer nodes would be put on a separate “network,” allowing the malicious actor to relay only blocks created by the separate network and thus opening the target user to double-spending attacks. By using cancer nodes, a malicious actor also can disconnect the target user from the Ethereum economy entirely by refusing to relay any blocks or transactions. Ethereum software programs make these attacks more difficult by limiting the number of outbound connections through which users are connected to the Ethereum Network.
Manipulating Blockchain Formation
A malicious actor may attempt to double-spend Ether by manipulating the formation of the Blockchain rather than through control of the Ethereum Network. In this type of attack, a miner creates a valid new block containing a double-spend transaction and schedules the release of such attack block so that it is added to the Blockchain before a target user’s legitimate transaction can be included in a block. All double-spend attacks require that the miner sequence and execute the steps of its attack with sufficient speed and accuracy. Users and merchants can dramatically reduce the risk of a double-spend attack by waiting for multiple confirmations from the Ethereum Network before settling a transaction. The Ethereum Network still may be used to execute instantaneous, low-value transactions without confirmation to the extent the recipient of Ether determines that a malicious miner would be unwilling to carry out a double-spend attack for low-value transactions because the reward from mining would be higher than the small profit gained from double-spending. Users and merchants can take additional precautions by adjusting their Ethereum Network software programs to connect only to other well-connected nodes and to disable incoming connections. These precautions reduce the risk of double-spend attacks involving manipulation of a target’s connectivity to the Ethereum Network.
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General Business Risks
Nevada law may make it more difficult and time-consuming to acquire the Company, thereby reducing our vulnerability to an unsolicited proposal for our takeover.
Under Nevada law, a qualified corporation shall not, directly or indirectly, enter into or engage in any business combination with any interested stockholder or any affiliate or associate of the interested shareholder for a period of three (3) years after the date the stockholder became an interested stockholder, unless: (i) Prior to the time the stockholder became an interested stockholder, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; or (iii) On or after the time the stockholder became an interested stockholder, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds (2/3) of the outstanding voting stock which is not owned by the interested stockholder.
Our business and operations may experience rapid growth. If we fail to manage our growth, our business and operating results could be harmed and we may have to incur significant expenditures to address the additional operational and control requirements of this growth.
We may experience rapid growth in our sales and operations, which may place significant demands on our management, operational and financial infrastructure. If we do not manage our growth, the quality of our products and services could suffer, which could negatively affect our brand and operating results. To manage this growth, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures. These systems enhancements and improvements will require significant capital expenditures and allocation of valuable management resources. If the improvements are not implemented successfully, our ability to manage our growth will be impaired and we may have to make significant additional expenditures to address these issues, which could harm our financial position. The required improvements may include: Enhancing our information and communication systems to attempt to optimize proper service to our customers, and Enhancing systems of internal controls to ensure timely and accurate reporting of all of our operations
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our stock.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our brand and operating results could be harmed. We may in the future discover areas of our internal controls that need improvement. We cannot be certain that any measures we implement will ensure that we achieve and maintain adequate controls over our financial processes and reporting in the future. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.
We have no operating history under our new business model utilizing blockchain technology in an emerging and rapidly evolving market. This makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
We have no operating history under our new business model utilizing blockchain technology. You must consider our business and prospects in light of the risks and difficulties we will encounter as an early-stage company in a new and rapidly evolving market. We may not be able to successfully address these risks and difficulties, which could materially harm our business and operating results.
We cannot be certain that additional financing will be available on reasonable terms when required, or at all.
From time to time, we may need additional financing. Our ability to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition of the capital markets, and other factors. We cannot assure you that additional financing will be available to us on favorable terms when required, or at all. We may need to raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences, or privileges senior to the rights of our Common Stock, and our existing stockholders may experience dilution.
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Rapid technological changes.
The industries in which the Company intends to compete with are subject to rapid technological changes. No assurances can be given that the technological advantages which may be enjoyed by the Company in respect of their technologies cannot or will not be overcome by technological advances in the respective industries rendering the Company’s technologies obsolete or non-competitive.
Lack of indications of product acceptability.
The success of the Company will be dependent upon its ability to develop commercially acceptable products and to sell such products in quantities sufficient to yield profitable results. To date, the Company has received no indications of the commercial acceptability of any of its proposed products. Accordingly, the Company cannot predict whether its products can be marketed and sold in a commercial manner.
Reliance upon third parties.
The Company does not intend on maintaining a significant technical staff nor does it intend on manufacturing its products. Rather it will rely heavily on consultants, contractors, and manufacturers to design, develop and manufacture its products. Accordingly, there is no assurance that such third parties will be available when needed at affordable prices.
Protection of intellectual property.
The success of the Company will be dependent, in part, upon the protection of its various proprietary technologies from competitive use. Certain of its technologies are the subject of various patents in varying jurisdictions. In addition to the patent applications, the Company relies on a combination of trade secrets, nondisclosure agreements and other contractual provisions to protect its intellectual property rights. Nevertheless, these measures may be inadequate to safeguard the Company’s underlying technologies. If these measures do not protect the intellectual property rights, third parties could use the Company’s technologies, and its ability to compete in the market would be reduced significantly.
In the future, the Company may be required to protect or enforce its patents and patent rights through patent litigation against third parties, such as infringement suits or interference proceedings. These lawsuits could be expensive, take significant time, and could divert management’s attention from other business concerns. These actions could put the Company’s patents at risk of being invalidated or interpreted narrowly, and any patent applications at risk of not issuing. In defense of any such action, these third parties may assert claims against the Company. The Company cannot provide any assurance that it will have sufficient funds to vigorously prosecute any patent litigation, that it will prevail in any of these suits, or that the damages or other remedies awarded, if any, will be commercially valuable. During the course of these suits, there may be public announcements of the results of hearings, motions and other interim proceedings or developments in the litigation, which could result in the negative perception by investors, which could cause the price of the Company’s common stock to decline dramatically.
Risks Related to this Offering
We are a shell company pursuant to Rule 405 of the Securities Act. This may impact our ability to attract additional capital.
We have no assets and our operations appear to have been primarily organizational since we discontinued previous operations as of March 5, 2018. We are a shell company pursuant to Rule 405 of the Securities Act. The consequences of shell company status may affect our ability attract additional capital. Under SEC Rule 144 restricted and control securities may be resold in reliance on Rule 144 unless and until the company has has ceased to be a shell company, is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act, has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, during the preceding 12 months and has filed current “Form 10 information” with the SEC reflecting its status as an entity. When these conditions are satisfied, then those securities may be sold subject to the requirements Rule 144 after one year has elapsed from the date that the issuer filed “Form 10 information” with the SEC.
The unavailability of Rule 144 may affect our ability to attract additional capital as investors may not be willing to purchase restricted or control securities unless they can sell under Rule 144.
There has been a limited public market for our Common Stock prior to this Offering, and an active market in which investors can resell their shares may not develop.
Prior to this Offering, there has been a limited public market for our Common Stock. We cannot predict the extent to which an active market for our Common Stock will develop or be sustained after this Offering, or how the development of such a market might affect the market price of our Common Stock. The initial offering price of our Common Stock in this Offering will be agreed between us and the underwriters based on a number of factors, including market conditions in effect at the time of the Offering, and it may not be in any way indicative of the price at which our shares will trade following the completion of this Offering. Investors may not be able to resell their shares at or above the initial offering price.
Investors in this Offering will experience immediate and substantial dilution.
If all of the shares offered hereby are sold, investors in this Offering will own 31.0% of the then outstanding shares of all classes of common stock, resulting in a dilution of $0.036 per share to investors in this offering. Please see “Dilution” for further information.
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The market price of our Common Stock may fluctuate, and you could lose all or part of your investment.
The offering price for our Common Stock will be set by us based on a number of factors and may not be indicative of prices that will prevail on OTCMarkets or elsewhere following this Offering. The price of our Common Stock may decline following this Offering. The stock market in general, and the market price of our Common Stock will likely be subject to fluctuation, whether due to, or irrespective of, our operating results, financial condition and prospects.
Our financial performance, our industry’s overall performance, changing consumer preferences, technologies and advertiser requirements, government regulatory action, tax laws and market conditions in general could have a significant impact on the future market price of our Common Stock. Some of the other factors that could negatively affect our share price or result in fluctuations in our share price include:
| ● | actual or anticipated variations in our periodic operating results; |
| ● | changes in earnings estimates; |
| ● | changes in market valuations of similar companies; |
| ● | actions or announcements by our competitors; |
| ● | adverse market reaction to any increased indebtedness we may incur in the future; |
| ● | additions or departures of key personnel; |
| ● | actions by stockholders; |
| ● | speculation in the press or investment community; and |
| ● | our intentions and ability to list our Common Stock on a national securities exchange and our subsequent ability to maintain such listing. |
We do not expect to declare or pay dividends in the foreseeable future.
We do not expect to declare or pay dividends in the foreseeable future, as we anticipate that we will invest future earnings in the development and growth of our business. Therefore, holders of our Common Stock will not receive any return on their investment unless they sell their securities, and holders may be unable to sell their securities on favorable terms or at all.
Our financial statements are unaudited and have not been reviewed by an independent accountant.
Management has prepared the Company’s financial statements. These statements have not been audited. No independent accountant has reviewed these financial statements.
Because we do not have an audit or compensation committee, shareholders will have to rely on our directors, none of whom is not independent, to perform these functions.
We do not have an audit or compensation committee comprised of an independent director. Indeed, we do not have any audit or compensation committee. The Board of Directors performs these functions as a whole. No members of the Board of Directors are an independent director. Thus, there is a potential conflict in that board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions.
Because we lack certain internal controls over financial reporting in that we do not have an audit committee and our Board of Directors has no technical knowledge of U.S. GAAP and internal control of financial reporting and relies upon the Company’s financial personnel to advise the Board on such matters, we are subject to increased risk related to financial statement disclosures.
We lack certain internal controls over financial reporting in that we do not have an audit committee and our Board of Directors has no technical knowledge of U.S. GAAP and internal control of financial reporting and relies upon the Company’s financial personnel to advise the Board on such matters. Accordingly, we are subject to increased risk related to financial statement disclosures.
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Our control shareholder holds a significant percentage of our outstanding voting securities, which could reduce the ability of minority shareholders to effect certain corporate actions.
Our control shareholder is the beneficial owner of 100.00% of our Series B Preferred Stock, which, along with his ownership of common stock, controls 94.7% of the voting securities prior to the Offering and 64.0% of our outstanding voting securities after the Offering, assuming all 80,000,000 shares of common stock in this Offering are sold. As a result of this ownership, he possesses and can continue to possess significant influence and can elect and can continue to elect a majority of our Board of Directors and authorize or prevent proposed significant corporate transactions. His ownership and control may also have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer.
Upon completion of this offering, we will not be subject to the current and periodic reporting requirements.
As a Regulation A, Tier 1 issuer, you will not be subject to the periodic and current reporting requirements under Rule 257(b) of Regulation A.
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The preparation of our consolidated financial statements involves the use of estimates, judgments and assumptions, and our consolidated financial statements may be materially affected if such estimates, judgments or assumptions prove to be inaccurate.
Financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) typically require the use of estimates, judgments and assumptions that affect the reported amounts. Often, different estimates, judgments and assumptions could reasonably be used that would have a material effect on such financial statements, and changes in these estimates, judgments and assumptions may occur from period to period over time. Significant areas of accounting requiring the application of management’s judgment include, but are not limited to, determining the fair value of assets and the timing and amount of cash flows from assets. These estimates, judgments and assumptions are inherently uncertain and, if our estimates were to prove to be wrong, we would face the risk that charges to income or other financial statement changes or adjustments would be required. Any such charges or changes could harm our business, including our financial condition and results of operations and the price of our securities. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the accounting estimates, judgments and assumptions that we believe are the most critical to an understanding of our consolidated financial statements and our business.
If securities industry analysts do not publish research reports on us, or publish unfavorable reports on us, then the market price and market trading volume of our Common Stock could be negatively affected.
Any trading market for our Common Stock will be influenced in part by any research reports that securities industry analysts publish about us. We do not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of us, the market price and market trading volume of our Common Stock could be negatively affected. In the event we are covered by analysts, and one or more of such analysts downgrade our securities, or otherwise reports on us unfavorably, or discontinues coverage or us, the market price and market trading volume of our Common Stock could be negatively affected.
Future issuances of our Common Stock or securities convertible into our Common Stock, or the expiration of lock-up agreements that restrict the issuance of new Common Stock or the trading of outstanding stock, could cause the market price of our Common Stock to decline and would result in the dilution of your shareholding.
Future issuances of our Common Stock or securities convertible into our Common Stock, and/or conversion of the Notes convertible into Common Stock, or the expiration of lock-up agreements that restrict the sale of Common Stock by selling shareholders, or the trading of outstanding stock, could cause the market price of our Common Stock to decline. We cannot predict the effect, if any, of the exercise of conversion of the Notes into Common Stock or other future issuances of our Common Stock or securities convertible into our Common Stock, or the future expirations of lock-up agreements, on the price of our Common Stock. In all events, future issuances of our Common Stock would result in the dilution of your shareholding. In addition, the perception that locked-up parties will sell their securities when the lock-ups expire, could adversely affect the market price of our Common Stock.
Our shares are subject to the penny stock rules, making it more difficult to trade our shares.
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. If the price of our Common Stock is less than $5.00, our Common Stock will be deemed a penny stock. The penny stock rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our Common Stock, and therefore stockholders may have difficulty selling their shares.
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Our management has broad discretion as to the use of certain of the net proceeds from this Offering.
We intend to use up to $400,000 of the net proceeds from this Offering (if we sell all of the shares being offered) for working capital and other general corporate purposes. However, we cannot specify with certainty the particular uses of such proceeds. Our management will have broad discretion in the application of the net proceeds designated for use as working capital or for other general corporate purposes. Accordingly, you will have to rely upon the judgment of our management with respect to the use of these proceeds. Our management may spend a portion or all of the net proceeds from this Offering in ways that holders of our Common Stock may not desire or that may not yield a significant return or any return at all. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may also invest the net proceeds from this Offering in a manner that does not produce income or that loses value. Please see “Use of Proceeds” below for more information.
Cautionary Statement Regarding Forward-Looking Statements
This Offering Circular contains various “forward-looking statements.” You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “would,” “could,” “should,” “seeks,” “approximately,” “intends,” “plans,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements may be impacted by a number of risks and uncertainties.
The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our Securities. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors.”
If we sell all of the shares being offered, our net proceeds (after our estimated offering expenses of $400,000) will be $3,600,000. We will use these net proceeds for:
If 25% of the Shares offered are sold:
| Percentage of Offering Sold | Offering Proceeds | Approximate Offering Expenses |
Total Net Offering Proceeds | Principal Uses of Net Proceeds | ||||||||||||
| Blockchain Software Development $346,000 | ||||||||||||||||
| Salaries $100,000 | ||||||||||||||||
| Acquire Blockchain Assets $75,022 | ||||||||||||||||
| Legal $25,000 | ||||||||||||||||
| Marketing $20,000 | ||||||||||||||||
| Consulting $80,000 | ||||||||||||||||
| Working capital $180,000 | ||||||||||||||||
| Loan Repayment $73,978 | ||||||||||||||||
| 25.00 | % | $ | 1,000,000 | $ | 100,000 | $ | 900,000 | |||||||||
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If 50% of the Shares offered are sold:
| Percentage of Offering Sold | Offering Proceeds | Approximate Offering Expenses |
Total Net Offering Proceeds | Principal Uses of Net Proceeds | ||||||||||||
| Blockchain Software Development $800,000 | ||||||||||||||||
| Salaries $200,000 | ||||||||||||||||
| Acquire Blockchain Assets $231,022 | ||||||||||||||||
| Legal $35,000 | ||||||||||||||||
| Marketing $90,000 | ||||||||||||||||
| Consulting $180,000 | ||||||||||||||||
| Working capital $607,500 | ||||||||||||||||
| Loan Repayment $73,978 | ||||||||||||||||
| 50.00 | % | $ | 2,000,000 | $ | 200,000 | $ | 1,800,000 | |||||||||
If 100% of the Shares offers are sold:
| Percentage of Offering Sold | Offering Proceeds | Approximate Offering Expenses | Total Net Offering Proceeds | Principal Uses of Net Proceeds | ||||||||||||
| Blockchain Software Development $1,720,900 ` | ||||||||||||||||
| Salaries $300,000 | ||||||||||||||||
| Acquire Blockchain Assets $605,122 | ||||||||||||||||
| Legal $80,000 | ||||||||||||||||
| Marketing $70,000 | ||||||||||||||||
| Consulting $250,000 | ||||||||||||||||
| Working capital $500,000 | ||||||||||||||||
| Loan Repayment $73,978 | ||||||||||||||||
| 100.00 | % | $ | 4,000,000 | $ | 400,000 | $ | 3,600,000 | |||||||||
The precise amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors.
As indicated in the table above, if we sell only 25% or 50% of the shares offered for sale in this Offering, we would expect to use the resulting net proceeds for the same purposes as we would use the net proceeds from a sale of 100% of the shares, and in approximately the same proportions, until such time as such use of proceeds would leave us without working capital reserve. At that point we would expect to modify our use of proceeds by limiting our expansion, leaving us with the working capital reserve indicated.
The expected use of net proceeds from this Offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve and change. The amounts and timing of our actual expenditures, specifically with respect to working capital, may vary significantly depending on numerous factors. The precise amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors. As a result, our management will retain broad discretion over the allocation of the net proceeds from this Offering.
In the event we do not sell all of the shares being offered, we may seek additional financing from other sources in order to support the intended use of proceeds indicated above. If we secure additional equity funding, investors in this Offering would be diluted. In all events, there can be no assurance that additional financing would be available to us when wanted or needed and, if available, on terms acceptable to us.
If you purchase shares in this Offering, your ownership interest in our Common Stock will be diluted immediately, to the extent of the difference between the price to the public charged for each share in this Offering and the net tangible book value per share of our Common Stock after this Offering.
Our historical net tangible book value as of March 31, 2018 was $(75,978) or $(0.0004) per then-outstanding share of our Common Stock. Historical net tangible book value per share equals the amount of our total tangible assets less total liabilities, divided by the total number of shares of our Common Stock outstanding, all as of the date specified.
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The following table illustrates the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 50% and 25% of the shares offered for sale in this Offering (after deducting estimated offering expenses of $400,000, $200,000 and $100,000, respectively):
| Percentage of shares offered that are sold | 100% | 50% | 25% | |||||||||
| Price to the public charged for each share in this Offering | $ | 0.0500 | $ | 0.0500 | 0.05 | |||||||
| Historical net tangible book value per share as of March 31, 2018 (1) | (0.0004 | ) | (0.0004 | ) | (0.0004 | ) | ||||||
| Increase in net tangible book value per share attributable to new investors in this Offering (2) | $ | 0.0141 | $ | 0.0086 | $ | 0.0043 | ||||||
| Net tangible book value per share, after this Offering | $ | 0.0137 | $ | 0.0079 | $ | 0.0042 | ||||||
| Dilution per share to new investors | $ | 0.0363 | $ | 0.0461 | $ | 0.0458 | ||||||
| (1) | Based on net tangible book value as of March 31, 2018 of $(75,978) and 177,748,501 outstanding shares of Common stock. |
| (2) | After deducting estimated offering expenses of $400,000, $200,000, and $100,000, respectively. |
During the quarter ended March 31, 2018, the Company’s President, CEO, CFO, Secretary and Chairman of the Board, Mr. Jeffrey J. Parker, provided advances to the Company for working capital purposes for a total of $73,978 in related party advances currently outstanding due upon demand. On March 27, 2018, the Company issued an 5% unsecured promissory note to Mr. Parker in the amount of $73,978. As of June 7, 2018, $73,978 was outstanding with accrued interest of $719.51 which is reflected as accounts payable and notes payable – related party in the accompanying unaudited balance sheets. Please see Note- 9.2 Related party balances for further information.
On April 15, 2018, the Company issued 7,500,000 shares of its common stock to Jeffrey J. Parker for his acceptance of the roles of Chief Executive Officer, Chief Financial Officer and Chairman of the Board. Mr. Parker was not required to purchase the shares thus his cost basis is $0. On the date of issuance, the Company’s common stock closed at $.05, which equates to a valuation of $375,000. If the same number of shares were to be purchased through the Company’s offering statement, the cost basis to the purchaser would be $.05 per share for a total of $375.000.
Percentage Ownership Not Including Certain Shares
| Share Structure | Number of Shares Outstanding | Percent of Class Before Offering | Percent of Class After Offering | |||||||||
| Shares outstanding prior to offering (a) | 178,748,501 | 100.00 | % | 69.35 | % | |||||||
| Shares offered in offering (b) | 80,000,000 | 0.00 | % | 30.65 | % | |||||||
| Total shares | 258,748,501 | 100 | % | 100 | % | |||||||
| (a) | Shares outstanding prior to the Offering Statement not including the 7,500,000 shares issued to Jeffrey J. Parker. | |
| (b) | Total shares outstanding after the offering equals 258,748,501 and assumes that all shares in the offering are sold. |
Percentage Ownership Including All Shares Issued and Outstanding
| Share Structure | Number of Shares Beneficially Owned | Percent of Class Before Offering | Percent of Class After Offering | |||||||||
| Shares outstanding prior to offering (a) | 178,748,501 | 95.97 | % | 67.14 | % | |||||||
| Shares issued to Jeffrey J. Parker | 7,500,000 | 4.03 | % | 2.81 | % | |||||||
| Shares offered in offering (b) | 80,000,000 | 0 | % | 30.05 | % | |||||||
| Total shares | 266,248,501 | 100 | % | 100 | % | |||||||
| (a) | The 7,500,00 shares issued to Jeffrey J. Parker included in the Percent of Class Before and After Offering | |
| (b) | Total shares outstanding after the offering equals 266,248,501 and assumes that all shares in the offering are sold. | |
| (c) | Purchasers of the shares in the offering statement are diluted by 0.60% due to the 7,500,000 shares issued to Mr. Parker |
This Offering Circular is part of an Offering Statement that we filed with the SEC, using a continuous offering process. Periodically, as we have material developments, we will provide an Offering Circular supplement that may add, update or change information contained in this Offering Circular. Any statement that we make in this Offering Circular will be modified or superseded by any inconsistent statement made by us in a subsequent Offering Circular supplement. The Offering Statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this Offering Circular. You should read this Offering Circular and the related exhibits filed with the SEC and any Offering Circular supplement, together with additional information contained in our annual reports, semi-annual reports and other reports and information statements that we will file periodically with the SEC. See the section entitled “Additional Information” below for more details.
Exchange Listing
Our Common Stock is quoted on the OTC Markets’ Pink Open Market under the symbol “SQCC.” The Company’s previous trading symbol was “ATSR.”
Pricing of the Offering
Prior to the Offering, there has been a limited public market for the Offered Shares. The initial public offering price was determined by us. The principal factors considered in determining the initial public offering price include:
| ● | the information set forth in this Offering Circular and otherwise available; |
| ● | our history and prospects and the history of and prospects for the industry in which we compete; |
| ● | our past and present financial performance; |
| ● | our prospects for future earnings and the present state of our development; |
| ● | the general condition of the securities markets at the time of this Offering; |
| ● | the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and |
| ● | other factors deemed relevant by us. |
Offering Period and Expiration Date
This Offering will start on or after the Qualification Date and will terminate if the Maximum Offering is reached or, if it not is reached, on the Termination Date.
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Procedures for Subscribing
When you decide to subscribe for Offered Shares in this Offering, you should:
Go to www.minivest.com, click on the “Invest Now” button and follow the procedures as described.
| 1. | Electronically receive, review, execute and deliver to us a subscription agreement; and |
| 2. | Deliver funds directly by wire or electronic funds transfer via ACH to the specified account maintained by us. |
Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. We shall only deliver such subscription agreement upon request after a potential investor has had ample opportunity to review this Offering Circular.
Right to Reject Subscriptions. After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to the escrow account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.
Acceptance of Subscriptions. Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the shares subscribed at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.
Under Rule 251 of Regulation A, non-accredited, non-natural investors are subject to the investment limitation and may only invest funds which do not exceed 10% of the greater of the purchaser’s revenue or net assets (as of the purchaser’s most recent fiscal year end). A non-accredited, natural person may only invest funds which do not exceed 10% of the greater of the purchaser’s annual income or net worth (please see below on how to calculate your net worth).
NOTE: For the purposes of calculating your net worth, it is defined as the difference between total assets and total liabilities. This calculation must exclude the value of your primary residence and may exclude any indebtedness secured by your primary residence (up to an amount equal to the value of your primary residence). In the case of fiduciary accounts, net worth and/or income suitability requirements may be satisfied by the beneficiary of the account or by the fiduciary, if the fiduciary directly or indirectly provides funds for the purchase of the Offered Shares.
In order to purchase offered Shares and prior to the acceptance of any funds from an investor, an investor will be required to represent, to the Company’s satisfaction, that he is either an accredited investor or is in compliance with the 10% of net worth or annual income limitation on investment in this Offering.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of our operations together with our consolidated financial statements and the notes thereto appearing elsewhere in this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors”, “Cautionary Statement Regarding Forward-Looking Statements” and elsewhere in this Offering Circular. Please see the notes to our Financial Statements for information about our Critical Accounting Policies and Recently Issued Accounting Pronouncements.
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Management’s Discussion and Analysis
The Company has not had material revenues from operations in each of the last two fiscal years.
Under its most recent business model, the Company operated as a travel related services company throughout Asia, , including online travel platforms and services, online hotel and flights booking and reservation services, managing and operating hotels including Zhuhai Tengda Business Hotel and Tengda Mansion.
In March 2018, the Board of Directors elected to shift the Company’s business model to concentrate on business opportunities within blockchain technology. Square Chain Corporation has designed a multi-faceted business model to take advantage of the significant emerging opportunities being developed utilizing blockchain technology. The opportunities we have identified to date cross many industries such as finance, shipping and healthcare just to name a few, which will help minimize our exposure to any single sector. We have associated ourselves with leading experts in the field of blockchain technologies, allowing for a broad overview of exciting applications being developed. Our ability to identify applications having significant market potential early in their development will allow for investment opportunities for Square Chain Corporation that will help drive our growth. The Company’s plan to enter the new and exciting blockchain technology sector will be through acquisitions, joint ventures, equity stakes and eventually through in-house development.
The Company’s plan to enter the new and exciting blockchain technology sector will be through acquisitions, joint ventures, equity stakes and eventually through in-house development.
Plan of Operation for the Next Twelve Months
The Company believes that the proceeds of this Offering will satisfy its cash requirements for the next twelve months. To complete the Company’s entire development plan, it may have to raise additional funds in the next twelve months.
The Company may make significant changes in the number of employees at the corporate level, as well as retaining the services of software developers as contract labor or employees.
Investments. The Company intends to make substantial investment in its blockchain business segment either through acquisitions, joint ventures, retaining software developers or a combination thereof.
Marketing and sales. The Company will incur substantial marketing and sales expenses which will consist primarily of salaries, and benefits for our employees engaged in sales, sales support, marketing, business development, and customer service functions. Our marketing and sales expenses also include marketing and promotional expenditures.
Cost of revenue. The Company expects that the cost of revenue for its operations will consist primarily of expenses associated with the development and distribution of our products. These include expenses related to providing products and services and salaries and benefits for employees on our operations teams.
Research and development. The Company will continue to engage in research and development expenses. These will consist primarily of salaries, and benefits for employees who are responsible for building new products as well as improving existing products. We will expense all of our research and development costs as they are incurred.
General and administrative. The majority of our general and administrative expenses will consist of salaries, benefits, and share-based compensation for certain of our executives as well as our legal, finance, human resources, corporate communications and policy employees, and other administrative employees. In addition, general and administrative expenses include professional and legal services. The Company expects to incur substantial expenses in marketing the current Offering, in closing sales, and in promoting and managing its operations.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
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Quantitative and Qualitative Disclosures about Market Risk
In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.
The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates and assumptions include the fair value of the Company’s common stock, stock-based compensation, the recoverability and useful lives of long-lived assets, and the valuation allowance relating to the Company’s deferred tax assets.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Upon completion of this offering, we will not be subject to current and periodic reporting requirements. As a Regulation A, Tier 1 issuer, we will not be subject to the periodic and current reporting requirements under Rule 257(b) of Regulation A.
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Square Chain Corporation (“Square Chain”), sometimes referred to herein as “we,” “us,” “our,” and the “Company” and/or “Square Chain Corporation” was incorporated under the laws of the State of Arizona on November 14, 1994 under the name of Piranha Interactive Publishing, Inc. On November 22, 1996, the Company reincorporated under the laws of the State of Nevada and effected a forward split of its common stock on a basis of approximately 242 shares of the Nevada corporation for each share of the Arizona corporation. On October 28, 2009, the Company filed Amended and Restated Articles of Incorporation effectively changing the name of the corporation to Piranha Ventures, Inc. On November 21, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation changing the name of the corporation to Realgold International, Inc. On May 16, 2013, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name from Realgold International, Inc. to Asia Travel Corporation. On March 8, 2018, the Company filed a Certificate of Amendment with the State of Nevada to effectively change the name of the Company to Square Chain Corporation.
The trading symbol for our Common Stock is ‘SQCC.” Our previous trading symbol was “ATSR” prior to our filing a name change with the State of NV and an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority in March 2018.
Our Business
Under its most recently discontinued business model, the Company carried out business operations through its prior wholly owned Hong Kong subsidiary Asia Travel Ltd (Hong Kong) (formerly named “Realgold Venture Pte Limited”) and its affiliated entities in China including Zhuhai Tengda International Travel Agency Co., Ltd and Zhuhai Tengda Business Hotel Co., Ltd. Through its subsidiary and affiliated entities, Square Chain Corporation provided travel related services throughout Asia, including online travel platforms and services, online hotel and flights booking and reservation services, managing and operating hotels including Zhuhai Tengda Business Hotel and Tengda Mansion. Asia Travel Corporation’s business model is unique as it generates revenues from diverse revenue streams by providing various travel services and acquiring various assets, which distinguishes Asia Travel Corporation from other travel service providers and put it at the competitive edge.
In March 2018, the Board of Directors elected to shift the Company’s business model to concentrate on business opportunities within blockchain technology. Square Chain has designed a multi-faceted business model to take advantage of the significant emerging opportunities being developed utilizing blockchain technology. The opportunities we have identified to date cross many industries such as real estate, finance, shipping/logistics and healthcare. We have associated ourselves with leading experts in the field of blockchain technologies, allowing for a broad overview of exciting software applications with significant opportunities for in-house development. The applications we have identified early in their development will drive our growth.
Through the operations of its blockchain business segment, Square Chain Corporation believes it can develop direct business relationships and opportunities to participate in operating projects that directly benefit from blockchain technology.
Unlike most companies pivoting into the blockchain space, Square Chain Corporation is not pursuing ownership in cryptocurrencies or tokens. Likewise, Square Chain has no plans to pursue, or participate, in any type of an ICO. We do not have the management systems in place to manage the custodial obligations coins and tokens present. Furthermore, the Company has no plans to enter the increasingly crowded arena of cryptocurrency mining.
Our goal is to develop blockchain applications internally, participate in third party blockchain application development and invest in companies developing blockchain applications that solve real world industry pain points for specific businesses. Our revenue will be derived from the sale of our blockchain applications through B to B software distribution channels, monetizing investments in blockchain applications developed by third parties and participating in business opportunities via joint ventures or partnerships with existing companies that can benefit from blockchain applications we provide.
The company has identified an industry that has the potential to take advantage of the capabilities and goals of blockchain technology. We have had preliminary discussions with an expert and current 30-year participant in the direct response television industry (DRTV) to conduct a study to determine potential blockchain applications that can solve operational pain points in his business, as well as the industry in general. The areas of interest for this study that can determine a successful DRTV program include:
| ● | Media | |
| ● | Inbound Call Centers | |
| ● | Offers | |
| ● | Back-end Optimization | |
| ● | Fulfillment | |
| ● | Merchant Processing | |
| ● | Budgeting & Scheduling | |
| ● | Creative Direction | |
| ● | International Distribution | |
| ● | Retail Distribution |
Within these areas of interest of a successful DRTV program, we will be particularly interested in the areas of inbound call centers and the integrity of the ordering process, customer data integrity, fulfillment logistics, including inventory management, global supply chain issues and payment systems.
Upon funding, we will commence a white paper study project by hiring a blockchain consulting group already identified to conduct a thorough review of the DRTV business mentioned above. The study will include extensive discussions with the DRTV’s management team to gain a detailed perspective about their business operations, including in depth details of particular pain points that can be improved upon through blockchain technology. We have determined that this white paper study will take 30 to 60 days and cost an estimated $12,000 - $18,000.
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If the study concludes that blockchain technology applications can be developed to address these operational challenges, then we would begin the process of hiring a blockchain applications developer to develop an application, or multiple applications, incorporating the solutions. If the application(s) proves to be successful, then Square Chain could market the product(s) to other industry participants.
Secondarily, as part of this study, Square Chain is in exploratory discussions with the local identified company to participate in a DRTV product and product launch. This would allow us to actively participate in the entire DRTV process, offering us the insight to know the industry needs inside and out, and increasing the likelihood of a successful blockchain application(s) product(s) roll out to the industry.
The estimated cost for a DRTV project is $175,000. The components of this investment would include:
| ● | Infomercial production costs | |
| ● | On-air talent costs | |
| ● | Media time slot purchases | |
| ● | Initial inventory costs | |
| ● | Ecommerce product website costs | |
| ● | Call center set up costs | |
| ● | Fulfillment set up costs |
The challenges we will encounter with our initial project and beyond will include:
| ● | General market acceptance of a potential DRTV blockchain application(s) | |
| ● | Identifying companies willing to undertake the process of sharing their internal business processes in order to develop a blockchain benefits white paper study | |
| ● | Hiring the right blockchain developer for the specific task | |
| ● | Incorporating the block chain application into the existing business model may be costly and disruptive in the beginning | |
| ● | Our partner companies will need to have the proper staff to solve roadblocks as we launch the application |
Blockchain Incubator
As part of the Company’s business plan to identify key talent and emerging blockchain concepts, the company will continue to participate in blockchain related networking opportunities. There is a growing and thriving community of blockchain application developers in our local market looking to associate themselves with a company such as Square Chain to complete product development and bring these products to market.
At present, the Company is working closely with a local blockchain incubator to identify developers looking for employment opportunities in blockchain software and app development. The incubator is a blockchain technology education, co-work and development center. It is their mission to provide an amazing space for innovation in the world’s most exciting and fast-moving industry. They are a collaborative space for blockchain technology educators, innovators, and startups.
The company plans to develop a network of entrepreneurs, advisors, and limited partners who are on the front lines of this fast-moving sector of Fintech. Management firmly believes that Blockchain technology is a profound invention that offers a better, faster, cheaper way to move money and exchange assets without counterparty risk.
In-House Blockchain Application Development
Concurrent to becoming a member of the incubator, the Company will conduct an extensive search for in-house Ethereum blockchain software application developers. The company intends to develop in-house applications to take advantage of the ever-expanding opportunities for blockchain platforms in several industries as highlighted below.
One of the Company’s conceptual blockchain applications is focused on the construction industry. The construction industry lags behind other industries in research and development (R&D) investment. R&D investments for mature US companies are typically around 3.5% of sales. For some industries such as aerospace that number can be 7% to 14%. However, the construction industry only reinvests 0.5% of sales. The reasons for the low reinvestment vary but are generally due to costs and complexity. Most construction firms are small (less than 10 employees) and operate on thin profit margins. So, technology spending is often seen as an unaffordable luxury.
The Company’s conceptual construction blockchain application will be an integrated family of software applications that support the entire building lifecycle from conception, to construction, to facility management. The suite will support the needs of small contractors by offering: online collaboration, digital takeoff, estimating, and project and property management capabilities, all presented in a format that’s easy to understand and use.
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Third Party Blockchain Application Development
The Company may elect to co-develop, fund late stage development or acquire certain blockchain applications. There are currently several blockchain software applications being developed utilizing the Ethereum open-source, public, blockchain-based distributed computing platform and operating system featuring smart contract functionality. As these applications approach their final stages of development, we will conduct a comprehensive business analysis of each to determine which we feel best suits our company goals.
One such application dedicated to payment systems allows users to take advantage of blockchain’s invaluable traits. The history of being able to purchase, receive and use blockchain based tokens has been a difficult and bumpy one. Though much progress has been made, there are still only a few on-ramps (exchanges, word of mouth) into owning blockchain tokens. Not only that, but those who seek to purchase tokens from exchanges are a self-selecting group - generally technical and early adopters.
Another application the Company expects to participate with through late stage development funding is focused on the financial sector and trading of public shells. This early-stage application will develop and deploy a blockchain-based certification protocol for the transfer of control block shares of publicly traded entities.
Retaining Key Personnel
Upon funding, the Company will look to retain key personnel that fit into the culture of the company. Positions to be filled include software developers, marketing and sales, executive assistant, graphic artists and a Treasurer.
In addition, the Company will form an Advisory Committee to be filled by leaders within the blockchain sector. The Company is in discussion with several forward thinking blockchain advocates well known on the lecture circuit.
Acquisitions
As part of the Company’s growth strategy, it will seek to identify investment and acquisition candidates that will be immediately accretive to earnings. In looking at potential “target” companies, the Company:
| ● | Will look to identify companies whereby the Company can accelerate market access for the Target’s products | |
| ● | Can improve the target company’s performance through cost reductions to improve margins and improve cash flow | |
| ● | Can remove excess capacity in the industry through an acquisition | |
| ● | Can gain skills or technologies faster or at a lower cost than through in-house development | |
| ● | Can pick early stage winners early in the development process and further assist in the development |
Target Markets
Square Chain Corporation’s investment strategy will focus on best in class software applications utilizing blockchain technology platforms. Our focus will be across several industry sectors that are incorporating blockchain technology into their business practices and processes. According to a 2015 World Economic Forum survey of 800 executives and information and communications technology sector experts, 57.9 percent of the respondents believe that 10 percent of the global GDP information will be stored on blockchain technology by 2025, thus creating significant long-term investment opportunities for Square Chain Corporation.
The blockchain market size is expected to grow from USD 241.9 Million in 2016 to USD 7,683.7 Million by 2022, at a Compound Annual Growth Rate (CAGR) of 79.6%. The major growth drivers of the market include the increasing demand for distributed ledger technology, reduced total cost of ownership, rising cryptocurrencies market cap and initial coin offerings, increasing demand for simplified business processes and creating transparency and immutability, faster transactions and increasing adoption of Blockchain-as-a-Service.
Examples of target markets include:
DRTV
Applications for Blockchain in Ecommerce
The blockchain ecommerce marketplace is becoming an economic ecosystem in its own right. As the online sales industry continues to both grow and adopt distributed ledger technology, the number of ways sellers can serve their customers — and their bottom line — will multiply. For now, here are just a few applications for blockchain technology in ecommerce.
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Smart Contracts
Smart contracts represent the most popular add-on feature of any blockchain. Basically, a smart contract is a relatively small computer program that can be stored on a blockchain, and which can automate certain tasks according to preset rules.
The power if these special blocks of code makes it easy to automate nearly any ecommerce-related process, freeing up staff to market and grow the business.
Inventory Control
One application that can use smart contracts is inventory control. By incorporating smart contracts into the blockchain, not only can inventory items be decremented from inventory as with some standard shopping carts, but replacement stock can be ordered when pre-defined thresholds are reached. A host of other functions can be automated to ensure that an online store never runs out of product, and at the same time ensuring that excess inventory is not accumulated.
Product Description Database
Making product descriptions and related images available to customers is a time-consuming and costly part of running an online store. Blockchain technology allows this information to be efficiently shared between suppliers, your online store, and with content creators.
Loyalty Rewards Software
Again, thanks to the power and versatility of smart contracts, customer loyalty reward programs can be totally automated within a blockchain. Since records of every purchase are stored in the chain, it is easy to have a smart contract offer a discount, or to issue reward points to customers as they surpass certain spending thresholds.
Supply Chain Tracking
An online store can live or die depending on the reliability of its supply chain. Not only does the store operator need to know what stock is in the pipeline and when it will arrive, but it is also crucial for them to make sure vendors are supplying the exact products ordered. The problem of fraud in the supply chain can result in inferior products being delivered, or even those with safety-related issues.
By using the blockchain to track the supply chain, ecommerce companies can ensure that vendors do not substitute products without notice, and that transparency is maintained throughout the process.
Advantages of Blockchain in Ecommerce
Cyberthreats, stifling competition, and ever changing user expectations are daily realities for every online retailer. For all but the largest sellers, the battle can not only become one of profitability, but survival. Ecommerce sites that are still standing in the years ahead will be those that adapted to these challenges early on — like now.
Although there is no shortage of ecommerce solutions on the market, blockchain technology is uniquely suited to solve many of the ills facing e-retailers. Let’s look at three of the greatest advantages blockchain offers the ecommerce industry, before we move on to see how these can be applied in real applications.
Security
Distributed ledger technology (DLT) offers the highest level of security available for online database platforms. Although there have been instances where vulnerabilities in smart contact coding resulted in fraud, there have been no verified breaches of a major blockchain backbone framework.
Since one data breach can cost an online retailer millions in revenue, and loss of future market share, blockchain offers a level of security that retailers cannot afford to do without.
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Integration with Business Processes
Blockchain is not limited to processing online payments. Part of the reason for the growth of DLT is its power to interface with new and existing systems. For the ecommerce vendor, this can mean tie-ins between the online store and a multitude of internal and external systems, processes, and partners.
By providing a shared ledger that serves the company, the online store, and external entities, a wealth of opportunities becomes available for the vendor that are only possible with blockchain.
Cost Reduction
Cost reduction has become a buzzword for selling just about everything from software to socks, but blockchain delivers on this promise.
The ability to combine payment processing, inventory management, product images and descriptions, with other business processes means fewer systems to maintain, less need for IT support staff, and fewer administrative tasks to be performed.
Maintaining even a small online store is a 24/7/365 job. The power of blockchain enables online vendors to spend more time running their business and less time running their online store.
Real Estate
Technology and real estate experts alike say blockchain technology has an important place in the commercial real estate market (CRE) with its ability to streamline processes, reduce fraud and cut costs (and middlemen). Real Estate is the largest asset class in the world, and also one of the most inefficient. Our aim is to seek out best in class applications and technology solutions serving the $217+ trillion global real-estate market with 2017 volume of $1.4 trillion.
Until recently, blockchain was known more as the technology powering Bitcoin. However, industry players now realize that blockchain-based smart contracts can play a much larger role in CRE, potentially transforming core CRE operations such as property transactions (purchase, sale, financing, leasing, and management). Over time, blockchain adoption can have a broader impact, as it can be linked to public utility services such as smart parking, waste, water, and energy billing, and also enable data-driven city management.
According to Goldman Sachs estimates, blockchain driven property records could drive up to $4bn in cost savings due to reductions in headcount and actuarial risk in the US alone.
Finance
What blockchain can do for the financial and banking industry:
Blockchain technology can potentially disrupt the financial industry that we know and use today. Here are just a few examples of how blockchain technology can transform the finance and banking industry.
Fraud Reduction
Even though blockchain is new technology, its potential to reduce fraud in the financial world is getting a lot of attention since 45% of financial intermediaries such as stock exchanges and money transfer services suffer from economic crime every year. Most banking systems around the world are built on a centralized database that is more vulnerable to cyberattack because it has one point of failure rather than many—once hackers breach the one system they have full access. The blockchain is essentially a distributed ledger where each block contains a timestamp and holds batches of individual transactions with a link to a previous block. This technology would eliminate some of the current crimes being perpetuated online today against our financial institutions.
Payments
Blockchain disruption could be highly transformative in the payments process. It would enable higher security and lower costs for banks to process payment between organizations and their clients and even between banks themselves. In the current reality, there are a lot of intermediaries in the payment processing system, but blockchain would eliminate the need for a lot of them.
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Trading Platforms
It’s exciting to contemplate the changes that might occur with our trading platforms if they relied on blockchain-based technology. There’s no doubt that the risk of operational errors and fraud would be dramatically reduced. NASDAQ and the Australian Securities Exchange are already exploring blockchain solutions to reduce costs and improve efficiencies.
Logistics and Transportation
Blockchain, the technology behind the digital asset and payment system Bitcoin - has the potential to transform the supply chain. From conducting payment and audits to tracking inventory and assets, blockchain technology will enable greater supply chain efficiency than ever before.
How Will Blockchain Technology Affect the Supply Chain?
If blockchain technology allows us to more securely and transparently track all types of transactions, imagine the possibilities it presents across the supply chain.
Every time a product changes hands, the transaction could be documented, creating a permanent history of a product, from manufacture to sale. This could dramatically reduce time delays, added costs, and human error that plague transactions today.
Some supply chains are already using the technology, and experts suggest blockchain could become a universal “supply chain operating system” before long. Consider how this technology could improve the following tasks:
| ● | Recording the quantity and transfer of assets - like pallets, trailers, containers, etc. - as they move between supply chain nodes |
| ● | Tracking purchase orders, change orders, receipts, shipment notifications, or other trade-related documents |
| ● | Assigning or verifying certifications or certain properties of physical products; for example; determining if a food product is organic or fair trade |
| ● | Linking physical goods to serial numbers, bar codes, digital tags like RFID, etc. |
| ● | Sharing information about manufacturing process, assembly, delivery, and maintenance of products with suppliers and vendors |
Benefits in a Nutshell:
Regardless of the application, blockchain offers shippers the following advantages:
| ● | Enhanced Transparency. Documenting a product’s journey across the supply chain reveals its true origin and touchpoints, which increases trust and helps eliminate the bias found in today’s opaque supply chains. Manufacturers can also reduce recalls by sharing logs with OEMs and regulators |
| ● | Greater Scalability. Virtually any number of participants, accessing from any number of touchpoints, is possible |
| ● | Better Security. A shared, indelible ledger with codified rules could potentially eliminate the audits required by internal systems and processes |
| ● | Increased Innovation. Opportunities abound to create new, specialized uses for the technology as a result of the decentralized architecture. |
Milestones and Budget
We have the created the following milestones and budgets. It is important to note that achievement of these milestones and their budget targets is subject to substantial risk. Please see “Risk Factors” and “Forward Looking Statements.”
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Operational Objectives June 1, 2018 to August 31, 2018:
| Expected proceeds from Reg A offering | Operational Objectives | |||
| $ | 50,000 | Finalize white paper consulting agreement with selected candidate(s), assemble advisory board and hire administrative assistant | ||
| 30,000 | Select initial target blockchain application candidate, product development plan, marketing plan | |||
| 70,000 | Identify and hire (2) blockchain software developers for product buildout, purchase IT equipment | |||
| 150,000 | Office, Admin, Regulatory, Salaries, Legal, Accounting systems, Travel, Accrued expenses/invoices | |||
| 150,000 | Co-Develop, partner with application developers, enter into collaborative product development and product marketing agreements | |||
| 100,000 | Cash reserve | |||
| $ | 550,000 | Total | ||
Operational Objectives September 1, 2018 to November 30, 2018:
| Expected proceeds from Reg A offering | Operational Objectives | |||
| $ | 65,000 | Add to consulting team | ||
| 40,000 | Review and analyze new blockchain applications | |||
| 70,000 | Expand internal blockchain software capabilities, BETA testing | |||
| 75,000 | Office, Admin, Regulatory, Salaries, Legal, Accounting systems, Travel, Accrued expenses/invoices | |||
| 200,000 | Co-Develop, partner with application developers, enter into collaborative product development and product marketing agreements | |||
| 30,000 | Hire internal or outsourced chief financial officer | |||
| 200,000 | Identify and Acquire Strategic Assets and Partners | |||
| 100,000 | Cash reserves | |||
| $ | 780,000 | Total | ||
Operational Objectives December 1, 2018 to February 28, 2019:
| Expected proceeds from Reg A offering | Operational Objectives | |||
| $ | 85,000 | Add to consulting team | ||
| 40,000 | Review and analyze new blockchain applications | |||
| 120,000 | Expand internal blockchain software capabilities, Continuing BETA tests | |||
| 75,000 | Office, Admin, Regulatory, Salaries, Legal, Accounting systems, Travel, Accrued expenses/invoices | |||
| 300,000 | Co-Develop, partner with application developers, enter into collaborative product development and product marketing agreements | |||
| 35,000 | Hire internal or outsourced chief financial officer | |||
| 300,000 | Identify and Acquire Strategic Assets and Partners | |||
| 100,000 | Cash reserves | |||
| $ | 1,045,000 | Total | ||
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Operational Objectives March 1, 2019 to May 31, 2019:
| Expected proceeds from Reg A offering | Operational Objectives | |||
| $ | 65,000 | Add to consulting team | ||
| 40,000 | Review and analyze new blockchain applications | |||
| 120,000 | Expand internal blockchain software capabilities | |||
| 75,000 | Office, Admin, Regulatory, Salaries, Legal, Accounting systems, Travel, Accrued expenses/invoices | |||
| 400,000 | Co-Develop, partner with application developers, enter into collaborative product development and product marketing agreements | |||
| 35,000 | Hire internal or outsourced chief financial officer | |||
| 600,000 | Identify and Acquire Strategic Assets and Partners | |||
| 100,000 | Cash reserves | |||
| $ | 1,435,000 | Total | ||
Competition
Square Chain Corporation is pursuing a business strategy with unique characteristics compared to peer companies. Nevertheless, in addition to Square Chain Corporation, there are several other companies developing blockchain applications; and acquiring blockchain application developers.
Our potential competitors may have greater resources, better access to capital, longer histories, more intellectual property and lower cost operations.
They may secure better terms during the investment negotiation process, make strategic decisions more quickly than us and devote more capital to better performing investments than we do.
Other companies also may enter into business combinations or alliances that strengthen their competitive positions.
Growth Issues
Service Delivery Controls
When awarded contracts that require additional resources, Square Chain Corporation will utilize its list of available consultants with expertise in the required areas. The collaborative nature of our professionals, coupled with our low overhead approach of hiring consultants on an as- needed basis creates challenges in the delivery of quality services and deliverables. Square Chain Corporation realizes that not everyone will share our vision, values, and methods.
In addition, Square Chain Corporation understands that as more blockchain applications come online it becomes increasingly difficult to monitor projects and communicate information to our consultants.
Because Square Chain Corporation utilizes exhaustive interviewing, stringent candidate selection and referrals from trusted advisors there is a reasonable confidence that the majority of our concerns will be eliminated through these processes. Square Chain Corporation will enter into agreements with consultants and contractors who demonstrate a bold commitment to representing the core values of Square Chain Corporation in an effective manner.
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Scalability
The ability to reproduce our proven system on a massive scale is a concern of Square Chain Corporation. Every site is unique and presents different challenges. Such factors can negatively impact the growth and consistency of our methods and will ultimately challenge our ability to replicate our initial success. This will directly impact how fast Square Chain Corporation can scale its operations.
Insufficient Capital
Currently Square Chain Corporation is confronted with the need to attract and retain a consistent investment source in order to grow our operations rapidly. If Square Chain Corporation is not funded properly it will prevent us from capturing the majority of the market.
To maintain our leadership role and first mover advantage in this space Square Chain Corporation is seeking funding from the capital markets which may include debt and equity offerings.
Sales Lead Time
Currently lead time for each project is estimated at ten (10) months. This reflects permitting, equipment ordering and delivery of and installation.
Marketing Strategy
Marketing Square Chain Corporation’s blockchain applications will be done through several different strategies. We plan to utilize third party software sales organizations primarily. For industry specific applications, we will incorporate industry trade show participation into our marketing program.
Seasonality
We do not expect any seasonality in our business.
Litigation
The Company has no current, pending or threatened legal proceedings or administrative actions either by or against the Company issuer that could have a material effect on the issuer’s business, financial condition, or operations and any current, past or pending trading suspensions
Employees
As of March 31, 2018, we had one employee, including officers and directors. We believe that we have been successful in attracting experienced and capable personnel. Our employee has entered agreements with us requiring him not to compete or disclose our proprietary information. Our employee is not represented by any labor union. We believe that relations with our employee are excellent.
Legal Proceedings
We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to temporary employee staffing business. These matters may include product liability, intellectual property, employment, personal injury cause by our employees, and other general claims. We will accrue for contingent liabilities when it is probable that a liability has been incurred and the amount can be reasonably estimated. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
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Description of Property
We maintain an office in North Las Vegas, Nevada. We consider that this space is sufficient for our current needs.
Intellectual Property
We may rely on a combination of patent, trademark, copyright, and trade secret laws in the United States as well as confidentiality procedures and contractual provisions to protect our proprietary technology, databases, and our brand. Despite these reliances, we believe the following factors are more essential to establishing and maintaining a competitive advantage:
| ● | the statistical and technological skills of our service operations and research and development teams; |
| ● | the Blockchain expertise and knowledge of our service operations and research and development teams; |
| ● | the real-time connectivity of our service offerings; |
| ● | the continued expansion of our proprietary technology; and |
| ● | a continued focus on the improved financial results of our clients. |
We have a policy of requiring key employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting relationship with us. Our employee agreements also require relevant employees to assign to us all rights to any inventions made or conceived during their employment with us. In addition, we have a policy of requiring individuals and entities with which we discuss potential business relationships to sign non-disclosure agreements. Our agreements with clients include confidentiality and non-disclosure provisions.
Legal Proceedings
We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to our business. These matters may include product liability, intellectual property, employment, personal injury cause by our employees, and other general claims. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
The following table sets forth information regarding our executive officers, directors and significant employees, including their ages as of March 31, 2018:
Name and Principal Position |
Age |
Term of Office |
Approximate hours per week | |||
| Jeffrey J Parker-President, Director | 56 | Since March 6, 2018 | 40 |
Jeffrey J Parker – President, Secretary, Principal Financial Officer and Director
Jeffrey J Parker was appointed to the Board of Square Chain Corporation on March 6, 2018 and assumed the roles of President, Secretary and Principal Financial Officer on March 6, 2018. Prior to this position with the Company, Mr. Parker served in various leadership capacities in the high-tech industry, including Gemesis Corporation, Sterling Semiconductor and a partner in various small business ventures. Mr. Parker is a results-oriented experienced professional providing leadership to sales and operations in the areas of small business and startup environments. Mr. Parker has a proven ability to help nurture start-ups, develop and execute plans into thriving organizations and effectively liaise with relevant shareholders to accomplish goals and resolve challenges. Mr. Parker completed both his undergraduate education and graduation level entrepreneurship certificate at the University of South Florida.
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None of our executive officers and board directors has been involved in any of the following proceedings during the past ten (10) years:
1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending criminal proceedings (excluding traffic violations and other minor offenses);
3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
Family Relationships
There are no family relationships between any of our officers and directors.
Involvement in Certain Legal Proceedings.
None of the following events have occurred during the past five years and which are material to an evaluation of the ability or integrity of any director or executive officer: (1) A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; or (2) Such person was convicted in a criminal proceeding (excluding traffic violations and other minor offenses).
Board Composition
Our Board of Directors currently consists of one member. Each director of the Company serves until the next annual meeting of stockholders and until his successor is elected and duly qualified, or until his earlier death, resignation or removal. Our board is authorized to appoint persons to the offices of Chairman of the Board of Directors, President, Chief Executive Officer, one or more vice presidents, a Treasurer or Chief Financial Officer and a Secretary and such other offices as may be determined by the board.
We have no formal policy regarding board diversity. In selecting board candidates, we seek individuals who will further the interests of our stockholders through an established record of professional accomplishment, the ability to contribute positively to our collaborative culture, knowledge of our business and understanding of our prospective markets.
Board Leadership Structure and Risk Oversight
The Board of Directors oversees our business and considers the risks associated with our business strategy and decisions. The board currently implements its risk oversight function as a whole. Each of the board committees when established will also provide risk oversight in respect of its areas of concentration and reports material risks to the board for further consideration.
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Code of Business Conduct and Ethics
Prior to one year from the date of this Offering’s qualification, we will be adopting a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. We will post on our website a current copy of the code and all disclosures that are required by law or market rules in regard to any amendments to, or waivers from, any provision of the code.
Employment Agreements
Mr. Parker has entered into an employment agreement with the Company for a term of five years. Pursuant to his employment agreement, he has agreed to devote a substantial portion of his business and professional time and efforts to our business. The employment agreement provides that he shall receive a salary determined by the Board of Directors commensurate with the development of the Company. They may be entitled to receive, at the sole discretion of our Board of Directors or a committee thereof, bonuses based on the achievement (in whole or in part) by the Company of our business plan and achievement by the employee of fixed personal performance objectives.
The following table represents information regarding the total compensation our officers and directors of the Company as of March 31, 2018:
| Name and Principal Position | Cash Compensation ($) | Other Compensation | Total Compensation ($) | |||||||||
| Jeffrey J Parker - President, Director | -0- | -0- | -0- | |||||||||
Our employment agreements also contain covenants (a) restricting the executive from engaging in any activities competitive with our business during the terms of such employment agreements and one year thereafter, and (b) prohibiting the executive from disclosure of confidential information regarding the Company.
Stock Options
Our stockholders have approved our 2018 Stock Option Plan, as previously adopted by our Board of Directors (the “Plan”). Under this Plan, our officers, directors, and/or key employees and/or consultants can receive incentive stock options and non-qualified stock options to purchase up to an aggregate of 5,000,000 shares of our Common Stock. To date, no options have been issued.
With respect to incentive stock options, the Plan provides that the exercise price of each such option must be at least equal to 100% of the fair market value of the Common Stock on the date that such option is granted. The Plan requires that all such options have an expiration date not later than that date which is one day before the tenth anniversary of the date of the grant of such options (or the fifth anniversary of the date of grant in the case of 10% stockholders). However, with certain limited exceptions, in the event that the option holder ceases to be associated with the Company, or engages in or is involved with any business similar to ours, such option holder’s incentive options immediately terminate.
Pursuant to the provisions of the Plan, the aggregate fair market value, determined as of the date(s) of grant, for which incentive stock options are first exercisable by an option holder during any one calendar year cannot exceed $100,000. No such options have yet been issued.
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Bonus Plan for Executive Officers
The Board of Directors has established an annual Bonus Plan for Executive Officers (the “Bonus Plan.”) Under the Bonus Plan, a Committee of the Board of Directors sets performance targets for key employees who are or may become executive officers. Such executives are eligible for a bonus only if they meet the performance standards set in advance by the Committee. Aggregate bonuses may not exceed ten percent of income before taxes and bonuses may not exceed $1 million per employee.
Management Stock Option Plan
The Board of Directors of the Company has adopted a Management Stock Bonus Plan. The Plan provides that the Company shall establish a reserve of 5,000,000 shares of Common Stock to be awarded to eligible salaried officers and directors. The Management Stock Bonus Plan Committee, composed of not less than three members, administers the Plan. The Board of Directors must review actions of the Committee. The Plan awards restricted stock to key executives. During the restricted period, the owner of the stock may not transfer the stock without first offering the Company the opportunity to buy back the stock at its issue price. In the first year of the restriction period, the Company has the right to buy back all of the awarded stock. In the second year, the Company has the right to buy back 75% of the awarded stock. After two years and until the end of the restriction period, a maximum of three years, the Company has the right to buy back 50% of the awarded stock. To date, the Company has not issued any Plan shares:
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
To the best of our knowledge, from January 1, 2016 to March 31, 2018, other than as set forth above, there were no material transactions, or series of similar transactions, or any currently proposed transactions, or series of similar transactions, to which we were or are to be a party, in which the amount involved exceeds $120,000, and in which any director or executive officer, or any security holder who is known by us to own of record or beneficially more than 5% of any class of our Common Stock, or any member of the immediate family of any of the foregoing persons, has an interest (other than compensation to our officers and directors in the ordinary course of business).
Statement of Policy
We have adopted a related-party transactions policy under which our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our Common Stock, and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related-party transaction with us without the consent of our audit committee. If the related party is, or is associated with, a member of our audit committee, the transaction must be reviewed and approved by another independent body of our Board of Directors, such as our governance committee. Any request for us to enter into a transaction with a related party in which the amount involved exceeds $120,000 and such party would have a direct or indirect interest must first be presented to our audit committee for review, consideration and approval. If advance approval of a related-party transaction was not feasible or was not obtained, the related-party transaction must be submitted to the audit committee as soon as reasonably practicable, at which time the audit committee shall consider whether to ratify and continue, amend and ratify, or terminate or rescind such related-party transaction. All of the transactions described above were reviewed and considered by, and were entered into with the approval of, or ratification by, our Board of Directors.
The following table sets forth certain information known to us regarding beneficial ownership of our capital stock as of April 30, 2018 for (i) all executive officers and directors as a group and (ii) each person, or group of affiliated persons, known by us to be the beneficial owner of more than ten percent (10%) of our capital stock. The percentage of beneficial ownership in the table below is based on 206,248,501 shares of Common Stock.
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Class A Preferred Stock $0.001 par value
| Name of Beneficial Owner | Number
of Shares Owned | Percent of Class | ||||||
| Tan Lung Lai | 20,000 | 100.00 | % | |||||
| Total | 20,000 | 100.00 | % | |||||
***The Company’s 20,000 shares of Series A Preferred Stock are convertible into 20,000,000 shares of Common Stock.
Class B Preferred Stock $0.001 par value
| Name of Beneficial Owner | Number
of Shares Owned | Percent of Class | ||||||
| Jeffrey J. Parker | 10,000 | 100.00 | % | |||||
| Total | 10,000 | 100.00 | % | |||||
***The Company’s 10,000 shares of Series B Preferred Stock are convertible into 0 shares of Common Stock.
Common Stock $0.001 par value
| Name of Beneficial Owner | Number of Shares Beneficially Owned | Percent of Class Before Offering | Percent of Class After Offering | |||||||||
| Tan Lung Lai (1)(2) | 20,991,951 | 10.18 | % | 7.33 | % | |||||||
| Jeffrey J. Parker (3)(4) | 7,500,000 | 3.64 | % | 2.62 | % | |||||||
| All Executive Officers, Directors and 10% Shareholders as a Group | 29,491,951 | 14.30 | % | 10.30 | % | |||||||
| (1) | Tan Lung Lai was the President and Director of the Company until March 6, 2018. The shares included within Mr. Lai’s ownership included 20,000,000 shares of Common Stock to be issued upon the conversion of the Company’s 20,000 shares of Series A Preferred Stock outstanding and 991,951 shares of Common Stock held in Mr. Lai’s name. |
| (2) | The address of Mr. Lai is 69-2 Jalan Taman Melaka Raya 25 Taman Melaka, Melaka, Malaysia 75000. |
| (3) | Mr. Parker is the Company’s President, Principal Officer and Director. Mr. Parker was appointed to these roles with the Company on March 6, 2018. The shares included in Mr. Parker’s ownership include 7,500,000 shares of common stock issued to Mr. Parker on April 5, 2018. |
| (4) | The principal address of Mr. Parker is P.O. Box 501, St. Petersburg, FL 33731. |
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
During the quarter ended March 31, 2018, the Company’s President, CEO, CFO, Secretary and Chairman of the Board, Mr. Jeffrey J. Parker, provided advances to the Company for working capital purposes for a total of $73,978 in related party advances currently outstanding due upon demand. On March 27, 2018, the Company issued an 5% unsecured promissory note to Mr. Parker in the amount of $73,978. As of June 7, 2018, $73,978 was outstanding with accrued interest of $719.51 which is reflected as accounts payable and notes payable – related party in the accompanying unaudited balance sheets. Please see Note- 9.2 Related party balances for further information.
On April 15, 2018, the Company issued 7,500,000 shares of its common stock to Jeffrey J. Parker for his acceptance of the roles of Chief Executive Officer, Chief Financial Officer and Chairman of the Board. Mr. Parker was not required to purchase the shares thus his cost basis is $0. On the date of issuance, the Company’s common stock closed at $.05, which equates to a valuation of $375,000. If the same number of shares were to be purchased through the Company’s offering statement, the cost basis to the purchaser would be $.05 per share for a total of $375.000.
Percentage Ownership Not Including Certain Shares
| Share Structure | Number of Shares Outstanding | Percent of Class Before Offering | Percent of Class After Offering | |||||||||
| Shares outstanding prior to offering (a) | 178,748,501 | 100.00 | % | 69.35 | % | |||||||
| Shares offered in offering (b) | 80,000,000 | 0.00 | % | 30.65 | % | |||||||
| Total shares | 258,748,501 | 100 | % | 100 | % | |||||||
| (a) | Shares outstanding prior to the Offering Statement not including the 7,500,000 shares issued to Jeffrey J. Parker. | |
| (b) | Total shares outstanding after the offering equals 258,748,501 and assumes that all shares in the offering are sold. |
Percentage Ownership Including All Shares Issued and Outstanding
| Share Structure | Number of Shares Beneficially Owned | Percent of Class Before Offering | Percent of Class After Offering | |||||||||
| Shares outstanding prior to offering (a) | 178,748,501 | 95.97 | % | 67.14 | % | |||||||
| Shares issued to Jeffrey J. Parker | 7,500,000 | 4.03 | % | 2.81 | % | |||||||
| Shares offered in offering (b) | 80,000,000 | 0 | % | 30.05 | % | |||||||
| Total shares | 266,248,501 | 100 | % | 100 | % | |||||||
| (a) | The 7,500,00 shares issued to Jeffrey J. Parker included in the Percent of Class Before and After Offering | |
| (b) | Total shares outstanding after the offering equals 266,248,501 and assumes that all shares in the offering are sold. | |
| (c) | Purchasers of the shares in the offering statement are diluted by 0.60% due to the 7,500,000 shares issued to Mr. Parker |
We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any further determination to pay dividends on our capital stock will be at the discretion of our Board of Directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our Board of Directors considers relevant.
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Square Chain Corporation (“Square Chain Corporation,” “We,” or the “Company”) is offering up to $4,000,000 total of Securities, consisting of Common Stock, $0.001 par value (the “Common Stock” or collectively the “Securities”).
Securities Being Offered
The following is a summary of the rights of our capital stock as provided in our articles of incorporation and bylaws. For more detailed information, please see our articles of incorporation and bylaws, which have been filed as exhibits to the Offering Statement of which this Offering Circular is a part.
General
Market capital structure:
Preferred stock
The Company is authorized to issue 10,000,000 shares of Preferred stock, par value $.001. The Company has designated two series of Preferred stock as of the date of this filing.
Series A
On November 2, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000 shares of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common stock for voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of common stock.
Accounting for the Series A Preferred Stock
The Series A Preferred Stock has been classified as permanent equity as there was no redemption provision at the option of the holders. The Company evaluated the embedded conversion feature in its Series A Preferred Stock to determine if there was an embedded derivative requiring bifurcation. The Company concluded that the embedded conversion feature of the Series A Preferred Stock is not required to be bifurcated because the conversion feature is clearly and closely related to the host instrument. The Company believes the economic risks and characteristics of the Series A Preferred Stock itself and the common stock the embedded conversion feature allows the Investor to convert into have similar economic risks and characteristics.
Series B
On March 6, 2018, the Company’s Board of Directors approved the designation of a Series B Super Voting Preferred stock whose par value is $.001. Under the terms of the designation, shares of Series B Super Voting Preferred stock, the Company is authorized to issue 10,000 shares. Holders of the Series B Super Voting Preferred stock have no conversion features. Holders of Series B Preferred stock have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting. All shares of the Series B Super Voting Preferred Stock shall rank (i) senior to the Corporation’s Common Stock, par value $0.001 per share and any other class or series of capital stock of the Corporation hereafter created.
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Common Stock
The Company is authorized to issue 990,000,000 shares of Common Stock, par value $.001.
On July 22, 2013 the Company entered into a Regulation S Stock Purchase Agreement (“Agreement”) with a group of 34 non-US individual purchasers (“Purchasers”). Under the Agreement, the Company will issue a total of 125,788,400 shares of common stock to Purchasers for a total price of $628,943 ($0.005 per share). The issuance of the 125,788,400 shares is pursuant to the exemption provided by Regulation S. None of the Purchasers is a US person and the transactions underlying the Agreement are carried out outside US. Accordingly, July 29,2013, 125,788,400 shares of common stock have been issued.
Capitalization
| Security | Par Value | Authorized | Outstanding | Voting Rights | Conversion Into Shares of Common Stock | |||||||||||||||
| Series B Preferred Stock | 0.001 | 10,000 | 10,000 | 20:1 | None | |||||||||||||||
| Common Stock | 0.001 | 990,000,000 | 186, 248, 501 | 1 | None | |||||||||||||||
| Series A Preferred Stock | 0.001 | 20,000 | 20,000 | 1000:1 | 1000 | |||||||||||||||
Preferred Stock
The Company has authorized 10,000,000 shares of Preferred Stock,” par value $0.001 per share. At the time of this filing, the Company has two series of Preferred Stock outstanding.
Series A
On November 2, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000 shares of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common stock for voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of common stock.
Accounting for the Series A Preferred Stock
The Series A Preferred Stock has been classified as permanent equity as there was no redemption provision at the option of the holders. The Company evaluated the embedded conversion feature in its Series A Preferred Stock to determine if there was an embedded derivative requiring bifurcation. The Company concluded that the embedded conversion feature of the Series A Preferred Stock is not required to be bifurcated because the conversion feature is clearly and closely related to the host instrument. The Company believes the economic risks and characteristics of the Series A Preferred Stock itself and the common stock the embedded conversion feature allows the Investor to convert into have similar economic risks and characteristics.
Series B
On March 6, 2018, the Company’s Board of Directors approved the designation of a Series B Super Voting Preferred stock whose par value is $.001. Under the terms of the designation, shares of Series B Super Voting Preferred stock, the Company is authorized to issue 10,000 shares. Holders of the Series B Super Voting Preferred stock have no conversion features. Holders of Series B Preferred stock have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting. All shares of the Series B Super Voting Preferred Stock shall rank (i) senior to the Corporation’s Common Stock, par value $0.001 per share and any other class or series of capital stock of the Corporation hereafter created.
Common Stock
Voting Rights. The holders of the Company’s Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of the shareholders, except as otherwise provided by law.
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Dividends. Subject to preferences that may be granted to any then outstanding preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available therefore as well as any distributions to the shareholders. The payment of dividends on the common stock will be a business decision to be made by our Board of Directors from time to time based upon results of our operations and our financial condition and any other factors that our Board of Directors considers relevant. Payment of dividends on the common stock may be restricted by loan agreements, indentures and other transactions entered into by us from time to time.
Liquidation Rights. In the event of our liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in all of our assets remaining after payment of liabilities and the liquidation preference of any then outstanding preferred stock.
Absence of Other Rights or Assessments. Holders of common stock have no preferential, preemptive, conversion or exchange rights. There are no redemption or sinking fund provisions applicable to the common stock. When issued in accordance with our articles of incorporation and law, shares of our common stock are fully paid and not liable to further calls or assessment by us.
Conversion Rights. None
Nevada Anti-Takeover Law
Certain provisions of Nevada law may have an anti-takeover effect and may delay or prevent a tender offer or other acquisition transaction that a shareholder might consider to be in his or her best interest. The summary of the provisions of Nevada law set forth below does not purport to be complete and is qualified in its entirety by reference to Nevada law.
The issuance of shares of preferred stock, the issuance of rights to purchase such shares, and the imposition of certain other adverse effects on any party contemplating a takeover could be used to discourage an unsolicited acquisition proposal. For instance, the issuance of our Series A Convertible Preferred Stock if the option to acquire such shares is exercised would impede a business combination by the voting and conversion rights that would enable a holder to block such a transaction. In addition, under certain circumstances, the issuance of preferred stock could adversely affect the voting power of holders of our common stock.
Under Nevada law, a director, in determining what he reasonably believes to be in or not opposed to the best interests of the corporation, does not need to consider only the interests of the corporation’s shareholders in any takeover matter but may also, in his discretion, may consider any of the following:
(i) The interests of the corporation’s employees, suppliers, creditors and customers;
(ii) The economy of the state and nation;
(iii) The impact of any action upon the communities in or near which the corporation’s facilities or operations are located;
(iv) The long-term interests of the corporation and its shareholders, including the possibility that those interests may be best served by the continued independence of the corporation; and
(v) Any other factors relevant to promoting or preserving public or community interests.
Because our Board of Directors is not required to make any determination on matters affecting potential takeovers solely based on its judgment as to the best interests of our shareholders, our board could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of our shareholders might believe to be in their best interests or in which such shareholders might receive a premium for their stock over the then market price of such stock. Our board presently does not intend to seek shareholder approval prior to the issuance of currently authorized stock, unless otherwise required by law or applicable stock exchange rules.
Nevada’s “Acquisition of Controlling Interest” statute applies to Nevada corporations that do business in the State of Nevada directly or through an affiliate and which have 200 or more stockholders of record (at least 100 of which have record addresses in Nevada), unless the articles of incorporation or bylaws specifically provide otherwise. If applicable, this statute generally provides that any person acquiring certain statutorily defined “control” percentages (20%, 33.3% or a majority) of a corporation’s outstanding shares in the secondary market is not entitled to vote those “control shares” unless a majority of the other stockholders elects to restore such voting rights in whole or in part.
| 48 |
Nevada Corporation Law generally provides that a Nevada corporation which has not “opted out” of coverage by this section in the prescribed manner, such as the Company, may not engage in any “combination” with an “interested stockholder” for a period of two years following the date that the stockholder became an “interested stockholder” unless prior to that time the Board of Directors of the corporation approved either the “combination” or the transaction which resulted in the stockholder becoming an “interested stockholder.”
Since our inception, we have not paid any dividends on our common stock, and we currently expect that, for the foreseeable future, all earnings (if any) will be retained for the development of our business and no dividends will be declared or paid. In the future, our Board of Directors may decide, at their discretion, whether dividends may be declared and paid, taking into consideration, among other things, our earnings (if any), operating results, financial condition and capital requirements, general business conditions and other pertinent facts.
Transfer Agent
Our Transfer Agent is Pacific Stock Transfer 6725 Via Austi Pkwy. Suite 300 Las Vegas, NV 89119 Telephone (800) 785-7782 Fax (702) 433-1979. The transfer agent is registered under the Exchange Act and operates under the regulatory authority of the SEC and FINRA.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this Offering, there has been a limited market for our Common Stock. Future sales of substantial amounts of our Common Stock, or securities or instruments convertible into our Common Stock, in the public market, or the perception that such sales may occur, could adversely affect the market price of our Common Stock prevailing from time to time. Furthermore, because there will be limits on the number of shares available for resale shortly after this Offering due to contractual and legal restrictions described below, there may be resales of substantial amounts of our Common Stock in the public market after those restrictions lapse. This could adversely affect the market price of our Common Stock prevailing at that time.
Rule 144
In general, a person who has beneficially owned restricted shares of our Common Stock for at least twelve months, in the event we are a reporting company under Regulation A, or at least six months, in the event we have been a reporting company under the Exchange Act for at least 90 days before the sale, would be entitled to sell such securities, provided that such person is not deemed to be an affiliate of ours at the time of sale or to have been an affiliate of ours at any time during the 90 days preceding the sale. A person who is an affiliate of ours at such time would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of shares that does not exceed the greater of the following:
| ● | 1% of the number of shares of our Common Stock then outstanding; or |
| ● | the average weekly trading volume of our Common Stock during the four calendar weeks preceding the filing by such person of a notice on Form 144 with respect to the sale; |
| 49 |
provided that, in each case, we are subject to the periodic reporting requirements of the Exchange Act for at least 90 days before the sale. Rule 144 trades must also comply with the manner of sale, notice and other provisions of Rule 144, to the extent applicable.
Certain legal matters with respect to the shares of common stock offered hereby will be passed upon by John E. Lux, Esq. of Washington, D.C.
The consolidated financial statements of the Company appearing elsewhere in this Offering Circular have been prepared by management and have not been reviewed by an independent accountant.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Regulation A Offering Statement on Form 1-A under the Securities Act with respect to the shares of common stock offered hereby. This Offering Circular, which constitutes a part of the Offering Statement, does not contain all of the information set forth in the Offering Statement or the exhibits and schedules filed therewith. For further information about us and the common stock offered hereby, we refer you to the Offering Statement and the exhibits and schedules filed therewith. Statements contained in this Offering Circular regarding the contents of any contract or other document that is filed as an exhibit to the Offering Statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the Offering Statement. Upon the completion of this Offering, we will be required to file periodic reports, proxy statements, and other information with the SEC pursuant to the Securities Exchange Act of 1934. You may read and copy this information at the SEC’s Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, including us, that file electronically with the SEC. The address of this site is www.sec.gov.
| 50 |
| F-1 |
SQUARE CHAIN CORPORATION
(Stated in US Dollars)
(Unaudited)
| March 31, | ||||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | - | $ | - | ||||
| Other receivables | - | - | ||||||
| Total current assets | - | - | ||||||
| Non-current assets: | ||||||||
| Property and equipment, net of accumulated depreciation | - | 2,644,762 | ||||||
| Total non-current assets | - | 2,644,762 | ||||||
| Total assets | $ | - | $ | 2,644,762 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accrued expenses and other payables | $ | 2,000 | $ | 86,172 | ||||
| Deferred tax liabilities | - | 8,692 | ||||||
| Related parties payables | - | 3,078,390 | ||||||
| Note payable-Officer | 73,978 | - | ||||||
| Mortgage loans – current portion | - | 157,791 | ||||||
| Total current liabilities | 75,978 | 3,331,045 | ||||||
| Mortgage loans – non-current portion | - | 1,204,856 | ||||||
| Total liabilities | $ | 75,978 | $ | 4,535,901 | ||||
| SHAREHOLDERS’ DEFICIT | ||||||||
| Preferred stock: par value $0.001 per share; 10,000,000 shares authorized, 20,000 shares issued and outstanding at March 31, 2018 and 2017 | 20 | 20 | ||||||
| Common stock: $0.001 par value, 990,000,000 shares authorized; 177,748,501 and 177,748,501 shares issued and outstanding at March 31, 2018 and 2017, respectively | 177,748 | 177,748 | ||||||
| Capital in excess of par value | 9,496,072 | 9,496,072 | ||||||
| Accumulated deficits | (9,749,818 | ) | (11,601,672 | ) | ||||
| Accumulated other comprehensive income | - | 36,693 | ||||||
| Total shareholders’ deficit | (75,978 | ) | (1,891,139 | ) | ||||
| Total liabilities and shareholders’ deficit | $ | - | $ | 2,644,762 | ||||
See notes to consolidated financial statements
| F-2 |
SQUARE CHAIN CORPORATION
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Stated in US Dollars)
(Unaudited)
| For the Years Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Revenue | $ | - | $ | 134,823 | ||||
| Cost of sales | - | (74,168 | ) | |||||
| Gross profit | - | 60,655 | ||||||
| Operating expenses | ||||||||
| Depreciation | (81,040 | ) | (81,040 | ) | ||||
| General and administrative | (75,978 | ) | (92,098 | ) | ||||
| Total expenses | (157,018 | ) | (173,138 | ) | ||||
| Loss from operations | (157,018 | ) | (112,483 | ) | ||||
| Other income and expenses | ||||||||
| Exchange gain | - | - | ||||||
| Gain on disposals | - | - | ||||||
| Interest income | - | 16 | ||||||
| Interest expenses | (108,336 | ) | (108,336 | ) | ||||
| Total other income and expenses | (108,336 | ) | (108,320 | ) | ||||
| Loss before income taxes | (265,354 | ) | (220,803 | ) | ||||
| Income tax expense | - | - | ||||||
| Net loss from continuing operations | (265,354 | ) | (220,803 | ) | ||||
| Comprehensive loss: | ||||||||
| Foreign currency translation adjustments | - | 15,504 | ||||||
| Comprehensive loss | (265,354 | ) | (205,299 | ) | ||||
| Discontinued operations (Note 11) | ||||||||
| Gain on disposition of discontinued operations, net | 2,080,515 | - | ||||||
| Net income (loss) | $ | 1,815,161 | $ | (205,299 | ) | |||
| Lo Loss per share: (continuing operations) | ||||||||
| Basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average common stock outstanding: | ||||||||
| Basic and diluted | 177,748,501 | 177,748,501 | ||||||
See notes to consolidated financial statements
| F-3 |
SQUARE CHAIN CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
For the Years Ended March 31, 2018 and 2017
(Stated in US Dollars)
(Unaudited)
| Preferred stock | Common stock | Capital
in excess of | Accumulated | Accumulated
other comprehensive | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | par value | deficit | income | Total | |||||||||||||||||||||||||
| Balance as of April 1, 2015 | 20,000 | $ | 20 | 177,748,501 | $ | 177,748 | $ | 9,496,072 | $ | (10,024,085 | ) | $ | 4,106 | $ | (346,139 | ) | ||||||||||||||||
| Net loss for the year | - | - | - | - | - | (1,356,784 | ) | - | (1,356,784 | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | - | 17,083 | 17,083 | ||||||||||||||||||||||||
| Balance as of March 31, 2016 | 20,000 | 20 | 177,748,501 | 177,748 | 9,496,072 | (11,380,869 | ) | 21,189 | (1,685,840 | ) | ||||||||||||||||||||||
| Net loss for the year | - | - | - | - | - | (220,803 | ) | - | (220,803 | ) | ||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | - | 15,504 | 15,504 | ||||||||||||||||||||||||
| Balance as of March 31, 2017 | 20,000 | $ | 20 | 177,748,501 | $ | 177,748 | $ | 9,496,072 | $ | (11,601,672 | ) | $ | 36,693 | $ | (1,891,139 | ) | ||||||||||||||||
| Net income (loss) for the year | 1,815,161 | 1,815,161 | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | 36,693 | (36,693 | ) | - | ||||||||||||||||||||||||||||
| Balance as of March 31, 2018 | 20,000 | $ | 20 | 177,748,501 | $ | 177,748 | $ | 9,496,072 | $ | (9,749,818 | ) | $ | - | $ | (75,978 | ) | ||||||||||||||||
See notes to consolidated financial statements
| F-4 |
SQUARE CHAIN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended March 31, 2018 and 2017
(Stated in US Dollars)
(Unaudited)
| For the Years Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | 1,815,161 | $ | (220,803 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 81,040 | 81,040 | ||||||
| Gain from discontinued operations | (2,080,515 | ) | - | |||||
| Changes in assets and liabilities: | ||||||||
| Decrease (increase) in other receivables | - | 22,185 | ||||||
| Increase (decrease) in tax payable | - | (275 | ) | |||||
| Increase (decrease) in accrued expenses and other payables | 110,336 | 81,094 | ||||||
| Net cash used in operating activities | (73,978 | ) | (36,759 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Sale of property and equipment | - | - | ||||||
| Net cash provided by investing activities | - | - | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Loan advance from related parties | - | 39,495 | ||||||
| Funds from note payable-officer | 73,978 | - | ||||||
| Repayment to related parties | - | (9,790 | ) | |||||
| Repayment of loan | - | (36,959 | ) | |||||
| Net cash provided (used) by financing activities | 73,978 | (7,254 | ) | |||||
| Effect of exchange rate changes on cash and cash equivalents | - | (1,579 | ) | |||||
| Net (decrease) in cash and cash equivalents | - | (45,592 | ) | |||||
| Cash and cash equivalents at beginning of year | - | 45,592 | ||||||
| Cash and cash equivalents at end of year | $ | - | $ | - | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest expenses | $ | 108,336 | $ | 108,336 | ||||
| Income taxes | $ | - | $ | - | ||||
See notes to consolidated financial statements
| F-5 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 1: Organization and principal activities
Square Chain Corporation (formerly Asia Travel Corporation) (the “Company” or “Square Chain Corp”) was incorporated under the laws of the State of Arizona on November 14, 1994 under the name of Piranha Interactive Publishing, Inc. On November 22, 1996, the Company reincorporated under the laws of the State of Nevada and effected a forward split of its common stock on a basis of approximately 242 shares of the Nevada corporation for each share of the Arizona corporation. The Company ceased to actively pursue its business operations relating to the publishing of interactive media software in July 1999.
On January 9, 2008, the Company filed a Certificate of Amendment to its Articles of Incorporation designating 100,000 shares of preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue up to 100,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate and as a single class with the common stock with each share of Series A Preferred Stock equal to 50 shares of common stock for voting purposes. The stock is redeemable by the Company at $.05/share.
On October 28, 2009, the Company filed Amended and Restated Articles of Incorporation effectively changing the name of the corporation to Piranha Ventures, Inc.
During December 2011, the Company established a subsidiary in Hong Kong, Asia Travel (Hong Kong) Limited (formerly Realgold Venture Pte Limited) (“Asia Travel (Hong Kong)”).
On May 17, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation, increasing the number of authorized common shares to 100,000,000 and authorized preferred shares 10,000,000. In addition, the Company completed a 1:10 reverse stock split.
On November 2, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000 shares of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common stock for voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of common stock.
On November 21, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation changing the name of the corporation to Realgold International, Inc.
On May 23, 2012, the Board of Directors of the Company adopted an Amendment to the Articles of Incorporation to increase authorized stock from 10,000,000 preferred shares and 99,000,000 common shares to 10,000,000 preferred shares and 990,000,000 common shares.
On November 22, 2012, Asia Travel (Hong Kong) entered into a Lease Management Agreement (“Lease Management Agreement”) with Zhuhai Tengfei Investment Co., Ltd. (“Tengfei Investment”), a limited liability company formed under the laws of the People’s Republic of China (“China” or “PRC”). Under the Lease Management Agreement, Tengfei Investment leased the managerial and operating rights of Zhuhai Tengda International Travel Agency Co., Ltd. (“Tengda Travel”), a wholly owned subsidiary of Tengfei Investment, to Asia Travel (Hong Kong). Based on the agreement, Asia Travel (Hong Kong) obtained 20 years of business operation right from Tengda Travel from November 11, 2012 to November 19, 2032 for a consideration of US$16,048 (RMB100,000) per year.
On November 25, 2012, Asia Travel (Hong Kong) entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Tengfei Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Asia Travel (Hong Kong) 100% of the ownership of Zhuhai Tengda Business Hotel Co., Ltd. (“Tengda Hotel”) for a total transfer price of RMB 400,000 (approximately $64,192).
| F-6 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 1: Organization and principal activities (continued)
On November 29, 2012, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of Tengda Hotel to Asia Travel (Hong Kong). On March 26, 2013, Guangdong Province Department of Foreign Trade and Economic Cooperation approved this ownership transfer.
Tengda Hotel and Tengda Travel are wholly owned subsidiaries of Tengfei Investment. They are considered as entities under common control. Accordingly, the financial statements for Tengda Hotel and Tengda Travel have been consolidated for all periods presented, similar to a pooling-of-interests.
Tengda Travel is a limited liability company formed under the laws of the People’s Republic of China on December 23, 2011. As of March 31, 2013, Tengda Travel had registered capital of RMB 300,000, or approximately $47,662 based on the exchange rate as of March 31, 2013. Tengda Travel’s principal activity is to provide packaged tours, air ticketing, reservation of hotel rooms and golf courses and organize corporate conferences, exhibitions and show events for its customers.
Tengda Hotel, formerly named Zhuhai Meihua Hotel Co., Ltd., is a limited liability company formed under the laws of the People’s Republic of China on January 16, 2006. Tengda Hotel had registered capital of RMB 500,000, or approximately $79,403 based on the exchange rate as of March 31, 2013. Tengda Hotel is a three-star hotel with 59 guest rooms, including 24 Standard Rooms, 24 Deluxe Rooms, 10 Business Rooms and 1 Luxury Suite, with many other amenities including fitness club, gym, business center, gift shop, meeting room, ballroom, game room, and a large parking lot.
Upon the completion of the said ownership transfer, Tengda Hotel became the wholly owned subsidiary of Asia Travel (Hong Kong).
On May 16, 2013, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name from Realgold International, Inc. to Asia Travel Corporation.
On November 6, 2013, Tengda Hotel entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Zhou Hui Juan and Yu Li Ying. Under the Ownership Transfer Agreement, Zhou Hui Juan and Yu Li Ying transfers to Tengda Hotel 100% of the ownership of Tengfei Investment for a total transfer price of RMB5,000,000 (approximately $820,309).
On January 22, 2014, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of Tengfei Investment to Tengda Hotel.
Upon the completion of the said ownership transfer, Tengfei Investment became the wholly owned subsidiary of Tengda Hotel. Lease Management Agreement would be automatically terminated on January 22, 2014.
On September 27, 2016, the Company filed a 15-12G with the Securities and Exchange Commission. As such, the Company will no longer be a reporting company with the Securities and Exchange Commission. The Company’s common stock will be quoted on the OTC Markets Pinksheets.
On March 5, 2018, Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark County, Nevada.
| F-7 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 1: Organization and principal activities (continued)
On March 6, 2018, the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers and directors were terminated from their position for abandonment of the Company.
On March 7, 2018, the Company filed its Reinstatement with the State of Nevada and its Annual list of officers and directors.
On March 7, 2018, the Company filed a Certificate of Designation to its Amended and Restated Articles of Incorporation for a new series of preferred stock titled Series B Super Voting Preferred Stock whose par value is $.001. Under the terms of the designation, the Company is authorized to issue 10,000 shares and the holder of the Series B Super Voting Preferred Stock has voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting.
On March 8, 2018, the Company filed a Certificate of Amendment with the State of Nevada to effectively change the name of the Company to Square Chain Corporation.
On March 9, 2018, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority for the name change to Square Chain Corporation, and for a new trading symbol.
Stock Split
On June 13, 2011, the Company effected a reverse stock split of the issued and outstanding shares of the Company on a ten (10) to one (1) basis with all fractional shares rounded up to the nearest whole share. The capital stock accounts, all share data and earnings per share data give effect to the stock split, applied retrospectively, to all periods presented.
Note 2: Summary of significant accounting policies
Basis of presentation
The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The consolidated financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of consolidated financial statements. These financial statements include all adjustments that, in the opinion of management, are necessary in order to make them not misleading.
Principles of consolidation
The consolidated financial statements give effect to the Share Exchange Transaction as if occurred at the beginning of the periods presented and include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.
Use of estimates
The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Significant estimates include the useful life of property and equipment, and assumptions used in assessing impairment of long-term assets.
| F-8 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 2: Summary of significant accounting policies (continued)
Fair value of financial instruments
The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
| ● | Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. |
| ● | Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data. |
| ● | Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information. |
The carrying amounts reported in the balance sheets for cash, due from related parties, other assets, accrued expenses, other payables, and due to related parties approximate their fair market value based on the short-term maturity of these instruments. The Company did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of March 13, 2018 and 2017.
ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.
Cash and Cash Equivalents
For purposes of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Management believes that Company’s cash and cash equivalents held by major banks located in the PRC are of high credit quality as of March 31, 2018.
Credit risk
The Company may be exposed to credit risk from its cash and fixed deposits at banks. No allowance has been made for estimated irrecoverable amounts determined by reference to past default experience and the current economic environment.
Property and equipment
Property and equipment are carried at cost and are depreciated on a straight-line basis (after taking into account their respective estimated residual value) over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.
| F-9 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 2: Summary of significant accounting policies (continued)
The estimated useful lives are as follows:
| Buildings | 50 years |
| Leasehold improvements | 20 years |
Impairment of long-lived assets
In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.
Revenue Recognition
Revenue derived from hotel services is recognized when the rooms are occupied and the services are performed. Travel agency services revenues are recognized when the travel-related service, golf package service or transportation is provided, or when the organization service of corporate conferences, exhibitions and show events is commenced. Deferred revenue consisting of deposits paid in advance is recognized as revenue when the services are performed for hotels and upon commencement of travel agency services.
Employment benefits
The Company does not provide any other post-retirement or post-employment benefits.
Income Taxes
The Company is governed by the Income Tax Law of US, Hong Kong and PRC. The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of March 31, 2018 and 2017, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.
Foreign currency translation
The accompanying consolidated financial statements are presented in U.S. dollars (“USD”). The reporting currency of the Company is the USD. The functional currency of EETA is Renminbi dollars (“RMB”). For the subsidiaries whose functional currencies are the USD or RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income.
| F-10 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 2: Summary of significant accounting policies (continued)
All of the Company’s revenue transactions are transacted in the functional currency. The Company does not enter any material transaction in foreign currencies and, accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.
Earnings per share
ASC 260 “Earnings per Share,” requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.
Basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
Accumulated other comprehensive loss
Comprehensive loss is comprised of net loss and all changes to the statements of stockholders’ deficit, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive loss for the years ended March 31, 2018 and 2017 included net loss and unrealized loss from foreign currency translation adjustments.
Related party transactions
A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities including such person’s immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.
Recent accounting pronouncements
The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.
Note 3: Going concern
As shown in the accompanying consolidated financial statements, the Company has generated a net loss from continuing operations of $265,354 and an accumulated deficit of $9,749,818 as of March 31, 2018. The Company also experienced insufficient cash flows from operations and will be required continuous financial support from the shareholders. The Company will need to raise capital to fund its operations until it is able to generate sufficient revenue to support the future development. Moreover, the Company may be continuously raising capital through the sale of debt and equity securities
| F-11 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 3: Going concern (continued)
The Company’s ability to achieve these objectives cannot be determined at this stage. If the Company is unsuccessful in its endeavors, it may be forced to cease operations. These consolidated financial statements do not include any adjustments that might result from this uncertainty which may include adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
These factors have raised substantial doubt about the Company’s ability to continue as a going concern. There can be no assurances that the Company will be able to obtain adequate financing or achieve profitability. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 4: Property, plant and equipment
Property, plant and equipment consisted of the following:
| Years Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Buildings | $ | - | $ | 2,203,310 | ||||
| Leasehold improvements | - | 848,034 | ||||||
| Total property, plant and equipment | - | 3,051,344 | ||||||
| Less: accumulated depreciation | - | (406,582 | ) | |||||
| Total property, plant and equipment, net | $ | - | $ | 2,644,762 | ||||
The Company discontinued operations as of March 5, 2018. Please see Note 11: Discontinued Operations for further information.
Note 5: Mortgage loans
| Years Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Mortgage loans - wholly repayable in year 2024 | $ | - | $ | 1,362,647 | ||||
| Less: current maturities of mortgage loans | - | (157,791 | ) | |||||
| Non-current maturities of mortgage loans | $ | - | $ | 1,204,856 | ||||
The Company discontinued operations as of March 5, 2018. Please see Note 11: Discontinued Operations for further information.
| F-12 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 6: Capital Stock
Preferred Stock
The Company is authorized to issue 10,000,000 shares of its preferred stock, par value $.001. As of March 31, 2018 and March 31, 2017, the Company has 30,000 and 20,000 shares of preferred stock issued and outstanding, respectively.
Series A Preferred Stock
On November 2, 2011, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation designating 20,000 shares of convertible preferred stock as Series A Preferred Stock whose par value is $.001. The Company shall be authorized to issue up to 20,000 shares of the Series A Preferred Stock. Holders of the Series A Preferred Stock shall be entitled to vote as a separate and as a single class with the common stock with each share of Series A Preferred Stock equal to 1000 shares of common stock for voting purposes. Holders shall have the right to convert each share of Series A Preferred Stock into 1000 shares of common stock. As of March 31, 2018 and March 31, 2017, the Company had 20,000 and 20,000 shares issued and outstanding, respectively
Series B Preferred Stock
On March 7, 2018, the Company filed a Certificate of Designation to its Amended and Restated Articles of Incorporation for a new series of preferred stock titled Series B Super Voting Preferred Stock whose par value is $.001. Under the terms of the designation, the Company is authorized to issue 10,000 shares and the holder of the Series B Super Voting Preferred Stock has voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting. As of March 31, 2018 and March 31, 2017, the Company had 10,000 and 0 shares issued and outstanding, respectively
Stock-Based Compensation
The Company accounts for stock-based compensation under FASB ASC subtopic 718-10, Compensation – Stock Compensation: Overall. Under FASB Subtopic 718-10, the Company measures the cost of the employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the requisite service periods.
Common Stock
The Company is authorized to issue 990,000,000 shares of its common stock, par value $.001. As of March 31, 2018 and March 31, 2017, the Company has 177,748,501 and 177,748,501 shares of common stock issued and outstanding, respectively.
On July 22, 2013 the Company entered into a Regulation S Stock Purchase Agreement (“Agreement”) with a group of 34 non-US individual purchasers (“Purchasers”). Under the Agreement, the Company will issue a total of 125,788,400 shares of common stock to Purchasers for a total price of $628,943 ($0.005 per share). The issuance of the 125,788,400 shares is pursuant to the exemption provided by Regulation S. None of the Purchasers is a US person and the transactions underlying the Agreement are carried out outside US. Accordingly, July 29,2013, 125,788,400 shares of common stock have been issued.
On September 16, 2016, the Company filed a 15-12G with the Securities and Exchange Commission. As such, the Company will no longer be a reporting company with the Securities and Exchange Commission. The Company’s common stock will be quoted on the OTC Markets Pinksheets.
| F-13 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 7: Income Taxes
Square Chain Corporation is incorporated in the United States and subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. As the Company had no income generated in the United States, there was no tax expense or tax liability for the years ended March 31, 2018 and 2017.
The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the years ended March 31, 2018 and 2017, the Company had no unrecognized tax benefits.
The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company will classify interest and penalties related to income tax matters, if any, in income tax expense.
| Years Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Income tax expense is comprised of: | ||||||||
| Current income tax | $ | - | $ | - | ||||
| Deferred income tax | - | - | ||||||
| Total provision for income tax | $ | - | $ | - | ||||
Deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carryforwards. Deferred income tax was measured using the enacted income tax rates for the periods in which they are expected to be reversed. The tax effects of temporary differences that give rise to the following approximate deferred tax assets and liabilities as of March 31, 2018 and 2017 are presented below:
| Years Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Operating loss carryforward | $ | - | $ | - | ||||
| Accrued tax expense | - | - | ||||||
| Deferred tax liabilities | $ | - | $ | - | ||||
Note 8: Loss per share
The following table presents a reconciliation of basic and diluted net loss per share:
| Years Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Net loss available to common stockholders for basic and diluted net loss per share of common stock | $ | (265,354 | ) | $ | (220,803 | ) | ||
| Denominator | ||||||||
| Basic | 177,748,501 | 177,748,501 | ||||||
| Conversion of preferred stock | 20,000,000 | 20,000,000 | ||||||
| Anti-dilutive effect of preferred stock | (20,000,000 | ) | (20,000,000 | ) | ||||
| Weighted average common stock outstanding – diluted | 177,748,501 | 177,748,501 | ||||||
| Loss per common stock – basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| F-14 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 9: Related parties transactions/Note Payable-Officer
The Company discontinued previous operations as of March 5, 2018. All related party loans were forgiven by all parties. Please see Note 11: Discontinued Operations for further information. On March 6, 2018, the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers and directors were terminated from their position for abandonment of the Company.
On March 27, 2018, Mr. Parker executed a demand note to the Company in the amount of $73,978 at 5% interest due August 1, 2018.
9.1 Previous Related parties
| Name of related parties | Relationship with the Company | |
| Mr. Tan Lung Lai | Shareholder of the Company | |
| Mr. Li Guo Hua | Shareholder of the Company | |
| Ms. Zhou Hui Juan | Shareholder of the Company | |
| Ms. Yu Li Ying | Mother-in-law of shareholder of the Company |
9.2 Related party balances
The Company had the following related party balances at March 31, 2018 and 2017:
| Years Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Loan from Mr. Tan Lung Lai | $ | - | $ | 1,215,321 | ||||
| Loan from Mr. Li Guo Hua | - | 678,360 | ||||||
| Loan from Ms. Zhou Hui Juan | - | 624,672 | ||||||
| Loan from Ms. Yu Li Ying | - | 560,037 | ||||||
| Total related party payables | $ | $ | 3,078,390 | |||||
| Note payable-officer | $ | 73,978 | $ | - | ||||
| Total notes payable | $ | 73,978 | $ | - | ||||
Note 10: Commitments and contingencies
Legal Proceeding
For the year ended March 31, 2016, the Company received the summons and complaint filed by Allison Carr (“Plaintiff”) in the Judicial District Court for Salt Lake County, State of Utah. The Company was named as one of the defendants by the Plaintiff. The Plaintiff was the ex-wife of Curtis S. Olsen, a former officer of the Company. The Plaintiff claimed that Curtis Olsen and Kip Eardley, another former officer of the Company, wrongfully transferred the shares of the Company held by Curtis Olsen. The Plaintiff claimed that the shares in question were transferred to an entity controlled by Kip Eardley below the fair value. The Plaintiff alleged that Curtis Olsen and Kip Eardley transferred the shares with intention to hide the assets from the Plaintiff amid the divorce proceedings. The Company had engaged a Utah counsel to represent them in the lawsuit. This lawsuit was ended as the Plaintiff filed a motion to dismiss to end the lawsuit and the court granted such motion. There was no damage caused to the Company.
There has been no other legal proceeding in which the Company is a party as of March 31, 2018.
| F-15 |
Square Chain Corporation
Notes to Consolidated Financial Statements
For the years ended March 31, 2018 and March 31, 2017
(Unaudited)
Note 11: Discontinued Operations
The Company previously operated a travel agency, hotel and Tengfei through direct ownership in China. These operations were discontinued and abandoned:
On March 5, 2018, Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark County, Nevada.
On March 6, 2018, the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers and directors were terminated from their position for abandonment of the Company.
The gain on disposition of these discontinued operations was calculated as follows:
| Fair value as of March 2018: | ||||
| Accrued expenses | $ | 196,508 | ||
| Deferred tax liabilities | 8,692 | |||
| Related party payables | 3,078,390 | |||
| Mortgage loans | 1,362,647 | |||
| Property and equipment book value | (2,563,722 | ) | ||
| Gain on disposition of discontinued operations | $ | 2,080,515 | ||
Note 12: Subsequent Events
None
Note 13. Change in Management
On March 5, 2018, Small Cap Compliance, LLC was appointed Custodian of the Company by the Eighth Judicial District Court of Clark County, Nevada.
On March 6, 2018, the Custodian of the Company appointed Jeffrey J Parker as the Company’s sole officer and director. All past officers and directors were terminated from their position for abandonment of the Company.
| F-16 |
PART III—EXHIBITS
Index to Exhibits
| F-17 |
III-1
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of North Las Vegas, State of Nevada, on June 15 , 2018.
| (Exact name of issuer as specified in its charter): | Square Chain Corporation |
This Offering Statement has been signed by the following persons in the capacities and on the dates indicated.
| By (Signature and Title): | /s/ Jeffrey J. Parker | |
| Jeffrey J. Parker, Chief Executive Officer (Principal Executive Officer). |
(Date): June 15, 2018
/s/ Jeffrey J. Parker |
| Jeffrey J. Parker, Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer). |
(Date): June 15, 2018
SIGNATURES OF DIRECTORS:
/s/ Jeffrey J. Parker |
June 15 , 2018 | |
| Jeffrey J. Parker, Director | Date |
| F-18 |
| STATE OF NEVADA | ||
BARBARA K. CEGAVSKE Secretary of State
KIMBERLEY PERONDI Deputy Secretary for Commercial Recordings |
|
Commercial Recordings Division 202
N. Carson Street |
OFFICE OF THE SECRETARY OF STATE |
| RHONDA KEAVENEY | Job: C20180309-0152 |
| March 12, 2018 | |
| NV |
Special Handling Instructions:
PWR 3-12-18
A&A
0309-0152
Charges
| Description | Document Number | Filing Date/Time | Qty | Price | Amount | |||||||||||
| Entity Copies | 00010914346-68 | 52 | $ | 2.00 | $ | 104.00 | ||||||||||
| Total | $ | 104.00 | ||||||||||||||
Payments
| Type | Description | Amount | ||||
| Credit | 5208798864276154703072| | $ | 104.00 | |||
| Total | $ | 104.00 | ||||
Credit Balance: $0.00
Job Contents:
NV Corp Copy Request Cover Letter(s): 1
RHONDA KEAVENEY
NV
| STATE OF NEVADA | ||
BARBARA K. CEGAVSKE Secretary of State
KIMBERLEY PERONDI Deputy Secretary for Commercial Recordings |
|
Commercial Recordings Division 202
N. Carson Street |
OFFICE OF THE SECRETARY OF STATE |
Copy Request
March 12, 2018
Job Number: Reference Number: Expedite: Through Date: |
C20180309-0152 00010914346-68 |
| Document Number(s) | Description | Number of Pages | ||
| C24140-1996-001 | Articles of Incorporation | 10 Pages/1 Copies | ||
| C24140-1996-003 | Articles of Merger | 13 Pages/1 Copies | ||
| 20080018053-87 | Amendment | 5 Pages/1 Copies | ||
| 20080652616-36 | Certificate of Correction | 1 Pages/1 Copies | ||
| 20090763328-10 | Amended & Restated Articles | 6 Pages/1 Copies | ||
| 20110368589-33 | Amendment | 1 Pages/1 Copies | ||
| 20110787798-40 | Certificate of Designation | 6 Pages/1 Copies | ||
| 20110823115-74 | Amendment | 1 Pages/1 Copies | ||
| 20120371603-15 | Amendment | 1 Pages/1 Copies | ||
| 20130327313-95 | Amendment | 1 Pages/1 Copies | ||
| 20180105077-21 | Amendment | 1 Pages/1 Copies | ||
| 20180106115-15 | Amendment | 5 Pages/1 Copies | ||
| 20180107662-53 | Amendment | 1 Pages/1 Copies |
| Respectfully, | |
 | |
| Barbara K. Cegavske | |
| Secretary of State |
Commercial Recording Division
202
N. Carson Street
Carson City, Nevada 89701-4201
Telephone (775) 684-5708
Fax (775) 684-7138
| IN THE OFFICE OF THE | INV#107388 &p | |
| SECRETARY OF STATE OF THE | 112296 $12500 | |
| STATE OF NEVADA | ||
| NOV 22 1996 | ARTICLES OF INCORPORATION | |
| OF | ||
| DEAN HELLER SECRETARY OF STATE | PIRANHA INTERACTIVE PUBLISHING, INC. | |
| NO. C24140-96 |
1. The name of the Corporation is Piranha Interactive Publishing, Inc.
2. Its principal office in the State of Nevada is located at One East First Street, Reno, Washoe County, Nevada 89501. The name and address of its resident agent is the Corporation Trust Company of Nevada, One East First Street, Reno, Nevada 89501.
3. The purpose for which the Corporation is organized is the transaction of any and all lawful activities for which corporations may be incorporated under the laws of the State of Nevada, as the same may be amended from time to time, including but not limited to the business of interactive multimedia software publishing.
4. The total authorized capital stock of the Corporation is Twenty Million (20,000,000) shares of common stock, $.001 par value, and Five Million (5,000,000) shares of preferred stock, $.001 par value. Such shares may be issued by the Corporation from time to time for such consideration as may be fixed by the Board of Directors
As to the preferred stock of the Corporation, the power to issue any shares of preferred stock of any class or any series of any class and designations, voting powers, preferences, and relative participating, optional or other rights, if any, or the qualifications, limitations, or restrictions thereof, shall be determined by the Board of Directors.
5. The governing board of this Corporation shall be known as Directors, and the number of Directors may from time to time be increased up to ten (10) or decreased in such manner as shall be provided by the Bylaws of this Corporation. The first Board of Directors shall consist of three (3) directors.
The number of Directors shall be divided into three (3) classes, as nearly equal in number as may be, to servo in the first instance until the first, second and third annual meetings of the stockholders to be held, respectively, and thereafter until the third annual meeting of stockholders to be held after their election and until their successors shall be elected and shall qualify. In the case of any increase in the number of Directors of the Corporation, the additional Directors shall be so classified that all classes of Directors shall be increased equally as nearly as may be, and the additional Directors shall be elected as provided in the Bylaws. In case of any decreases in the number of Directors of the Corporation, all classes of Directors shall be decreased equally, as nearly as may be. Election of Directors shall be conducted as provided in these Articles, by law or in the Bylaws.
| 1 |
The names and mailing addresses of the first Board of Directors who are to serve until the first, second and third annual meetings of the stockholders and until their successors are elected and qualified, and the class designation and term of office of each director is as follows:
| NAME | CLASS & TERM | POST OFFICE ADDRESS | ||
| Timothy M. Brannan | III. Term Ending 1999 | 1839 West Drake, Suite B Tempe, AZ 85283 | ||
| Keith Higginson | II. Term Ending 1998 | 1839 West Drake, Suite B Tempe, AZ 85283 | ||
| J. Wade Stallings, II | I. Term Ending 1997
|
1839 West Drake, Suite B Tempe, AZ 85283 |
6. The capital stock, after the amount of the subscription price or par value has been paid in, shall not be subject to assessment to pay the debts of the Corporation.
7. The name and post office address of each of the incorporators signing the Articles of Incorporation are as follows:
| NAME | POST OFFICE ADDRESS | |
| Loren D. Bates | 3225 N. Central Avenue | |
| Phoenix, Arizona 85012 | ||
| Jennifer Hunt | 3225 N. Central Avenue | |
| Phoenix, Arizona 85012 | ||
| Vickie Prince | 3225 N. Central Avenue | |
| Phoenix, Arizona 85012 |
8. The Corporation is to have perpetual existence.
9. The fiscal year of the Corporation shall initially end on December 31 and begin on January 1 of each year, provided, however, that such date may be changed from time to time as determined by the Board of Directors to be in the best interest of the Corporation.
| 2 |
10. Meetings of stockholders may be held within or without the State of Nevada, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the Nevada statutes, or the rules and regulations promulgated thereunder) outside the State of Nevada at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation.
11. To the fullest extent permitted by the laws of the State of Nevada, as the same exist or may hereinafter be amended, no director or officer of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer; provided, however, that nothing contained herein shall eliminate or limit the liability of a director or officer of the Corporation to the extent provided by applicable laws (i) for acts or omissions which involve intentional misconduct, fraud or knowing violation of law or (ii) for authorizing the payment of dividends in violation of Nevada Revised Statutes Section 78.300. The limitation of liability provided herein shall continue after a director or officer has ceased to occupy such position as to acts or omissions occurring during such director’s or officer’s term or terms of office. No repeal, amendment or modification of this Article, whether direct or indirect, shall eliminate or reduce its effect with respect to any act or omission of a director or officer of the Corporation occurring prior to such repeal, amendment or modification.
12. The Corporation shall indemnify, defend and hold harmless any person who incurs expenses, claims, damages or liability by reason of the fact that he or she is, or was, an officer, Director, employee or agent of the Corporation, to the fullest extent allowed pursuant to Nevada law.
13. Pursuant to Nevada Revised Statutes Section 78.378, the Corporation elects not to be governed by the provisions of Nevada Revised Statutes Sections 78.378 to 78.3793, inclusive, as the same may be amended from time to time; and further, pursuant to Nevada Revised Statutes Section 78.434, the Corporation elects not to be governed by the provisions of Nevada Revised Statutes Sections 78.411 to 78.444, inclusive, as the same may be amended from time to time.
14. Any Business Combination (as hereinafter defined) with an Interested Stockholder (as hereinafter defined) shall be subject to the following requirements:
(a) In addition to any affirmative vote required by law or these Articles of Incorporation or the Bylaws of the Corporation, and except as otherwise expressly provided in paragraph (b) of this Article 14, a Business Combination involving an Interested Stockholder or any Affiliate or Associate (as hereinafter defined) of any Interested Stockholder or any person who thereafter would be an Affiliate or Associate of such Interested Stockholder shall require the affirmative vote of not less than sixty six and two-thirds percent (66 2/3%) of all the then outstanding shares of Voting Stock, voting together as a single class, excluding Voting Stock beneficially owned by such Interested Stockholder. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage or separate class vote may be specified, by law or in any agreement with any national securities exchange or otherwise.
| 3 |
(b) The provisions of paragraph (a) of this Article 14 shall not be applicable to any particular Business Combination and such Business Combination shall require only such affirmative vote, if any. as is required by law or by any other provision of these Articles of Incorporation or the Bylaws of the Corporation, or any agreement with any national securities exchange, if the Business Combination shall have been approved, either specifically or as a transaction which is within an approved category of transactions, by a majority (whether such approval is made prior to or subsequent to the acquisition of, or announcement of or public disclosure of the intention to acquire, beneficial ownership of the Voting Stock that caused the Interested Stockholder to become an Interested Stockholder) of the Continuing Directors (as hereinafter defined).
(c) For the purposes of this Article 14:
1. The term ‘‘Business Combination” shall mean:
A. any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (i) any Interested Stockholder or (ii) any other Corporation (whether or not itself an Interested Stockholder) which is or after such merger or consolidation would be an Affiliate or Associate of an Interested Stockholder; or
B. any sale, lease, exchange, mortgage, pledge, transfer or other disposition or security arrangement, investment, loan, advance, guarantee, agreement to purchase, agreement to pay, extension of credit, joint venture participation or other arrangement (in one transaction or a series of transactions) with or for the benefit of any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder involving any assets or securities or commitments of the Corporation, any Subsidiary or any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder which, together with all other such arrangements (including all contemplated future events) has an aggregate Fair Market Value and/or involves aggregate commitments of $10,000,000 or more or constitutes more than ten percent (10%) of the book value of the total assets (in the case of transactions involving assets or commitments other than Capital Stock) or ten percent (10%) of the stockholders’ equity (in the case of transactions in Capital Stock) of the entity in question (the “Substantial Part”), as reflected in the most recent fiscal year end consolidated balance sheet of such entity existing at the time the stockholders of the Corporation would be required to approve or authorize the Business Combination involving the assets, securities, obligations and/or commitments constituting any Substantial Part; or
C. the adoption of any plan or proposal for the liquidation or dissolution of the Corporation or for any amendment to these Articles of Incorporation or the Bylaws proposed by or on behalf of an Interested Stockholder or any Affiliate or Associate of any Interested Stockholder; or
| 4 |
D. any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or otherwise involving an Interested Stockholder) that has the effect, directly or indirectly, of increasing the proportionate share of any class or series of Capital Stock, or any securities convertible into Capital Stock or into equity securities of any Subsidiary, that is beneficially owned by any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder; or
E. any agreement, contract or other arrangement providing for any one or more of the action specified in the foregoing clauses A to D.
2. The term “Capital Stock” shall mean all capital stock of the Corporation authorized to be issued from time to time under Article 4 of these Articles of Incorporation.
3. The term “person” shall mean any individual, firm, Corporation or other entity and shall include any group comprised of any person and any other person with whom such person or any Affiliate or Associate of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of Capital Stock.
4. The term “Interested Stockholder” shall mean any person (other than the Corporation or any Subsidiary and other than any profit-sharing, employee stock ownership or other employee benefit plan of the Corporation or any Subsidiary or any trustee of, or fiduciary with respect to; any such plan when acting in such capacity) who (a) is or has announced or publicly disclosed a plan or intention to become the beneficial owner of Voting Stock representing ten percent (10%) or more of the votes entitled to be cast by the holders of all the then outstanding shares of Voting Stock; or (b) is an Affiliate or Associate of the Corporation and at any time within the two-year period immediately prior to the date in question, was the beneficial owner of Voting Stock representing ten percent (10%) or more of the votes entitled to be cast by the holders of all the then outstanding shares of Voting Stock.
5. A person shall be a “beneficial owner” of any Capital Stock (a) which such person or any of its Affiliates or Associates owns, directly or indirectly; (b) which such person or any of its Affiliates or Associates has, directly or indirectly, (i) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding; or (c) which is beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Capital Stock. For the purposes of determining whether a person is an Interested Stockholder pursuant to Paragraph 4 of this Section (c), the number of shares of Capital Stock deemed to be outstanding shall include shares deemed beneficially owned by such person through application of this Paragraph 5, but shall not include any other shares of Capital Stock that may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
| 5 |
6. The terms ‘Affiliate’ and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Act as in effect on the date that these Articles of Incorporation are accepted for filing by the Nevada Secretary of State (the term “registrant” in said Rule 12h-2 meaning in this case, the Corporation).
7. The term “Subsidiary” means any company of which a majority of any class of equity security is beneficially owned by the Corporation: provided, however, that for the purposes of the definition of Interested Stockholder set forth in Paragraph 4 of this Section (c), the term “Subsidiary” shall mean only a company of which a majority of each class of equity security is beneficially owned by the Corporation.
8. The term “Continuing Director” means (i) any member of the Board of Directors on the date of the filing of these Articles of Incorporation with the Nevada Secretary of State, and (ii) any member of the Board of Directors who thereafter becomes a member of the Board of Directors while such person is a member of the Board of Directors, who is not an Affiliate or Associate or representative of the Interested Stockholder and was a member of the Board of Directors prior to the time that the Interested Stockholder became an Interested Stockholder, and (iii) a successor of a Continuing Director while such successor is a member of the Board of Directors, who is not an Affiliate or Associate or representative of the Interested Stockholder and is recommended or elected to succeed the Continuing Director by a majority of Continuing Directors.
9. The term “Fair Market Value” means (a) in the case of cash, the amount of such cash; (b) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the principal United States securities exchange registered under the Act on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period immediately preceding the date in question on the Nasdaq Small Cap Market or any similar system. then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors in good faith; and (c) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined in good faith by a majority of the Continuing Directors.
| 6 |
10. The term “Voting Stock” means stock of any class or series entitled to vote generally in the election of directors.
(d) A majority of the Continuing Directors shall have the power and duty to determine for the purposes of this Article 14 on the basis of information known to them after reasonable inquiry, (1) whether a person is an Interested Stockholder, (2) the number of shares of Capital Stock or other securities beneficially owned by any person, (3) whether a person is an Affiliate or Associate, (4) whether the proposed action is with, or proposed by, or on behalf of, an interested Stockholder or an Affiliate or Associate of an Interested Stockholder, (5) whether the assets that are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination has an aggregate Fair Market Value of $10,000,000 or more and (6) whether the assets or securities that are the subject of any Business Combination constitute a Substantial Part. Any such determination made in good faith shall be binding and conclusive on all parties.
(e) Nothing contained in this Article 14 shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law.
(f) For the purposes of this Article 14, a Business Combination or any proposal to amend, repeal or adopt any provision of these Articles of Incorporation inconsistent with this Article 14 (collectively, the “Proposed Action”) is presumed to have been proposed by, or on behalf of, an Interested Stockholder or an Affiliate or Associate of an Interested Stockholder or a person who thereafter would become such if (1) after the Interested Stockholder became such, the Proposed Action is proposed following the election of any director of the Corporation who, with respect to such Interested Stockholder, would not qualify to serve as a Continuing Director or (2) such Interested Stockholder, Affiliate, Associate or person votes for or consents to the adoption of any such Proposed Action, unless as to such Interested Stockholder, Affiliate. Associate or person, a majority of the Continuing Directors makes a good faith determination that such Proposed Action is not proposed by or on behalf of such Interested Stockholder, Affiliate, associate or person, based on information known to them after reasonable inquiry.
15. The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation or in the Bylaws of the Corporation, in the manner now or hereafter previously prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation; provided, however, that notwithstanding anything to the contrary in these Articles of Incorporation to the contrary, the affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of stock of this Corporation, entitled to vote shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with, these Articles. Notwithstanding the foregoing, only the affirmative vote of a majority of the outstanding shares of stock of this Corporation entitled to vote and represented at a meeting at which a quorum is constituted shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with, these Articles which has been recommended by a majority of the Continuing Directors for adoption by the stockholders.
| 7 |
WE, THE UNDERSIGNED, being each of the incorporators herein before named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Nevada, do make and file these Articles of Incorporation, hereby declaring and certifying that the facts herein stated arc true, and accordingly have hereunto set our hands this 22nd day of November, 1996.
| 8 |
| STATE OF ARIZONA | ) | |
| ) ss | ||
| County of Maricopa | ) |
On this 22nd day of November, 1996, before me, a Notary Public, personally appeared Loren D. Bates, Jennifer Hunt and Vickie Prince who acknowledged that they executed the above instrument.
(Notary Seal)
My commission expires:
July 5, 1997
| 9 |
| FILED | |
| IN THE OFFICE OF THE | |
| SECRETARY OF STATE OF THE | |
| STATE OF NEVADA | |
| NOV 22 1996 | |
| DEAN HELLER SECRETARY OF STATE | |
| NO. C24140-96 |
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY RESIDENT AGENT OF
PIRANHA INTERACTIVE PUBLISHING, INC.
The Corporation Trust Company of Nevada hereby accepts the appointment as Resident Agent of the above named corporation.
The Corporation Trust Company of Nevada, Resident Agent
| FILED | |
| IN THE OFFICE OF THE | |
| SECRETARY OF STATE OF THE | ARTICLES OF MERGER |
| STATE OF NEVADA | |
| OF | |
| NOV 25 1996 | |
| PIRANHA INTERACTIVE PUBLISHING. INC., an Arizona corporation. | |
| DEAN HELLER SECRETARY OF STATE | |
| NO. C-24140-96 | INTO |
PIRANHA INTERACTIVE PUBLISHING, INC., a Nevada corporation.
These Articles of Merge are delivered to the Arizona Corporation Commission for filing pursuant to Section 10-1105 of the Arizona Business Corporation Act by the undersigned corporations.
FIRST: The names, addresses of the known places of business, and states of incorporation of the merging corporations are as follows:
| Name and Address | State of Incorporation | |
| Piranha Interactive Publishing, Inc. | Arizona | |
1839 West Drake, Suite B Tempe, Arizona 85283 |
||
| Piranha Interactive Publishing, Inc. | Nevada | |
1839 West Drake, Suite B Tempe, Arizona 85283 |
SECOND: The name and address of the agent of the surviving corporation, Piranha Interactive Publishing Inc., a Nevada corporation, is:
The Corporation Trust Company of Nevada
One East First Street
Reno, Nevada 89501
THIRD: There were no amendments to the Articles of Incorporation of the Surviving corporation.
FOURTH: The Plan of Merger attached hereto as Exhibit “A” was approved by the shareholders of the undersigned corporations in the manner prescribed by the Arizona Business Corporation Act.
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FIFTH: As to each such corporation, the number of shares of stock issued and outstanding are as follows:
| Name of Corporation | Number of Shares of Issued and Outstanding Common Stock | |
| Piranha Interactive Publishing, | 4,959 shares, no par value | |
| Inc., an Arizona corporation | Common stock | |
| (“Piranha-Arizona”) | ||
| Piranha Interactive Publishing, | 1 shares, $.001 par value common stock | |
| Inc., a Nevada corporation | ||
| (“Piranha-Nevada”) |
Holders of each share of the 4,959 shares of common stock of Piranha-Arizona and the one share of common stock of Piranha-Nevada were entitled to cast one vote for each share held on the Plan of Merger. Piranha-Arizona has no class of stock authorized other than common stock. Piranha- Nevada has authorized a class of preferred stock, but no shares have been
issued.
SIXTH: As to each such corporation, the number of shares voted for or against such Plan of Merger, respectively, are as follows:
| Name of Corporation | Voted For | Vested Against | ||||||
| Piranha-Arizona | 4,959 | 0 | ||||||
| Piranha-Nevada | 1 | 0 | ||||||
SEVENTH: The Arizona Corporation Commission is appointed as the corporation’s agent for service of process in a proceeding to enforce any obligation or the rights of dissenting shareholders of each domestic corporation that is a party to the merger or share exchange.
[SIGNATURES ON FOLLOWING PAGE]
| 2 |
IN WITNESS WHEREOF, Piranha-Arizona and Piranha-Nevada have caused these Articles of Merger to be executed by their respective duly authorized officers on this 22 day of November, 1996.
PIRANHA INTERACTIVE PUBLISHING, INC., an Arizona corporation | ||
| By | /s/ Timothy M. Brannan | |
| Name: | Timothy M. Brannan | |
| Title: | President | |
| By | /s/ J, Wade Stallings II | |
| Name: | J.Wade Stallings II | |
| Title: | Vice President and Secretary |
PIRANHA INTERACTIVE PUBLISHING, INC., a Nevada corporation | ||
| By | /s/ Timothy M. Brannan | |
| Name: | Timothy M. Brannan | |
| Title: | President | |
| By | /s/ J, Wade Stallings II | |
| Name: | J. Wade Stallings II | |
| Title: | Vice President and Secretary |
| 3 |
STATE OF ARIZONA )
) SS.
County of Maricopa )
The foregoing instrument was acknowledged before me this 22 day of November, 1996 by Timothy M. Brannan, President of Piranha Interactive Publishing, Inc., an Arizona corporation, for and on behalf of the Corporation.
 | |
| Notary Public |
My commission expires :
My Commission Expires Oct. 15, 1997
STATE OF ARIZONA )
) SS.
County of Maricopa )
The foregoing instrument wasacknowledged before me this 22 day of November, 1996, by J, Wade Stallings II, the Vice President and Secretary of Piranha Interactive Publishing, Inc., an Arizona corporation, for and on behalf of the Corporation.
 | |
| Notary Public |
My commission expires:
My Commission Expires Oct. 15, 1997
| 4 |
STATE OF ARIZONA )
) SS.
County of Maricopa )
The foregoing Instrument was acknowledged before me this 22 day of November, 1996 by Timothy M. Brannan, President of Piranha Interactive Publishing, Inc., an Nevada corporation, for and on behalf of the Corporation.
 | |
| Notary Public |
My commission expires :
My Commission Expires Oct. 15, 1997
STATE OF ARIZONA )
) ss.
County of Maricopa )
The foregoing instrument was acknowledged before me this 22 day of November, 1996, by J. Wade Stallings II, the Vice President and Secretary of Piranha Interactive Publishing, Inc., a Nevada corporation, for and on behalf of the Corporation.
 | |
| Notary Public |
My commission expires :
My Commission Expires Oct. 15, 1997
| 5 |
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the “Agreement”) is entered into as of November 22, 1996, by and between PIRANHA INTERACTIVE PUBLISHING, INC., an Arizona corporation (“Piranha-Arizona” or a “Consulting Corporation”) whose principal place of. business is; 1839 West Drake Tempe, Arizona 85283, and PIRANHA INTERACTIVE PUBLISHING, INC., a Nevada corporation (“Piranha-Nevada” or a ‘Consultant Corporation”) whose principal place of business is:1839 West Drake, Suite B, Tempe. Arizona 85283.
WHEREAS, Piranha-Arizona has determined that is in the best interest of the Corporation to change the state of its incorporation form the State of Arizona to the state Nevada; and
WHEREAS, Piranha-Arizona caused Piranha-Nevada to be formed and desires to merge with and into Piranha-Nevada for the purpose of accomplishing such change; and
WHEREAS, Piranha-Nevada desires to merge with Piranha-Arizona pursuant to Nevada Revised Statute Chapter 92A; and
WHEREAS, the parties desire to exchange all shares of the common stock of Piranha-Arizona for shares of Piranha-Nevada (the “Merger”), upon the terms, and subject to the conditions, set forth in this Agreement and Plan of Merger (the “Agreement’) in accordance with the laws of the State of Arizona and the State of Nevada; and
WHEREAS, the authorized capital stock of Piranha-Arizona consists oi the following: 10,000,000 shares of common stock , no par value (the “piranha –Arizona common Stock”), of which 4,959 shares are issued and outstanding; and
WHEREAS, the authorized capital stock of Piranha-Nevada consists of 20,000,000 shares of Common Stock, $.001 par value (the “Piranha-Nevada of a Common Stock”), one shares of which is issued and outstanding and owns Piranha-Arizona and 5,000,000 shares of preferred stock, $.00 par value, none of which issued and outstanding; and
WHEREAS, Piranha-Arizona intends to convert each issued and outstanding share of Piranha-Arizona Common Stock into 241.98427 shares of Piranha-Nevada Common Stock; and
WHEREAS, the Boards of Directors of Piranha-Arizona and Piranha-Nevada, the stockholders of Piranha-Arizona, and the sole stockholder of Piranha-Arizona, and the sole stockholder of Piranha-Nevada have approved the terms of this agreement;
| 1 |
NOW THEREFORE, in consideration of the premises and the mutual agreements, covenants, and provisions herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Merger. O,' the Effective Date, as defined in Section 4.1 hereof, Piranha-Arizona shall be merged with and into Piranha-Nevada, which shall be the surviving corporation, and Piranha-Nevada at such time shall merge Piranha-Arizona with and into Piranha-Nevada. The corporate existence of Piranha-Nevada with all its purposes, powers, and objects shall continue unaffected and unimpaired by the Merger and Piranha-Nevada as it shall be constituted after the Effective Date is herein called the "Surviving Corporation." The Surviving Corporation shall, from and after the Effective Date, possess all of the rights, privileges, powers, and franchises of a public, as well as a private, nature and be subject to and liable for all the restrictions, disabilities, debts, liabilities, obligations, penalties and duties of each of the Constituent Corporations and all of the rights, privileges, powers, and franchises of each of the Constituent Corporations in all property, real, personal, or mixed; and all debts due either of the Constituent Corporations on whatever account, including stook subscriptions and other things in action and all or every other interest of or belonging to either of the Constituent Corporations shall be vested in the Surviving Corporation without further act or deed; and the title to any real estate, whether vested by deed or otherwise in either of the Constituent Corporations, shall not revert or be in any way impaired by reason of the Merger, and no liability or obligation due or to become due at the Effective Date or any claim or demand for any cause then existing or action or proceeding pending by or against either of the Constituent Corporations or any stockholder, officer or director thereof shall be released or impaired by the Merger, and all rights of creditors and liens upon property, of either of the Constituent Corporations, shall be preserved unimpaired, all in accordance with, and with the effect stated in Section 92A.250 of the Nevada Revised Statutes, as amended. The separate existence and corporate organization of Piranha-Arizona shall cease upon the Effective Date sod thereupon Piranha-Arizona and Piranha-Nevada shall be a single corporation, Piranha-Nevada.
1.2 Further Assurances, If at any time after the Effective Date the Surviving Corporation shall consider or be advised that any further assignment, assurances in law, or any other things are necessary or desirable to vest, perfect, or confirm of record or otherwise in the Surviving Corporation, the title to any property or right of Piranha-Arizona acquired or to be acquired by reason of or as a result of the Merger Piranha-Arizona and its proper officers and directors will, upon notice, execute and deliver such proper deeds, assignments, and assurances reasonably requested by the Surviving Corporation and do all things necessary or advisable to vest, perfect, or confirm tide to such property or rights in the Surviving Corporation and otherwise to carry out the intent and purposes of this Agreement, and the proper officers and directors of the Surviving Corporation are fully authorized in the name of Piranha-Arizona or otherwise to take any and all such actions.
| 2 |
article II
CORPORATE GOVERNANCE
2.1 Charter. Articles of Incorporation of Piranha-Nevada as in effect at the Effective Date shall be; Articles of Incorporation of the Surviving Corporation until the same shall be amended as property law.
2.2 Bylaws. The Bylaws of Piranha-Nevada as in effect at the Effective Date shall be the Bylaws of the Surviving Corporation until the same shall thereafter be altered, amended, or repealed in accordance with law, the Articles of Incorporation of the Surviving Corporation, or such Bylaws.
I
2.3 Officers and Directors. From and after the Effective Date, the officers and directors of Piranha-Nevada immediately prior to the Effective Date shall serve in their respective capacities as the officers and directors of the Surviving Corporation, each to serve until his respective successor shall have been duly elected and qualified.
2.4 Governing Law. The laws which are to govern the Surviving Corporation are the laws of the State of Nevada,
ARTICLE III
CONVERSION OF STOCK
3.1 Common Stock. On the Effective Date, each share of Piranha-Arizona Common Stock issued and outstanding immediately prior to the Effective Date then held by each Piranha-Arizona stockholder of record shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into 241.98427 shares of Piranha-Nevada Common Stock and the single share of Piranha-Nevada outstanding immediately prior to the Effective Time will be cancelled. Piranha-Nevada Common Stock shall be entitled to one vote per share, irrespective of the voting rights relating to that share prior to its conversion from Piranha-Arizona Common Stock.
3.2 Options. Upon the Effective Date, each outstanding option to purchase shares of Piranha-Arizona Common Stock shall be converted into a number of shares of Piranha-Nevada Common Stock equal to the number of shares of Piranha- Arizona Common Stock subject to each option multiplied by 241.98427 at a price per share equal to the per share exercise price of the option as in effect at the Effective Date divided by 241.98427 and upon the same terms and subject to the same conditions as set forth in the Plan and other agreements entered into by Piranha-Arizona pertaining to each option. Piranha-Nevada shall reserve a number of shares of Common Stock for purposes of such options equal to the product of 241.98427 multiplied by the number of shares of Piranha-Arizona Common Stock reserved by Piranha-Arizona as of the Effective Date. As of the effective time, Piranha-Nevada shall assume all obligations of Piranha-Arizona under agreements pertaining to such options.
| 3 |
3.3 Agreements. On the Effective Date, all agreements of any kind governing the Piranha-Arizona Common Stock, shall be adopted by Piranha-Nevada and shall apply to and inure to the benefit of the holders of Piranha-Arizona Common Stock.
3.4 Certificates and Agreements. After the Effective Date, each holder of outstanding certificates or agreements which, prior to the Effective Date, represented shares of Piranha-Arizona Common Stock, shall be deemed for all purposes to evidence ownership of and to represent shares of Piranha Nevada .Common Stock into which the securities of Piranha-Arizona represented by such certificates have been converted as provided in this Agreement. The registered owner on the books and records of Piranha-Arizona or its transfer agent of any such outstanding stock certificates shall until such certificate shall have been surrendered for transfer or otherwise accounted for to Piranha-Nevada or its transfer agent, have and be entitled to exercise any voting and other rights with respect to, and to receive any dividend and other distributions upon, the shares of Piranha-Nevada securities evidenced by such outstanding certificates, as above provided.
ARTICLE IV
PROCEDURE TO EFFECT MERGER
4.1 Effective Date. The term "Effective Date" as used herein shall mean the date on which this Agreement shall become effective in accordance with the laws of the State of Nevada, and the State of Arizona. Each of the Constituent Corporations hereby agrees to do promptly all of such acts, and to take promptly all such measures as may be appropriate to enable it to perform as early as practicable the covenants and agreements herein provided to be performed by it.
4.2 Termination. This Agreement may be terminated for any reason by the mutual consent of the Boards of Directors of the Constituent Corporations whether before or after approval of this Agreement by the stockholders of Piranha-Arizona and/or Piranha-Nevada.
4.3 Amendment. At any time prior to the Effective Date, the parties hereto may by written agreement amend, modify or supplement any provision of this Agreement, provided that an amendment made subsequent to the adoption of this Agreement by the stockholders of Piranha-Arizona and Piranha-Nevada shall not, without the approval of the holders of the requisite number of shares of capital stock of Piranha-Arizona or Piranha-Nevada, as the case may be, (a) alter or change the amount or kind of securities or rights to be received for or on conversion of all or any of the shares of capital stock of Piranha-Arizona or Piranha-Nevada, (b) alter or change any material term of the Articles of Incorporation of Piranha-Nevada or (c) alter or change any of the terms and conditions of this Agreement if such alteration or change would adversely affect the stockholders of Piranha-Arizona or Piranha-Nevada.
| 4 |
4.4 Filing. A copy of this Agreement shall be maintained in the principal office of Piranha-Nevada. Duplicate copies of this Agreement, Certified by the appropriate authorities, If necessary or desirable, shall be filed or recorded in such other offices or places as shall be required by the laws of the States of Nevada and Arizona.
ARTICLE V
MISCELLANEOUS
5.1 Counterparts. This Agreements may be executed in several counterparts, each of which shall be deemed an original, but all of which counterparts collectively shall constitute one instrument representing the agreement between the parties hereto.
5.2 Third Parties Except as otherwise provided in this Agreement, nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the Constituent Corporations or their respective successors and assigns, any rights or remedies under or by reasons of this Agreement.
5.3 Governing Law. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the internal laws of the State of Nevada, without reference to conflict of laws principles.
(SIGNATURES ON FOLLOWING PAGE].
| 5 |
IN WITNESS WHEREOF, each of the Constituent Corporations has caused this Agreement and Plan of Merger to be signed in its corporate name by its duly authorized officers all as of the date first above written.
PIRANHA INTERACTIVE PUBLISHING, INC., an Arizona corporation | ||
| By: | /s/ Timothy M. Brannan | |
| Timothy M. Brannan, President | ||
ATTEST:
J Wade Stallings II
| PIRANHA INTERACTIVE PUBLISHING, INC., | ||
| a Nevada corporation | ||
| By: | /s/ Timothy M. Brannan | |
| Timothy M. Brannan, President | ||
| 6 |
STATE OF ARIZONA )
)SS.
County of MARICOPA )
The foregoing Instrument was acknowledged before me this 22 day of November, 1996 by Timothy M. Brannan, President of Piranha Interactive Publishing, Inc., a Nevada corporation, for and on behalf of the corporation.
 | |
| Notary Public |
My commission expires :
My Commission Expires Oct. 15, 1997
STATE OF ARIZONA )
)SS.
County of MARICOPA )
The foregoing instrument was acknowledged before me this 22 day of November, 1996, by J. Wade Stallings II, the Vice President and Secretary of Piranha Interactive Publishing, Inc., a Nevada corporation, for and on behalf of the corporation.
| |
| Notary Public |
My commission expires:
My Commission Expires Oct. 15, 1997
| 7 |
STATE OF ARIZONA )
)SS.
County of MARICOPA )
The foregoing instrument was acknowledged before me this 22 day of November, 1996 by Timothy M. Brannan, President of Piranha Interactive Publishing, Inc., an Arizona corporation, for and on behalf of the corporation.
| |
| Notary Public |
My commission expires :
My Commission Expires Oct. 15, 1997
STATE OF ARIZONA )
)SS.
County of MARICOPA )
The foregoing instrument was acknowledged before me this 22 day of November, 1996, by J. Wade Stallings II, the Secretary of Piranha Interactive Publishing, Inc., an Arizona corporation, for and on behalf of the corporation.
| |
| Notary Public |
My commission expires:
My Commission Expires Oct. 15, 1997
| 8 |
 |
ROSS MILLER Secretary of State 204 North Carson Street, Ste 1 Carson City, Nevada 89701-4299 (775) 684 5708 Website: secretaryofstate.blz
|
Filed in the office of
|
Document Number 20080018053-87 | |
| Filing Date and Time | ||
ROSS MILLER Secretary of State State of Nevada |
01/09/2008 1:30 AM Enitity Number C24140-1996 | |
| Certificate of Amendment | ||
| (PURSUANT TO NRS 78.385 AND 78.390) |
| USE BALCK INK ONLY.DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Amendment to Articles of Incorporation
For_Nevada
Profit Corporations
(Pursuant to NRS 78.385 and 78.390«After Issuance of Stock)
1. Name of corporation:
Piranha Interactive Publishing, Inc.
2. The articles have been amended as follows (provide article numbers, if available):
The board of directors has designated 100,000 shares of preferred stock, par value $0.001, as 2007 Series A Convertible Preferred Stock having the voting powers, designations, preferences, limitations, restrictions and relative rights set forth in Exhibit A attached hereto and incorporated herein by reference.
3 .The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the* articles of incorporation have voted in favor of the amendment is:
4. Effective date of filing (optional):
| 5. Officer Signature (Required): |  |
*lf any proposed amendment would alter or change any preference or any relative or other right given to any class of series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless of limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and submit the proper fees may cause this filing to be rejected.
PIRANHA INTERACTIVE PUBLISHING, INC.
DESIGNATION
OF RIGHTS, PRIVILEGES, AND PREFERENCES OF
2007 SERIES A CONVERTIBLE PREFERRED STOCK
Piranha Interactive Publishing, Inc, a Nevada corporation (the “Corporation”) hereby adopts the following Designation of Rights, Privileges, and Preferences of 2007 Series A Convertible Preferred Stock (the “Designation”):
FIRST: The name of the Corporation is PIRANHA INTERACTIVE PUBLISHING, INC
SECOND: The following resolution establishing a series of convertible preferred Stock designated as the “2007 Series A Convertible Preferred Stock” consisting of 100,000 shares of the Corporation’s preferred stock, par value $0.001, was duly adopted by the board of directors of the Corporation on October 1, 2007, in accordance with the articles of incorporation of the Corporation and the corporation laws of the State of Nevada:
RESOLVED, there is hereby created a series of preferred stock of the Corporation to be designated as the “2007 Series A Convertible Preferred Stock” consisting of 100,000 shares, par value $0.001, with the following powers, preferences, rights, qualifications, limitations, and restrictions:
1. Liquidation.
1.01. In the event of any involuntary liquidation (whether complete or partial), dissolution, or winding up of the Corporation, the holders of the 2007 Series A Convertible Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders, whether from capital, surplus, or earnings, an amount in cash equal to $0.05 per share plus all unpaid dividends previously declared thereon to the date of final distribution. No distribution shall be made on any common stock or other series of preferred stock of the Corporation by reason of any voluntary or involuntary liquidation (whether complete or partial), dissolution, or winding up of the Corporation unless each holder of any 2007 Series A Convertible Preferred Stock shall have received all amounts to which such holder shall be entitled under this subsection.
1.02 In the event of any voluntary liquidation (whether complete or partial), dissolution, or winding up of the Corporation, the holders of the 2007 Series A Convertible Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders, whether from capital, surplus, or earnings, an amount in cash equal to $0.05 per share. No distribution shall be made on any common stock or other series of preferred stock of the Corporation by reason of any voluntary or involuntary liquidation (whether complete or partial), dissolution, or winding up of the Corporation unless each holder of any 2007 Series A Convertible Preferred Stock shall have received all amounts to which such holder shall be entitled under this subsection.
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1.03 If on any liquidation (whether complete or partial), dissolution, or winding, up of the Corporation, the assets of the Corporation available for distribution to holders of 2007 Series A Convertible Preferred Stock shall be insufficient to pay the holders of outstanding 2007 Series A Convertible Preferred Stock the full amounts to which they otherwise would be entitled under the Nevada Revised Business Corporation Act, the assets of the Corporation available for distribution to holders of the 2007 Series A Convertible Preferred Stock shall be distributed to them pro rata on the basis of the number of shares of 2007 Series A Convertible Preferred Stock held by each such holder.
2. Voting Rights. The 2007 Series A Convertible Preferred Stock shall be entitled to vote as a separate class and as a single class with the Common Stock of the Corporation, with each share of 2007 Series A Convertible Preferred Stock equal to 50 shares of Common Stock for voting purposes. Except to the extent that the consent of the holders of the 2007 Series A Convertible Preferred Stock, voting as a class, is specifically required by the provisions of the corporate law of the state of Nevada, as now existing or as hereafter amended, the Series A Convertible Preferred Stock shall vote as a class with the Common Stock; as such, each share of Series A Convertible Preferred Stock shall be counted, for voting purposes, as 50 votes of Common Stock.
3. Subordination. Any payment of any dividends or any redemption hereunder shall be subordinated to payment in full of all Senior Debt as defined herein. “Senior Debt” shall mean the principal of and premium, if any, and interest on all indebtedness of the Corporation to any financial institution, including, but not limited to. (i) banks whether currently outstanding or hereinafter created and whether or not such loans are secured or unsecured; (ii) any other indebtedness, liability, obligation, contingent or Otherwise of the Corporation to guarantee endorsement of the contingent obligation with respect to any indebtedness, liability, or obligation whether created, assumed, or occurred by the Corporation and after the date of the creation of the 2007 Series A Convertible Preferred Stock, which is. when created, specifically designated by the Corporation as Senior Debt; and (iii) any refunding, renewals, or extensions of any indebtedness or similar obligations described ns Senior Debt in subparagraphs (i) and (ii) above.
4. Redemption
4.01 Subject to the requirements and limitations of the corporation laws of the state of Nevada, the Corporation shall have the right to redeem shares of the 2007 Series A Convertible Preferred Stock on the following terms and conditions.
4.02 The shares of the 2007 Series A Convertible Preferred Stock are subject to redemption by the Corporation at any time after Issuance pursuant to written notice of redemption given to the holders thereof on not less than 30 days, specifying the date on which the 2007 Series A Convertible Preferred Stock shall be redeemed (the “Redemption Date”).
4.03 The redemption price for each share of 2007 Series A Convertible Preferred Stock shall be $0,05 per share; plus any unpaid dividends, if applicable, on such share as of the Redemption Date (the “Redemption Price”).
4.04 Redemption of the 2007 Series A Convertible Preferred Stock shall be made in the following manner
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(a) At least ten (10) days prior to the date that written notice of redemption is given to the holders of the 2007 Series A Convertible Preferred Stock, the Corporation shall make appropriate arrangements with the Transfer Agent for the delivery of funds and/or Common Stock necessary to make payment of the Redemption Price for all shares of the 2007 Series A Convertible Preferred Stock redeemed by the Corporation.
(b) The holder of any shares of 2007 Series A Convertible Preferred Stock so redeemed shall be required to tender the certificates representing such shares, duly endorsed, to the Company in exchange for payment of the Redemption Price and reissuance of the balance of the 2007 Series A Convertible Preferred Stock not otherwise redeemed. On such surrender, the Company shall cause to be issued and delivered a check, with all reasonable dispatch to the holder and such name or names as the holder may designate.
(c) The Corporation may redeem a portion or all of the issued and outstanding shares of the 2007 Series A Convertible Preferred Stock; provided, that in the event that less than all of the outstanding shares of the 2007 Series A Convertible Preferred Stock are redeemed, such redemption shall be pro rata determined on the basis of the number of shares of the 2007 Series A Convertible Preferred Stock held by each holder reflected on the stock records and the total number of shares of 2007 Series A Convertible Preferred Stock outstanding.
5. Additional Provisions
5.01 No change in the provisions of the 2007 Series A Convertible Preferred Stock set forth in this Designation affecting any interests of the holders of any shares of 2007 Series A Convertible Preferred Stock shall be binding or effective unless such change shall have been approved or consented to by the holders of 2007 Series A Convertible Preferred Stock in the manner provided in the corporation laws of the state of Nevada, as the same may be amended from lime to time.
5.02 The shares of 2007 Series A Convertible Preferred Stock shall be transferable only on the books of the Corporation maintained at its principal office, on delivery thereof duly endorsed by the holder or by his duly authorized attorney or representative or accompanied by proper evidence of succession, assignment, or authority to transfer. In all cases of transfer by an attorney, the original letter of attorney, duly approved, or an official copy thereof, duly certified, shall be deposited and remain with the Corporation. In case of transfer by executors, administrators, guardians, or other legal representatives, duly authenticated evidence of their authority shall be produced and may be required to be deposited and remain with the new certificate representing the share of 2007 Series A Convertible Preferred Stock so transferred to the person entitled thereto.
5.03 The Corporation shall not be required to issue any fractional shares of Common Stock on the conversion or redemption of any share of 2007 Series A Convertible Preferred Stock
5.04 Any notice required or permitted to be given to the holders of the 2007 Series A Convertible Preferred Stock under this Designation shall be deemed to have been duly given If mailed by first class mail, postage prepared to such holders at their respective addresses appearing on the stock records maintained by or for the Corporation and shall be deemed to have been given as of the date deposited in the United States mail.
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on the stock records maintained by or for the Corporation and shall be deemed to have been given as of the date deposited in the United States mail.
IN WITNESS WHEREOF, the foregoing Designation of Rights, Privileges, and Preferences of 2007 Series A Convertible Preferred Stock of the Corporation has been executed this 18 day of December __, 2007.
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
On 12-18-2007, before me the undersigned, a notary public in and for the above county and state, personally appeared ______________ and ___________, who being by me duly sworn, did state, each for himself, that he, _________________, is the president, and that he,________, is the secretary, of____________, a Nevada corporation, and that the foregoing Designation of Rights, and Preferences of 2007 Series A Convertible Preferred Stock of _________________________, was signed on behalf of such corporation by authority of a resolution of its board of directors, and that the statements contained therein are true.
WITNESS MY HAND AND OFFICIAL SEAL.
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| USE BLACK INK ONLY DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Correction
(Pursuant to NRS Chapters 78,78A, 80, 81, 82, 84, 86, 87, 87A, 88, 88A, 89 and 92A)
1. The name of the entity for which correction is being made:
PIRANHA INTERACTIVE PUBLISHING, INC.
2. Description of the original document for which correction is being made:
Amendment to Articles of lncorporation - DESIGNATION OF RIGHTS, PRIVILEGES, AND PREFERENCES OF 2007 SERIES A CONVERTIBLE PREFERRED STOCK
3. Filing date of the original document for which correction is being made: 1/9/2008
4. Description of the inaccuracy or defect.
The designation incorrectly referred to the preferred stock as convertible in its title referring to the preferred stock as the “2007 Scries A Convertible Preferred Stock.” Instead the title should have read “2007 Series A Preferred Stock” since there was no convertible feature in the preferred stock.
5, Correction of the inaccuracy or defect.
The following changes are hereby made to remove all reference to “convertible” by changing the title of the preferred stock to “2007 Series A Preferred Stock” as follows: The title is hereby changed to read: DESIGNATION OF RIGHTS, PRIVILEGES AND PREFERENCES OF 2007 SERIES A PREFERRED STOCK and all references to “2007 Series A Convertible Preferred Stock” shall be replaced with “2007 Series A Preferred Stock,”
Unless otherwise corrected the designation shall remain unchanged.
6. Signature:
 |
President | 9/26/2008 | ||
| Title* | Date |
“If entity is a corporation, it must be signed by an officer if stock has been issued. OR an Incorporator or director If stock has not been issued; a limited -liability company, by a manager or managing members; a limited partnership or limited-liability limited partnership, by a general partner; a limited-liability partnership, by a managing partner; a business trust, by a trustee.
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected
| This form must be accompanied by appropriate fees. | Nevada Secretary of state Correction | |
| Revised 7-1-08 |
| USE BLACK INK ONLY DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
This Form is to Accompany Restated Articles or Amended and Restated Articles of Incorporation
(Pursuant to NRS 78.403,82.371, 66.221, 87A, 88.355 or 88A.260)
(This form is also to be used to accompany Restated Articles or Amended and Restated Articles for Limited-Liability
Companies, Certificates of Limited Partnership, Limited-Liability Limited Partnerships and Business Trusts)
1. Name of Nevada entity as last recorded in this office:
PIRANHA INTERACTIVE PUBLISHING, INC.
2. The articles are: (mark only one box) [ ] Restated [X] Amended and Restated
Please entitle your attached articles “Restated” or “Amended and Restated,” accordingly.
3. Indicate what changes have been made by checking the appropriate box:*
[ ] No amendments; articles are restated only and are signed by an officer of the corporation who has been authorized to execute the certificate by resolution of the board of directors adopted on:
The certificate correctly sets forth the text of the articles or certificate as amended to the date of the certificate.
[X] The entity name has been amended.
[ ] The registered agent has been changed, (attach Certificate of Acceptance from new registered agent)
[ ] The purpose of the entity has been amended.
[X] The authorized shares have been amended.
[ ] The directors, managers or general partners have been amended.
[ ] IRS tax language haa been added.
[X] Articles have been added.
[X] Articles have been deleted.
[X] Other. The articles or certificate have been amended as follows: (provide article numbers, if available)
The name of the Corporation has been changed to “Piranha Ventures, Inc.,” the authorized capital has increased to 100,000,000, the 66 2/3 shareholder voting requirements and limitations on “business Combinations with ‘Interested Stockholders” have been removed all as stated on the attached Restated and Amended Articles of Incorporation incorporated herein by this reference.
* This form is to accompany Restated Articles or Amended and Restated Articles which contain newly altered or amended articles. The Restated Articles must contain all of the requirements as set forth In the statutes or amending or altering the articles for certificates.
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
| This form must be accompanied by appropriate fees. | Nevada Secretary of State Restated Articles | |
| Revised: 3-30-08 |
AMENDED
AND RESTATED
ARTICLES OF INCORPORATION
OF
PIRANHA VENTURES, INC.
(FORMALLY PIRANHA INTERACTIVE PUBLISHING, INC.)
The following Restated and Amended Articles of Incorporation of Piranha Interactive Publishing, Inc. (the “Corporation”) constitute amended and restated articles of incorporation of the Corporation, which supercede entirely the articles of incorporation filed with the Secretary of the State of Nevada on or about November 22, 1996.
ARTICLE
I
NAME
The name of the Corporation shall be: Piranha Ventures, Inc. (the “Corporation”).
ARTICLE II
PERIOD OF DURATION
The Corporation shall continue in existence perpetually unless sooner dissolved according to law.
ARTICLE
HI
PURPOSES
The Corporation is organized for the purpose of conducting any lawful business for which a corporation may be organized under the laws of the State of Nevada,
ARTICLE
IV
AUTHORIZED SHARES
The Corporation is authorized to issue a total of 100,000,000 shares, consisting of 10,000,000 shares of preferred stock having a par value of $0,001 per share (hereinafter referred to as “Preferred Stock”) and 90,000,000 shares of common stock having a par value $0,001 per share (hereinafter referred to as “Common Stock”). Shares of any class of stock may be issued, without shareholder action, from time to time in one or more series as may from time to time be determined by the board of directors. The board of directors of this Corporation is hereby expressly granted authority, without shareholder action, and within the limits set forth in the Nevada Revised Statutes, to:
(a) designate in whole or in part, the powers, preferences, limitations, and relative rights, of any class of shares before the issuance of any shares of that class;
(b) create one or more series within a class of shares, fix the number of shares of each such series, and designate, in whole or part, the powers, preferences, limitations, and relative rights of the series, all before the issuance of any shares of that series;
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(c) alter or revoke the powers, preferences, limitations, and relative rights granted to or imposed upon any wholly unissued class of shares or any wholly unissued series of any class of shares; or
(d) increase or decrease the number of shares constituting any series, the number of shares of which was originally fixed by the board of directors, either before or after the issuance of shares of the series; provided that, the number may not be decreased below the number of shares of the series then outstanding, or increased above the total number of authorized shares of the applicable class of shares available for designation as a part of the series.
The board of directors, under the powers provide in Nevada Revised Statutes section 78.2055, shall have the power to reverse split or consolidated the issued and outstanding shares of the Corporation without shareholder approval.
The allocation between the classes, or among the series of each class, of unlimited voting rights and the right to receive the net assets of the Corporation upon dissolution, shall be as designated by the board of directors. All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein or in the Corporation’s bylaws or in any amendment hereto or thereto shall be vested in the Common Stock. Accordingly, unless and until otherwise designated by the board of directors of the Corporation, and subject to any superior rights as so designated, the Common Stock shall have unlimited voting rights and be entitled to receive the net assets of the Corporation upon dissolution.
ARTICLE V
NON-ACCESSIBILITY FOR DEBTS OF CORPORATION
After the amount of the subscription price, the purchase price, or the par value of the stock of any class or series is paid into the Corporation, owners or holders of shares of any stock in the Corporation may never be assessed to pay the debts of the Corporation.
ARTICLE VI
NO CUMULATIVE VOTING
Except as may otherwise be required by law, these articles of incorporation, or the provisions of the resolution or resolutions as may be adopted by the board of directors pursuant to Article IV of these articles of incorporation, in all matters as to which the vote or consent of stockholders of the Corporation shall be required to be taken, the holders of Common Stock shall have one vote per share of Common Stock held. Cumulative Voting on the election of directors or on any other matter submitted to the stockholders shall not be permitted.
ARTICLE VII
NO PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of stock or of options, warrants, or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series of any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures, or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any rights to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock, or securities convertible into or exchangeable for stock carrying any right to purchase stock may be issued and disposed of pursuant to an appropriate resolution of the board of directors to such persons, firms, corporations, or associations and on such terms as may be deemed advisable by the board of directors in the exercise of its sole discretion.
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ARTICLE VIII
TRANSACTIONS WITH OFFICERS AND DIRECTORS
No contract or other transaction between the Corporation and one or more or its directors or officers, or between the Corporation and any corporation, firm or association in which one or more of its directors or officers are directors or officers or are financially interested, is void or voidable solely for this reason or solely because any such director or officer is present at the meeting of the board of directors or a committee thereof which authorizes or approves the contract or transaction, or because the vote or votes of common or interested directors are counted for that purpose, if the circumstances specified in any of the following paragraphs exist:
(a) The fact of the common directorship, office or financial interest is disclosed or known to the board of directors or committee and noted in the minutes, and the board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient for the purpose without counting the vote or votes of the common or interested director or directors;
(b) The fact of the common directorship, office or financial interest is disclosed or known to the stockholders, and they approve or ratify the contract or transaction in good faith by a majority vote of stockholders holding a majority of the voting power. The votes of the common or interested directors or officers must be counted in any such vote of stockholders; or
(c) The contract or transaction is fair as to the Corporation at the time it is authorized or approved.
ARTICLE IX
INDEMNIFICATION OF OFFICERS, DIRECTORS, AND OTHERS
(a) The Corporation shall indemnify each director and officer of the Corporation and their respective heirs, administrators, and executors against all liabilities and expenses reasonably incurred in connection with any action, suit, or proceeding to which he may be made a party by reason of the fact that he is or was a director or officer of the Corporation, to the full extent permitted by the laws of the state of Nevada now existing or as such laws may hereafter be amended. The expenses of officers and directors incurred in defending a civil or criminal action, suit, or proceeding shall be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the Corporation.
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(b) The Corporation may indemnify each director, officer, employee, or agent of the Corporation and their respective heirs, administrators, and executors against all liabilities and expenses reasonably incurred in connection with any action, suit, or proceeding to which such person may be made a party by reason of such person being, or having been, a director, officer, employee, or agent of the Corporation, to the full extent permitted by the laws of the state of Nevada now existing or as such laws may hereafter be amended.
ARTICLE X
LIMITATION ON DIRECTORS LIABILITY
To the full extent permitted by the Nevada Revised Statutes, directors and officers of the Corporation shall have no personal liability to the Corporation or its stockholders for damages for breach of their fiduciary duty as a director or officer, except for damages resulting from (a) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law; (b) the payment of distribution in violation of section 78.300 of the Nevada Revised Statutes, as it may be amended from time to time, or any successor statute thereto.
ARTICLE XI
NO LIMITATIONS ON VOTING RIGHTS
To the extent permissible under the applicable law of any jurisdiction to which the Corporation may become subject by reason of the conduct of business, the ownership of assets, the residence of shareholders, the location of offices or facilities, or any other item, the Corporation elects not to be governed by the provisions of any statute that (i) limits, restricts, modifies, suspends, terminates, or otherwise effects the rights of any shareholder to cast one vote for each share of Common Stock registered in the name of such shareholder on the books of the Corporation, without regard to whether such shares were acquired directly from the Corporation or from any other person and without regard to whether such shareholder has the power to exercise or direct the exercise of voting power over any specific fraction of the shares of Common Stock of the Corporation issued and outstanding or (ii) grants to any shareholder the right to have his or her stock redeemed or purchased by the Corporation or any other shareholder of the Corporation. Without limiting the generality of the foregoing, the Corporation expressly elects not to be governed by or be subject to the provisions of sections 78.378 through 78.3793 of the Nevada Revised Statutes or any similar or successor statutes adopted by any state which may be deemed to apply to the Corporation from time to time.
ARTICLE
XII
AMENDMENTS
The Corporation reserves the right to amend, alter, change, or repeal all or any portion of the provisions contained in these articles of incorporation from time to time in accordance with the laws of the state of Nevada; and all rights conferred herein on stockholders are granted subject to this reservation.
ARTICLE XIII
ADOPTION AND AMENDMENT OF BYLAWS
The initial bylaws of the Corporation shall be adopted by the board of directors. The power to alter, amend, or repeal the bylaws or adopt new bylaws shall be vested in the board of directors, The bylaws may contain any provisions for the regulation or management of the affairs of the Corporation not inconsistent with these articles of incorporation and the laws of the state of Nevada now or hereafter existing.
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ARTICLE
XIV
GOVERNING BOARD
The governing board of the Corporation shall be known as the “board of directors.” The board of directors must have at least one director or as otherwise specified in its bylaws or director’s resolutions.
ARTICLE XV
POWERS OF GOVERNING BOARD
The governing board of the Corporation is specifically granted by these articles of incorporation all powers permitted to be vested in the governing board of a corporation by the applicable provisions of the laws of the stale of Nevada now or hereafter existing.
The undersigned, being the duly authorized officer of the Corporation herein before named, hereby makes and files these restated and revised articles of incorporation, declaring and certifying that the facts contained herein are true, that the amendment and restated articles of incorporation was duly adopted and approved by the board of directors of the Corporation and that a majority of the shareholders of the Corporation approved such amendment and restatement on October 22, 2009.
DATED this 22nd day of October 2009.
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Certificate of Amendment to Articles of Incorporation
For
Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
| USE BLACK INK ONLY - DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
1. Name of corporation:
Piranha Ventures, Inc
2. The articles have been amended as follows: (provide article numbers, if available)
The articles of incorporation have been amended by amending Article Four to provide for 110,000,000 shares of capital stock; Article Four now provides: The Corporation is authorized to issue a total of : 110,000,000 shares, consisting of 10,000,000 shares of preferred stock, having a par value of $0,001 per share (hereinafter referred to as “Preferred Stock”) and 100,000,000 shares of common stock having a par value $0.001 per share (“Common Stock”). The articles of incorporation have also been amended to provide for a reverse split so that on the effective date of this Amendment, the Corporation shall effect a , reverse split in its issued and outstanding shares of Common Stock so that the shares currently issued and outstanding shall be reverse split, or consolidated, on a 1:10 basis, and stockholders shall receive one share of the Corporation’s post-split Common Stock, $0.001 par value, for each 10 shares held prior to the reverse
3. The vote by which the stockholders holding shares in the corporation entitling them to exercise a least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is: 82.56%
| 4. | Effective date of filing: (optional) | 6/13/11 |
| (must not be later than 90 days after the certificate is filed) |
5. Signature: (required)
*If any proposed amendment would after or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
| This form must be accompanied by appropriate fees. | Nevada Secretary of State Amend Profit-After | |
| Revised: 3-6-09 |
1. Name of corporation:
Piranha Ventures, Inc.
2. By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock.
There is hereby created, from the ten million (10,000,000) shares of preferred stock, par value $ 0.001 per share, of the Corporation authorized in Article Fourth of the Articles of incorporation (the “Preferred Stock of the Corporation”) a series of Convertible Preferred Stock of the Corporation consisting of Twenty Thousand (20,000) shares. The series shall have the following powers, designations, preferences and relative participating, optional or other rights, and the following qualifications, limitations and restrictions:
1. Designation, Amount and Par Value.
The series of Convertible Preferred Stock of the Corporation consisting of Twenty Thousand (20,000) shares created pursuant to this Certificate of Designation (the “Certificate of Designation”) shall be designated the “Series A Preferred Stock” (the “Series A Preferred Stock”) and the authorized number of shares constituting such series shall be Twenty Thousand (20.000), par value $ 0.001.
(More descriptions continue in the attached page)
3. Effective date of filing: (optional)
(must not be later than 90 days after the certificate is filed)
4. Signature: (required)
Filing Fee: $175.00
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
| This form must be accompanied by appropriate fees. | Nevada Secretary of State stock Designation | |
| Revised: 3-6-09 |
CERTIFICATE
OF DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK
OF PIRANHA VENTURES, INC.
(PURSUANT TO NRS 78.1955)
Piranha Ventures, Inc., a Nevada Corporation (the “Corporation”), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation:
RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of Directors of the Corporation (the “Board”) by the Articles of Incorporation of the Corporation (the “Certificate of Incorporation”), there is hereby created, from the ten million (10,000,000) shares of preferred stock, par value $ 0.001 per share, of the Corporation authorized in Article Fourth of the Articles of Incorporation (the “Preferred Stock of the Corporation”) a series of Convertible Preferred Stock of the Corporation consisting of Twenty Thousand (20,000) shares. The series shall have the following powers, designations, preferences and relative participating, optional or other rights, and the following qualifications, limitations and restrictions:
1. Designation, Amount and Par Value.
The series of Convertible Preferred Stock of the Corporation consisting of Twenty Thousand (20,000) shares created pursuant to this Certificate of Designation (the “Certificate of Designation”) shall be designated the “Series A Preferred Stock” (the “Series A Preferred Stock”) and the authorized number of shares constituting such series shall be Twenty Thousand (20,000), par value $ 0.001. Any and all shares of the Series H Preferred Stock issued by the Corporation which have been paid for and delivered shall be deemed fully paid and holders of record of the outstanding shares of the Series A Preferred Stock shall not be liable for any further call or assessment thereon. Any and all shares of the Series A Preferred Stock issued by the Corporation shall be registered with the Corporation in the name of the holders of the Series A Preferred Stock, and shall appear on the share records of the Corporation in the name of the holders of the Series A Preferred Stock.
2. Conversion.
(A) The holders of Series A Preferred Stock shall have the right to convert the Twenty Thousand (20,000) shares of Series A Preferred Stock into an aggregate of Twenty Million (20,000,000) shares of Common Stock at the conversion rate of one thousand (1,000) shares of Common Stock for each share of Series A Preferred Stock.
(B) Before any holder of Series A Preferred Stock shall be entitled to convert, he or she shall surrender the certificate or certificates representing the Series A Preferred Stock to be converted, duly endorsed or accompanied by proper instruments of transfer, at the office of the Corporation or its transfer agent, and shall give written notice to the Corporation at such office that he or she elects to convert the same. The holders of Series A Preferred Stock shall also deliver to the Corporation a Notice of Conversion, specifying therein the date on which such conversion shall be effected (such date, the “Conversion Date”), provided that such date is on or after the date of deliver of the Notice of Conversion. The Conversion Date is specified in a Notice of Conversion, or if the stated conversion date is prior to date of delivery of the Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. The Corporation shall, on the date specified in the Notice of Conversion, or as soon as practicable after delivery of such certificates, or such agreement and indemnification in the case of a lost, stolen or destroyed certificate, if no date is specified in a Notice of Conversion, issue and deliver to such holder of Series A Preferred Stock a certificate or certificates for the number of shares of Common Stock as such holder is entitled as aforesaid. The Corporation will round down any fractional share resulting from the calculation of Common shares.
(C) The Corporation will not, by amendment of its Articles of Incorporation, this Certificate of Designation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 2 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series A Preferred Stock against impairment.
3. Voting Rights.
The holders of Series A Preferred Stock shall have voting rights as if the shares of the Series A Preferred Stock have been converted into shares of common stock, which is one thousand 1,000 votes per share of Series A Preferred Stock, as of the date of this Certificate of Designation, and as otherwise required by the Nevada Statutes.
4. Dividends.
The holders of Series A Preferred Stock shall be entitled to the dividend equal to the aggregate dividends for one thousand (1,000) shares of common stock for every one share of Series A Preferred Stock.
5. Tax Treatment of Dividends.
For federal income tax purposes, the Corporation shall report distributions on the Series A Preferred Stock as dividends, to the extent of the Corporation’s current and accumulated earnings and profits (as determined for federal income tax purposes).
6. Rights upon Liquidation, Dissolution or Winding Up.
(A) Upon any “Liquidating Transaction” (hereinafter defined), the holders of the Series A Preferred Stock shall be entitled to participate in the distribution of assets of the Corporation to the holders of its Common Stock, whether such assets are from capital, surplus or earnings in an amount up to the value of the Series A Preferred Stock at the time of the liquidation.
(B) After payment of the full amount on the liquidating distributions to which each holder of the Series A Preferred Stock is entitled, the holder of the Series A Preferred Stock shall have no light or claim to any of the remaining assets of the Corporation.
(C) For purposes of this Certificate of Designation, a “Liquidating Transaction” of the Corporation shall mean a (i) voluntary or involuntary liquidation, dissolution or winding up of the Corporation, (ii) the sale, transfer, conveyance, other disposal, exclusive lease, exclusive license or other disposition of all or substantially all of the assets, property or business of the Corporation, (iii) the effectuation of a transaction or series of related transactions in which more than fifty (50%) percent of the voting power of the Corporation is disposed of (other than as a direct result of normal, uncoordinated trading activities in the Common Stock generally), (iv) a transaction or series of transactions in which any person or “group” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) acquires more than fifty (50%) percent of the voting equity of the Corporation or (v) a transaction or series of transactions that constitutes or results in a “going private transaction” (as defined in Rule 13(e)-3 promulgated pursuant to the Securities Exchange Act of 1934 and the regulations of the Commission issued thereunder).
7. Assignment and Transfer
The holders of Series A Preferred Stock shall have the right to transfer each share of the Series A Preferred Stock to any third party at any time in such holder’s sole and absolute discretion, subject to compliance with applicable securities laws.
8. Miscellaneous.
(A) Notice. Any notice or other communication required or permitted pursuant to this Certificate of Designation shall he sufficiently given if sent by (i) mail by (a) certified mail, postage prepaid, return receipt requested and (b) first class mail, (ii) overnight delivery with confirmation of delivery or (iii) facsimile transmission with an original mailed by first class mail, postage prepaid and addressed.
(B) Enforceability. If any provision which is contained in this Certificate of Designation, should, for any reason, be held to be invalid or unenforceable in any respect under the laws of any State of the United States, such invalidity or unenforceability shall not affect any other provision of this Certificate of Designation and this Certificate of Designation shall be construed as if such invalid or unenforceable provision had not been contained herein.
(C) Governing Law. This Certificate of Designation shall in all respects be construed, governed, pursuant to the internal laws of the State of Nevada without giving effect to the principles of conflicts of laws and be deemed to be an agreement entered into in the State of Nevada and made pursuant to the laws of the State of Nevada, and enforced by courts of the State of New York The Holder of the Series A Preferred Stock and the Corporation hereby consent and submit to the exclusive jurisdiction of the courts of the State of New York in any action or proceeding and submit to personal jurisdiction over each of them by such courts. The Holder of the Series A Preferred Stock and Corporation hereby waive trial by jury and personal service of any and all process. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.
(D) Non-Waiver. Except as otherwise expressly provided herein, no waiver of any covenant, condition, or provision of this Certificate of Designation shall be deemed to have been made unless expressly in writing and signed by the Corporation against whom such waiver is charged; and (i) the failure of the Corporation to insist in anyone or more cases upon the performance of any of the provisions, covenants or conditions of this Certificate of Designation or to exercise any option herein contained shall not be construed as a waiver or relinquishment for the future of any such provisions, covenants or conditions, (ii) the acceptance of performance of anything required by this Certificate of Designation to be performed with knowledge of the breach or failure of a covenant, condition or provision hereof shall not be deemed a waiver of such breach or failure and (iii) no waiver by the Corporation of one breach by another party shall be construed as a waiver of any other or subsequent breach.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed in its name and on its behalf this 12th day of October, 2011.
| Piranha Ventures, Inc., | ||
| By: |  | |
| Tan Lung Lai | ||
| President, Chief Executive Officer | ||
| USE BLACK INK ONLV DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After issuance of Stock)
1. Name of Corporation
Piranha Ventures, Inc.
2. The articles have been amended as follows: (provide article numbers, if available)
The Article One of the Articles of Incorporation has been amended as follows:
Article One: The Name of the Corporation is Realgold International, Inc.
3. The vote by which the stockholders holding shares in the corporation entitling them to exercise a least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is: 991.951
| 4. Effective date and lime of filing: (optional) | Date: 12/05/2011 Time: | |
| (must not be later than 90 days after the certificate is filed) | ||
5. Signature: (required)
*lf any proposed amendment Would alter or charge any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected fay the amendment regardless to limitations or restrictions on the voting power thereof
IMPORTANT: Failure to include any of the above Information and submit with the proper fees may cause this filing to be rejected
Nevada Secretary of State Amend Profit-After
| This form must be accompanied by appropriate fees. | Revised: 8-31-11 |
| USE BLACK INK ONLV DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After issuance of Stock)
1. Name of corporation:
Realgold International, Inc.
2. The articles have been amended as follows: (provide article numbers, if available)
The Articles of Incorporation have been amended by amending Article Four as follows:
Article Four: The Corporation is authorized to issue a total of 1,000,000,000 shares, consisting of 10,000,000 shares of preferred stock, par value of $ 0.001 per share, and 990,000,000 shares of common stock, par value of $ 0.001 per share.
3. The vote by which the stockholders holding shares in the corporation entitling them to exercise a least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is: 20,995,951
| 4. Effective date and time of filing: (optional) | Date: | Time: | |
| (must not be later than 90 days after the certificate is filed) | |||
5. Signature: (required)
*if any proposed amendment would after or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
Nevada Secretary of State Amend Profit-After
| This form must be accompanied by appropriate fees. | Revised: 8-31-11 |
| USE BLACK INK ONLV DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After issuance of Stock)
1. Name of corporation:
Realgold International, Inc.
2. The articles have been amended as follows: (provide article numbers, if available)
Article One:
The name of the Corporation is Asia Travel Corporation
3. The vote by which the stockholders holding shares in the corporation entitling them to exercise a least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is: 38,407,210
| 4. Effective date and time of filing: (optional) | Date: Time: |
| (must not be later than 90 days after the certificate is filed) |
5. Signature: (required)
*lf any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected
Nevada Secretary of State Amend Profit-After
| This form must be accompanied by appropriate fees. | Revised: 8-31-11 |
| USE BLACK INK ONLY DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Amendment to Articles of Incorporation
Filed by Custodian
(Pursuant to NRS 78.347)
1. Name of corporation:
| Asia Travel Corporation |
2. Any previous criminal, administrative, civil or National Association of Securities Dealers, Inc., or Securities and Exchange Commission investigations, violations or convictions concerning the custodian and any affiliate of the custodian are disclosed as follows:
There are no previous criminal, administrative, FINRA, or SEC investigations, violations, or convictions concerning the Custodian or any of its affiliates. |
3. Custodian Statement:
Reasonable attempts were made to contact the officers or directors of the corporation to request that the corporation comply with corporate formalities and to continue its business. I am continuing the business and attempting to further the interests of the shareholders. I will reinstate or maintain the corporate charter.
4. Custodian Signature:
Filing Fee: $175.00
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
Nevada Secretary of State Amend Custodian
| This form must be accompanied by appropriate fees. | Reset | Revised: 1-5-15 |
| USE BLACK INK ONLY DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Designation For
Nevada Profit Corporations
(Pursuant to NRS 78.1955)
1. Name of corporation:
Asia Travel Corporation |
2. By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock.
IT IS HEREBY RESOLVED, the Corporation shall designate 10,000 shares as Series B Super Voting Preferred Stock with par value of $.001 and shall have no conversion rights.
FURTHER RESOLVED, that the Series B Super Voting Preferred Stock shall be entitled to voting rights equal to:
[twenty times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all I shares of Series A, Series B and any newly designated Preferred stock issued and outstanding at the time of voting}]
Divided by:
[the number of shares of Series B Super Voting Preferred Stock issued and outstanding at the time of voting]
The holders of the Series B Super Voting Preferred Stock shall not be entitled to receive dividends. |
| 3. Effective date of filing: (optional) | |
| (must not be later than 90 days after the certificate is filed) |
4. Signature: (required)
Filing Fee: $175.00
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected
Nevada Secretary of State Stock Designation
| This form must be accompanied by appropriate fees. | Reset | Revised: 1-5-15 |
CERTIFICATE
OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF
SERIES B SUPER VOTING PREFERRED STOCK,
$0.001 PAR VALUE PER SHARE
(PURSUANT TO NRS 78.1955)
The undersigned, Jeffrey J. Parker do hereby certify that:
I They are the Officer and Director, respectively, of Asia Travel Corporation, a Nevada corporation (the “Corporation”).
2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, of which 20,000 shares of Series A Convertible Preferred Stock have been designated.
3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):
WHEREAS, the certificate of incorporation of the Corporation, as amended, provides for a class of its authorized stock known as preferred stock, consisting of 10,000,000 shares, $0.001 par value per share, issuable from time to time in one or more series;
WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and the designation thereof, of any of them; and
WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to a series of the preferred stock, which shall consist of, up to 10,000 shares of the preferred stock, which the Corporation has the authority to issue, as follows:
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred stock as follows:
| 1 |
SERIES B PREFERRED STOCK
1.DESIGNATION AND AMOUNT; DIVIDENDS
| A. | Designation. The designation of said series of preferred stock shall be Series B Super Voting Preferred Stock, 50.001 par value per share (the “Series B Super Voting Preferred Stock”). | |
| B. | Number of Shares. The number of shares of Series B Super Voting Preferred Stock authorized shall be ten thousand (10,000) shares. Each share of Series B Super Voting Preferred Stock shall have a stated value equal to 50.001 (as may be adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series B Stated Value”). | |
| C. | Dividends. Initially, there will be no dividends due or payable on the Series B Super Voting Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed. |
2. LIQUIDATION AND REDEMPTION RIGHTS
Upon the occurrence of a Liquidation Event (as defined below), the holders of Series B Super Voting Preferred Stock are entitled to receive net assets on a pro-rata basis. Each holder of Series B Super Voting Preferred Stock is entitled to receive ratably any dividends declared by the Board, if any, out of funds legally available for the payment of dividends. As used herein, “Liquidation Event” means (1) the liquidation, dissolution or winding-up, whether voluntary or involuntary, of the Corporation, (ii) the purchase or redemption by the Corporation of shares of any class of stock or the merger or consolidation of the Corporation with or into any other corporation or corporations, unless (a) the holders of the Series A Super Voting Preferred Stock receive securities of the surviving Corporation having substantially similar rights as the Series A Super Voting Preferred Stock and the stockholders of the Corporation immediately prior to such transaction are holders of at least a majority of the voting securities of the successor Corporation immediately thereafter (the “Permitted Merger”), unless the holders of the shares of Series B Super Voting Preferred Stock elect otherwise or (b) the sale, license or lease of all or substantially all, or any material part of, the Corporation’s assets, unless the holders of Series B Super Voting Preferred Stock elect otherwise.
3. CONVERSION
No conversion of the Series B Super Voting Preferred Stock is permitted.
4. RANK
All shares of the Series B Super Voting Preferred Stock shall rank (i) senior to the Corporation’s (A) Common Stock, par value $0.001 per share ( “Common Stock” ), and any other class or series of capital stock of the Corporation hereafter created, except as otherwise provided in clauses (ii) and (iii) of this Section 4, (ii)pari passu with any class or series of capital stock of the Corporation hereafter created and specifically ranking, by its terms, on par with the Series B Super Voting Preferred-Stock and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the Series B Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.
5. VOTING RIGHTS
A. If at least one share of Series B Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series B Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting.
| 2 |
B. Each individual share of Series B Super Voting Preferred Stock shall have the voting rights equal to:
[twenty times the sum of:{all shares of Common stock issued and outstanding at the time of voting + all shares of Series A, Series B and any newly designated Preferred stock issued and outstanding at the time of voting}]
Divided by:
[ the number of shares of Series B Super Voting Preferred Stock issued and outstanding at the time of voting]
With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series B Super Voting Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Certificate of Incorporation or By-laws.
6. PROTECTION PROVISIONS
So long as any shares of Series B Super Voting Preferred Stock are outstanding, the Corporation shall not, without first obtaining the unanimous written consent of the holders of Series B Super Voting Preferred Stock, alter or change the rights, preferences or privileges of the Series B Super Voting Preferred so as to affect adversely the holders of Series B Super Voting Preferred Stock.
7. MISCELLANEOUS
| A. | Status of Redeemed Stock. In case any shares of Series B Super Voting Preferred Stock shall be redeemed or otherwise repurchased or reacquired, the shares so redeemed, repurchased, or reacquired shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series B Preferred Stock, | |
| B. | Lost or Stolen Certificates. Upon receipt by the Corporation of (1) evidence of the loss, theft, destruction or mutilation of any Preferred Stock Certificate(s) and (ii) in the case of loss, theft or destruction, indemnity (with a bond or other security) reasonably satisfactory to the Corporation, or in the case of mutilation, the Preferred Stock Certificate(s) (surrendered for cancellation), the Corporation shall execute and deliver new Preferred Stock Certificates. | |
| C. | Waiver. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the holders of Series B Super Voting Preferred Stock granted hereunder may be waived as to all shares of Series B Super Voting Preferred Stock (and the holders thereof) upon the unanimous written consent of the holders of the Series B Super Voting Preferred Stock. | |
| D. | Notices. Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally, by nationally recognized overnight carrier or by confirmed facsimile transmission, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by nationally recognized overnight carrier or confirmed facsimile transmission, in each case addressed to a party as set forth below, or such other address and telephone and fax number as may be designated in writing hereafter in the same manner its set forth in this Section. |
If to the Corporation:
Asia Travel Corporation
3609 Hammerkop Dr.
N. Las Vegas, NV. 89084
If to the holders of the Series B Super Voting Preferred Stock, to the address listed in the Corporation’s books and records.
| 3 |
RESOLVED, FURTHER, that the Chairman, the president or any vice-president, and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution and the provisions of Nevada law,
IN WITNESS WHEREOF, the undersigned have executed this Certificate this 2nd day of March 2018.
/s/ Jeffrey I. Parker |
|
Name: Jeffrey J. Parker |
|
Title: Officer, Director and Principal Financial Officer |
| 4 |
| USE BLACK INK ONLY DO NOT HIGHLIGHT | ABOVE SPACE IS FOR OFFICE USE ONLY |
Certificate of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After issuance of Stock)
1. Name of corporation:
Asia Travel Corporation |
2. The articles have been amended as follows: (provide article numbers, if available)
ARTICLE I. NAME
The name of the Corporation shall be: SQUARE CHAIN CORPORATION |
The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is: 3,555,570,020
| 4. Effective date and time of filing: (optional) | Date: | 03/08/2018 | Time: | 11:31 am | |
| (must not be later than 90 days after the certificate is filed) | |||||
5. Signature: (required)
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
Nevada Secretary of State Amend Profit-After
| This form must be accompanied by appropriate fees. | Revised: 1-5-15 |
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PIRANHA VENTURES, INC.
(FORMALLY PIRANHA INTERACTIVE PUBLISHING, INC.)
The following Restated and Amended Articles of Incorporation of Piranha Interactive Publishing, Inc. (the “Corporation”) constitute amended and restated articles of incorporation of the Corporation, which supercede entirely the articles of incorporation filed with the Secretary of the State of Nevada on or about November 22, 1996.
ARTICLE I
NAME
The name of the Corporation shall be: Piranha Ventures, Inc. (the “Corporation”).
ARTICLE II
PERIOD OF DURATION
The Corporation shall continue in existence perpetually unless sooner dissolved according to law.
ARTICLE III
PURPOSES
The Corporation is organized for the purpose of conducting any lawful business for which a corporation may be organized under the laws of the State of Nevada.
ARTICLE IV
AUTHORIZED SHARES
The Corporation is authorized to issue a total of 100,000,000 shares, consisting of 10,000,000 shares of preferred stock having a par value of $0.001 per share (hereinafter referred to as “Preferred Stock”) and 90,000,000 shares of common stock having a par value $0.001 per share (hereinafter referred to as “Common Stock”). Shares of any class of stock may be issued, without shareholder action, from time to time in one or more series as may from time to time be determined by the board of directors. The board of directors of this Corporation is hereby expressly granted authority, without shareholder action, and within the limits set forth in the Nevada Revised Statutes, to:
(a)
designate in whole or in part, the powers, preferences, limitations, and relative rights, of any class of shares before the issuance of any shares of that class;
(b)
create one or more series within a class of shares, fix the number of shares of each such series, and designate, in whole or part, the powers, preferences, limitations, and relative rights of the series, all before the issuance of any shares of that series;
(c)
alter or revoke the powers, preferences, limitations, and relative rights granted to or imposed upon any wholly unissued class of shares or any wholly unissued series of any class of shares; or
(d)
increase or decrease the number of shares constituting any series, the number of shares of which was originally fixed by the board of directors, either before or after the issuance of shares of the series; provided that, the number may not be decreased below the number of shares of the series then outstanding, or increased above the total number of authorized shares of the applicable class of shares available for designation as a part of the series.
The board of directors, under the powers provide in Nevada Revised Statutes section 78.2055, shall have the power to reverse split or consolidated the issued and outstanding shares of the Corporation without shareholder approval.
The allocation between the classes, or among the series of each class, of unlimited voting rights and the right to receive the net assets of the Corporation upon dissolution, shall be as designated by the board of directors. All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein or in the Corporation’s bylaws or in any amendment hereto or thereto shall be vested in the Common Stock. Accordingly, unless and until otherwise designated by the board of directors of the Corporation, and subject to any superior rights as so designated, the Common Stock shall have unlimited voting rights and be entitled to receive the net assets of the Corporation upon dissolution.
ARTICLE V
NON-ACCESSIBILITY FOR DEBTS OF CORPORATION
After the amount of the subscription price, the purchase price, or the par value of the stock of any class or series is paid into the Corporation, owners or holders of shares of any stock in the Corporation may never be assessed to pay the debts of the Corporation.
ARTICLE VI
NO CUMULATIVE VOTING
Except as may otherwise be required by law, these articles of incorporation, or the provisions of the resolution or resolutions as may be adopted by the board of directors pursuant to Article IV of these articles of incorporation, in all matters as to which the vote or consent of stockholders of the Corporation shall be required to be taken, the holders of Common Stock shall have one vote per share of Common Stock held. Cumulative Voting on the election of directors or on any other matter submitted to the stockholders shall not be permitted.
ARTICLE VII
NO PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of stock or of options, warrants, or other rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right to purchase or subscribe for any unissued stock of any class or series of any additional shares of any class or series to be issued by reason of any increase of the authorized capital stock of the Corporation of any class or series, or bonds, certificates of indebtedness, debentures, or other securities convertible into or exchangeable for stock of the Corporation of any class or series, or carrying any rights to purchase stock of any class or series, but any such unissued stock, additional authorized issue of shares of any class or series of stock, or securities convertible into or exchangeable for stock carrying any right to purchase stock may be issued and disposed of pursuant to an appropriate resolution of the board of directors to such persons, firms, corporations, or associations and on such terms as may be deemed advisable by the board of directors in the exercise of its sole discretion.
ARTICLE VIII
TRANSACTIONS WITH OFFICERS AND DIRECTORS
No contract or other transaction between the Corporation and one or more or its directors or officers, or between the Corporation and any corporation, firm or association in which one or more of its directors or officers are directors or officers or are financially interested, is void or voidable solely for this reason or solely because any such director or officer is present at the meeting of the board of directors or a committee thereof which authorizes or approves the contract or transaction, or because the vote or votes of common or interested directors are counted for that purpose, if the circumstances specified in any of the following paragraphs exist:
(a)
The fact of the common directorship, office or financial interest is disclosed or known to the board of directors or committee and noted in the minutes, and the board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient for the purpose without counting the vote or votes of the common or interested director or directors;
(b)
The fact of the common directorship, office or financial interest is disclosed or known to the stockholders, and they approve or ratify the contract or transaction in good faith by a majority vote of stockholders holding a majority of the voting power. The votes of the common or interested directors or officers must be counted in any such vote of stockholders; or
(c)
The contract or transaction is fair as to the Corporation at the time it is authorized or approved.
ARTICLE IX
INDEMNIFICATION OF OFFICERS, DIRECTORS, AND OTHERS
(a)
The
Corporation shall indemnify each director and officer of the Corporation and their respective heirs, administrators, and executors
against all liabilities and expenses reasonably incurred in connection with any action, suit, or proceeding to which he may be
made a party by reason of the fact that he is or was a director or officer of the Corporation, to the full extent permitted by
the laws of the state of Nevada now existing or as such laws may hereafter be amended. The expenses of officers and directors
incurred in defending a civil or criminal action, suit, or proceeding shall be paid by the Corporation as they are incurred and
in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled
to be indemnified by the Corporation.
(b)
The Corporation may indemnify each director, officer, employee, or agent of the Corporation and their respective heirs, administrators, and executors against all liabilities and expenses reasonably incurred in connection with any action, suit, or proceeding to which such person may be made a party by reason of such person being, or having been, a director, officer, employee, or agent of the Corporation, to the full extent permitted by the laws of the state of Nevada now existing or as such laws may hereafter be amended.
ARTICLE X
LIMITATION ON DIRECTORS LIABILITY
To the full extent permitted by the Nevada Revised Statutes, directors and officers of the Corporation shall have no personal liability to the Corporation or its stockholders for damages for breach of their fiduciary duty as a director or officer, except for damages resulting from (a) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law; (b) the payment of distribution in violation of section 78.300 of the Nevada Revised Statutes, as it may be amended from time to time, or any successor statute thereto.
ARTICLE XI
NO LIMITATIONS ON VOTING RIGHTS
To the extent permissible under the applicable law of any jurisdiction to which the Corporation may become subject by reason of the conduct of business, the ownership of assets, the residence of shareholders, the location of offices or facilities, or any other item, the Corporation elects not to be governed by the provisions of any statute that (i) limits, restricts, modifies, suspends, terminates, or otherwise effects the rights of any shareholder to cast one vote for each share of Common Stock registered in the name of such shareholder on the books of the Corporation, without regard to whether such shares were acquired directly from the Corporation or from any other person and without regard to whether such shareholder has the power to exercise or direct the exercise of voting power over any specific fraction of the shares of Common Stock of the Corporation issued and outstanding or (ii) grants to any shareholder the right to have his or her stock redeemed or purchased by the Corporation or any other shareholder of the Corporation. Without limiting the generality of the foregoing, the Corporation expressly elects not to be governed by or be subject to the provisions of sections 78.378 through 78.3793 of the Nevada Revised Statutes or any similar or successor statutes adopted by any state which may be deemed to apply to the Corporation from time to time.
ARTICLE XII
AMENDMENTS
The Corporation reserves the right to amend, alter, change, or repeal all or any portion of the provisions contained in these articles of incorporation from time to time in accordance with the laws of the state of Nevada; and all rights conferred herein on stockholders are granted subject to this reservation.
ARTICLE XIII
ADOPTION AND AMENDMENT OF BYLAWS
The initial bylaws of the Corporation shall be adopted by the board of directors. The power to alter, amend, or repeal the bylaws or adopt new bylaws shall be vested in the board of directors. The bylaws may contain any provisions for the regulation or management of the affairs of the Corporation not inconsistent with these articles of incorporation and the laws of the state of Nevada now or hereafter existing.
ARTICLE XIV
GOVERNING BOARD
The governing board of the Corporation shall be known as the “board of directors.” The board of directors must have at least one director or as otherwise specified in its bylaws or director’s resolutions.
ARTICLE XV
POWERS OF GOVERNING BOARD
The governing board of the Corporation is specifically granted by these articles of incorporation all powers permitted to be vested in the governing board of a corporation by the applicable provisions of the laws of the state of Nevada now or hereafter existing.
The undersigned, being the duly authorized officer of the Corporation herein before named, hereby makes and files these restated and revised articles of incorporation, declaring and certifying that the facts contained herein are true, that the amendment and restated articles of incorporation was duly adopted and approved by the board of directors of the Corporation and that a majority of the shareholders of the Corporation approved such amendment and restatement on October 22, 2009.
DATED this 22nd day of October 2009.
| ` | Piranha Interactive Publishing, Inc. | |
| By: | /s/ Kip Eardley | |
| A duly Authorized Officer | ||
| STATE OF NEVADA | ||
BARBARA K. CEGAVSKE Secretary of Stare
KIMBERLEY PRO DI Deputy Secretary for Commercia7 Recordings |
|
Commercial Recordings Division 202
N. Carson Street |
OFFICE OF THE SECRETARY OF STATE |
| JEFF PARKER | Job:C20180308-0562 |
| March 8, 2018 |
Special Handling Instructions:
EXP AMD-BL EMAILED 03/08/18 NEH
Charges
| Description | Document Number | Filing Date/Time | Qty | Price | Amount | |||||||||||
| Amendment | 20180107662-53 | 3/8/2018 9:26:54 AM | 1 | $ | 175.00 | $ | 175.00 | |||||||||
| 24 Hour Expedite | 20180107662-53 | 3/8/2018 9:26:54 AM | 1 | $ | 125.00 | $ | 125.00 | |||||||||
| Total | $ | 300.00 | ||||||||||||||
Payments
| Type | Description | Amount | ||||||
| Credit | 52054740557564372030941 | $ | 300.00 | |||||
| Total | $ | 300.00 | ||||||
Credit Balance: $0.00
| Job Contents: | ||
| File Stamped Copy(s): | 1 | |
| Business License(s): | 1 |
JEFF PARKER
BYLAWS
OF
SQUARE CHAIN CORPORATION
ARTICLE I
OFFICES
1. Principal Office.
The principal office shall be in 3609 Hammerkop Drive N., Las Vegas, NV 89084.
2. Other Offices.
The Corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
1. Annual Meeting.
The annual meeting of the stockholders shall be held on such date and at such time and place each year as the Board of Directors (the “Board”) shall determine, for the purpose of electing Directors and for the transaction of such other business as may properly come before the meeting. If the election of Directors is not held on the day designated by the Board for any annual meeting of the stockholders, or any adjournment thereof, the Board shall cause the election to be held at a special meeting of the stockholders as soon thereafter as convenient.
2. Special Meetings.
Special meetings of the stockholders may be called for any purpose or purposes at any time by a majority of the Board of Directors, Chairman of the Board or the President. No special meeting may be called at the request of a stockholder. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice thereof.
3. Place of Meetings.
Annual and special meetings of the stockholders may be held at such time and place within or without the State of Nevada as shall be stated in the notice of the meeting, or in a duly executed waiver of notice thereof.
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4. Notice of Meeting.
Written notice stating the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered to each stockholder of record entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. Notice may be delivered either personally or by first class, certified or registered mail, postage prepaid, and signed by an officer of the Corporation at the direction of the person or persons calling the meeting. If mailed, notice shall be deemed to be delivered when mailed to the stockholders at his or hers or her address as it appears on the stock transfer books of the Corporation. Delivery of any such notice to any officer of a corporation or association, or to any member of a partnership shall constitute delivery of such notice to such corporation, association or partnership. In the event of the transfer of stock after delivery or mailing of the notice of and prior to the holding of the meeting it shall not be necessary to deliver or mail notice of the meeting to the transferee. Notice need not be given of an adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken, provided that such adjournment is for less than thirty (30) days and further provided that a new record date is not fixed for the adjourned meeting, in either of which events, written notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at such meeting. At any adjourned meeting, any business may be transacted which might have been transacted at the meeting as originally noticed. A written waiver of notice, whether given before or after the meeting to which it relates, shall be equivalent to the giving of notice of such meeting to the stockholder or stockholders signing such waiver. Attendance of a stockholder at a meeting shall constitute a waiver of notice of such meeting, except when the stockholder attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.
5. Fixing Date for Determination of Stockholders Record.
In order that the Corporation may determine the stockholders entitled to notice of and to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, if permitted by these By-laws or the Articles of Incorporation, or to receive payment of any dividend or other distribution or allotment of any rights, or to exercise any rights in respect of any other change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix in advance a record date, which shall not be more than sixty (60) nor less than ten (10) days prior to the date of such meeting or such action, as the case may be. If the Board of Directors has not fixed a record date for determining the stockholders entitled to notice of and to vote at a meeting of stockholders, the record date shall be at close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. If the Board of Directors has not fixed a record date for determining the stockholders entitled to express consent to corporate action in writing without a meeting, if permitted by these By-laws or the Articles of Incorporation, when no prior action by the Board of Directors is necessary, the record date shall be the day on which the first written consent is expressed by any stockholder. If the Board of Directors has not fixed a record date for determining stockholders for any other purpose, the record date shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
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6. Record of Stockholders.
The Secretary or other officer having charge of the stock transfer books of the Corporation shall make, or cause to be made, at least ten (10) days before every meeting of stockholders, a complete record of the stockholders entitled to vote at a meeting of stockholders or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.
7. Quorum and Manner of Acting.
At any meeting of the stockholders, the presence, in person or by proxy, of the holders of a majority of the outstanding stock entitled to vote shall constitute a quorum for the transaction of business except as otherwise provided by the Nevada General Corporation Law or by the Articles of Incorporation. All shares represented and entitled to vote on any single subject matter which may be brought before the meeting shall be counted for quorum purposes. Only those shares entitled to vote on a particular subject matter shall be counted for the purpose of voting on that subject matter. Business may be conducted once a quorum is present and may continue to be conducted until adjournment sine die, notwithstanding the withdrawal or temporary absence of stockholders leaving less than a quorum. Except as otherwise provided in the Nevada General Corporation Law, the Articles of Incorporation or these Bylaws, the affirmative vote of the holders of a majority of the shares of stock then represented at the meeting and entitled to vote thereat shall be the act of the stockholders; provided, however, that if the shares of stock so represented are less than the number required to constitute a quorum, the affirmative vote must be such as would constitute a majority if a quorum were present, except that the affirmative vote of the holders of a majority of the shares of stock then present is sufficient in all cases to adjourn a meeting.
8. Voting of Shares of Stock.
Each stockholder shall be entitled to one vote or corresponding fraction thereof for each share of stock or fraction thereof standing in his, her or its name on the books of the Corporation on the record date. A stockholder may vote either in person or by valid proxy, as defined in Section 12 of this Article II, executed in writing by the stockholder or by his, her or its duly authorized attorney in fact. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor counted for quorum purposes; provided, however, that the foregoing shall not limit the right of any corporation to vote stock, including but not limited to its own stock, when held by it in a fiduciary capacity. Shares of stock standing in the name of another corporation may be voted by such officer, agent or proxy as the bylaws of such other corporation may prescribe or, in the absence of such provision, as the Board of Directors of such other corporation may determine. Unless demanded by a stockholder present in person or by proxy at any meeting of the stockholders and entitled to vote thereat, or unless so directed by the chairman of the meeting, the vote thereat on any question need not be by ballot. If such demand or direction is made, a vote by ballot shall be taken, and each ballot shall be signed by the stockholder voting, or by his or hers or her proxy, and shall state the number of shares voted.
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9. Organization.
At each meeting of the stockholders, the Chairman of the Board, or, if he or she is absent therefrom, the President, or, if he or she is absent therefrom, another officer of the Corporation chosen as chairman of such meeting by the President, or if such person is absent therefrom, another officer of the Corporation chosen as the Chairman of such meeting by stockholders holding a majority of the shares present in person or by proxy and entitled to vote thereat, or, if all the officers of the Corporation are absent therefrom, a stockholder of record so chosen, shall act as chairman of the meeting and preside thereat. The Secretary, or, if he or she is absent from the meeting or is required pursuant to the provisions of this Section 9 to act as chairman of such meeting, the person (who shall be an Assistant Secretary, if any and if present) whom the chairman of the meeting shall appoint shall act as secretary of the meeting and keep the minutes thereof.
10. Order of Business.
The order of business at each meeting of the stockholders shall be determined by the chairman of such meeting, but the order of business may be changed by the vote of stockholders holding a majority of the shares present in person or by proxy at such meeting and entitled to vote thereat.
11. Voting.
At all meetings of stockholders, each stockholder entitled to vote thereat shall have the right to vote, in person or by proxy, and shall have, for each share of stock registered in his, her or its name, the number of votes provided by the Articles of Incorporation or these Bylaws in respect of stock of such class. Stockholders shall not have cumulative voting rights with respect to the election of Directors.
12. Voting by Proxy.
At any meeting of the stockholders, any stockholder may be represented and vote by a proxy or proxies appointed by an instrument in writing. In the event that any such instrument in writing shall designate two (2) or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such written instrument upon all of the persons so designated unless the instrument shall otherwise provide. No such proxy shall be valid after the expiration of six (6) months from the date of its execution, unless coupled with an interest, or unless the person executing it specifies therein the length of time for which it is to continue in force, which in no case shall exceed seven (7) years from the date of its execution. Subject to the above, any proxy duly executed is not revoked and continues in full force and effect until an instrument revoking it or a duly executed proxy bearing a later date is filed with the Secretary of the Corporation.
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13. Action By Stockholders Without a Meeting.
At any such time as the Corporation shall have a class of equity securities registered under the Securities Exchange Act of 1934, as amended, no action required or permitted to be taken at a meeting of the stockholders shall be taken without a meeting by a consent in writing.
14. Nomination of Directors.
Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nomination for election to the Board of Directors of the Corporation at a meeting of stockholders may be made by the Board of Directors or by any stockholder of the Corporation entitled to vote for the election of directors at such meeting who complies with the notice procedures set forth in this Section 14. Such nominations, other than those made by or on behalf of the Board of Directors, shall be made by notice in writing delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation, and received not less than thirty (30) days nor more than sixty (60) days prior to such meeting; provided, however, that if less than forty-five (45) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, such nomination shall have been mailed or delivered to the Secretary not later than the close of business on the 10th day following the date on which the notice of the meeting was mailed or public disclosure was made, whichever occurs first. Such notice shall set forth (a) as to each proposed nominee (i) the name, age, business address and, if known, residence address of each such nominee, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of stock of the Corporation which are beneficially owned by each such nominee, and (iv) any other information concerning the nominee that must be disclosed in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person’s written consent to be named as a nominee and to serve as a director if elected); (b) as to the stockholder giving the notice (i) the name and address, as they appear on the Corporation’s books, of such stockholder, and (ii) the class and number or shares of the Corporation which are beneficially owned by such stockholder; and (c) as to the beneficial owner, if any, on whose behalf the nomination is made, (i) the name and address of such person and (ii) the class and number of shares of the Corporation which are beneficially owned by such person.
The Chairman presiding at a meeting of stockholders may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
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Nothing in the foregoing provision shall obligate the Corporation or the Board of Directors to include in any proxy statement or other stockholder communication distributed on behalf of the Corporation or the Board of Directors information with respect to any nominee for directors submitted by a stockholder.
ARTICLE III
BOARD OF DIRECTORS
1. General Powers.
The business and affairs of the Corporation shall be managed by the Board of Directors.
2. Number, Term of Office and Qualifications.
Subject to the requirements of the Nevada General Corporation Law or the Articles of Incorporation, the Board of Directors may from time to time determine the number of Directors. Until the Board of Directors shall otherwise determine, the number of Directors shall be that number comprising the initial Board of Directors as set forth in the Articles of Incorporation. Each director shall hold office until his or hers or her successor is duly elected or until his or hers or her earlier death or resignation or removal in the manner hereinafter provided. Directors need not be stockholders.
3. Place of Meeting.
The Board of Directors may hold its meetings, either within or without the State of Nevada, at such place or places as it may from time to time by resolution determine or as shall be designated in any notices or waivers of notice thereof. Any such meeting, whether regular or special, may be held by telephone conference or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting in such manner shall constitute presence in person at such meeting. Each person participating in a telephonic meeting shall sign the minutes thereof, which may be signed in counterparts.
4. Annual Meetings.
As soon as practicable after each annual election of Directors, the Board of Directors shall meet for the purpose of organization and the transaction of other business at the place where regular meetings of the Board of Directors are held, and no notice of such meeting shall be necessary in order to legally hold the meeting, provided that a quorum is present. If such meeting is not held as provided above, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for a special meeting of the Board of Directors, or in the event of waiver of notice as specified in the written waiver of notice.
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5. Regular Meetings.
Regular meetings of the Board of Directors may be held without notice at such times as the Board of Directors shall from time to time by resolution determine.
6. Special Meetings; Notice.
Special meetings of the Board of Directors shall be held, either within or without the State of Nevada, whenever called by the Chairman of the Board or a majority of the Directors at the time in office. Notice shall be given, in the manner hereinafter provided, of each such special meeting, which notice shall state the time and place of such meeting, but need not state the purposes thereof. Except as otherwise provided in Section 9 of this Article III, notice of each such meeting shall be mailed to each Director, addressed to him or her or her at his or hers or her residence or usual place of business, at least five (5) days before the day on which such meeting is to be held, or shall be sent addressed to him or her at such place by facsimile, cable, wireless or other form of recorded communication or delivered personally or by telephone not later than the day before the day on which such meeting is to be held. A written waiver of notice, whether given before or after the meeting to which it relates, shall be equivalent to the giving of notice of such meeting to the Director or Directors signing such waiver. Attendance of a Director at a special meeting of the Board of Directors shall constitute a waiver of notice of such meeting, except when he or she attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.
7. Quorum and Manner of Acting.
A majority of the whole Board of Directors shall be present in person at any meeting of the Board of Directors in order to constitute a quorum for the transaction of business at such meeting, and except as otherwise specified in the Articles of Incorporation or these Bylaws, and except also as otherwise expressly provided by the Nevada General Corporation Law, the vote of a majority of the Directors present at any such meeting at which a quorum is present shall be the act of the Board of Directors; provided, however, that in the event an equal number of votes are cast for and against any proposed act of the Board, the vote of the Chairman of the Board shall determine the outcome of such vote. In the absence of a quorum from any such meeting, a majority of the Directors present thereat may adjourn such meeting from time to time to another time or place, without notice other than announcement at the meeting, until a quorum shall be present thereat. The Directors shall act only as a Board of Directors and the individual Directors shall have no power as such.
8. Organization.
At each meeting of the Board of Directors, the Chairman of the Board, or, if he or she is absent therefrom, the President, or if he or she is absent therefrom, a Director chosen by a majority of the Directors present thereat, shall act as chairman of such meeting and preside thereat. The Secretary, or if he or she is absent, the person (who shall be an Assistant Secretary, if any and if present) whom the chairman of such meeting shall appoint, shall act as Secretary of such meeting and keep the minutes thereof.
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9. Action by Directors Without a Meeting.
Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by all Directors and such consent is filed with the minutes of the proceedings of the Board of Directors.
10. Resignations.
Any Director may resign at any time by giving written notice of his or hers or her resignation to the Corporation. Any such resignation shall take effect at the time specified therein, or, if the time when it shall become effective is not specified therein, it shall take effect immediately upon its receipt by the Chairman of the Board, the President or the Secretary; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
11. Removal of Directors.
Directors may be removed only for cause, as provided from time to time by the Nevada General Corporation Law as then in effect, or by affirmative vote of stockholders representing a majority of the outstanding stock entitled to vote thereon.
12. Vacancies.
Vacancies and newly created directorships resulting from any increase in the authorized number of Directors elected by all of the stockholders having the right to vote as a single class may be filled by a vote of a majority of the Directors then in office, although less than a quorum, or chosen by a sole remaining Director. If at any time, by reason of death or resignation or other cause, the Corporation has no Directors in office, then any officer or stockholder or an executor, administrator, trustee or guardian of a stockholder, may call a special meeting of stockholders for the purpose of filling vacancies in the Board of Directors. If one or more Directors shall resign from the Board of Directors, effective at a future date, a majority of the Directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each Director so chosen shall hold office as provided in this section in the filling of other vacancies.
13. Compensation.
Unless otherwise expressly provided by resolution adopted by the Board of Directors, no Director shall receive any compensation for his or hers or her services as a Director. The Board of Directors may at any time and from time to time by resolution provide that the Directors shall be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as Director. In addition, the Board of Directors may at any time and from time to time by resolution provide that Directors shall be paid their actual expenses, if any, of attendance at each meeting of the Board of Directors. Nothing in this section shall be construed as precluding any Director from serving the Corporation in any other capacity and receiving compensation therefor, but the Board of Directors may by resolution provide that any Director receiving compensation for his or hers or her services to the Corporation in any other capacity shall not receive additional compensation for his or hers or her services as a Director.
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ARTICLE IV
OFFICERS
1. Number.
The Corporation shall have the following officers: a Chairman of the Board (who shall be a Director), a President, a Vice President, a Secretary and a Treasurer. At the discretion of the Board of Directors, the Corporation may also have additional Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers. Any two (2) or more offices may be held by the same person.
2. Election and Term of Office.
The officers of the Corporation shall be elected annually by the Board of Directors. Each such officer shall hold office until his or hers or her successor is duly elected or until his or hers or her earlier death or resignation or removal in the manner hereinafter provided.
3. Agents.
In addition to the officers mentioned in Section 1 of this Article IV, the Board of Directors may appoint such agents as the Board of Directors may deem necessary or advisable, each of which agents shall have such authority and perform such duties as are provided in these Bylaws or as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer or to any committee the power to appoint or remove any such agents.
4. Removal.
Any officer may be removed, with or without cause, at any time by resolution adopted by a majority of the whole Board of Directors.
5. Resignations.
Any officer may resign at any time by giving written notice of his or hers or her resignation to the Board of Directors, the Chairman of the Board, the President or the Secretary. Any such resignation shall take effect at the times specified therein, or, if the time when it shall become effective is not specified therein, it shall take effect immediately upon its receipt by the Board of Directors, the Chairman of the Board, the President or the Secretary; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
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6. Vacancies.
A vacancy in any office due to death, resignation, removal, disqualification or any other cause may be filled for the unexpired portion of the term thereof by the Board of Directors.
7. Chairman of the Board.
The Chairman of the Board shall be the chief executive officer of the Corporation and shall have, subject to the control of the Board of Directors, general and active supervision and direction over the business and affairs of the Corporation and over its several officers. The Chairman of the Board shall: (a) preside at all meetings of the stockholders and at all meetings of the Board of Directors; (b) make a report of the state of the business of the Corporation at each annual meeting of the stockholders; (c) see that all orders and resolutions of the Board of Directors are carried into effect; (d) sign, with the Secretary or an Assistant Secretary, certificates for stock of the Corporation; (e) have the right to sign, execute and deliver in the name of the Corporation all deeds, mortgages, bonds, contracts or other instruments authorized by the Board of Directors, except in cases where the signing, execution or delivery thereof is expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or where any of them are required by law otherwise to be signed, executed or delivered; and (f) have the right to cause the corporate seal, if any, to be affixed to any instrument which requires it. In general, the Chairman of the Board shall perform all duties incident to the office of the Chairman of the Board and such other duties as from time to time may be assigned to him or her by the Board of Directors.
8. President.
The President shall have, subject to the control of the Board of Directors and the Chairman of the Board, general and active supervision and direction over the business and affairs of the Corporation and over its several officers. At the request of the Chairman of the Board, or in case of his or hers or her absence or inability to act, the President shall perform the duties of the Chairman of the Board and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Chairman of the Board. he or she may sign, with the Secretary or an Assistant Secretary, certificates for stock of the Corporation. He or she may sign, execute and deliver in the name of the Corporation all deeds, mortgages, bonds, contracts or other instruments authorized by the Board of Directors, except in cases where the signing, execution or delivery thereof is expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or where any of them are required by law otherwise to be signed, executed or delivered, and he may cause the corporate seal, if any, to be affixed to any instrument which requires it. In general, the President shall perform all duties incident to the office of the President and such other duties as from time to time may be assigned to him or her by the Board of Directors or the Chairman of the Board.
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9. Vice President.
The Vice President and any additional Vice Presidents shall have such powers and perform such duties as the Chairman of the Board, the President or the Board of Directors may from time to time prescribe and shall perform such other duties as may be prescribed by these Bylaws. At the request of the President, or in case of his or hers or her absence or inability to act, the Vice President shall perform the duties of the President and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the President.
10. Secretary.
The Secretary shall: (a) record all the proceedings of the meetings of the stockholders, the Board of Directors and the Executive Committee, if any, in one or more books kept for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be the custodian of all contracts, deeds, documents, all other indicia of title to properties owned by the Corporation and of its other corporate records (except accounting records) and of the corporate seal, if any, and affix such seal to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; (d) sign, with the Chairman of the Board, the President, the Executive Vice President or a Vice President, certificates for stock of the Corporation; (e) have charge, directly or through the transfer clerk or transfer clerks, transfer agent or transfer agents and registrar or registrars appointed as provided in Section 3 of Article VII of these Bylaws, of the issue, transfer and registration of certificates for stock of the Corporation and of the records thereof, such records to be kept in such manner as to show at any time the amount of the stock of the Corporation issued and outstanding, the manner in which and the time when such stock was paid for, the names, alphabetically arranged, and the addresses of the holders of record thereof, the number of shares held by each, and the time when each became a holder of record; (f) upon request, exhibit or cause to be exhibited at all reasonable times to any Director such records of the issue, transfer and registration of the certificates for stock of the Corporation; (g) see that the books, reports, statements, certificates and all other documents and records required by law are properly kept and filed; and (h) see that the duties prescribed by Section 6 of Article II of these Bylaws are performed. In general, the Secretary shall perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the Chairman of the Board, the President or the Board of Directors.
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11. Treasurer.
If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his or hers or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. The Treasurer shall: (a) have charge and custody of, and be responsible for, all funds, securities, notes and valuable effects of the Corporation; (b) receive and give receipt for monies due and payable to the Corporation from any sources whatsoever; (c) deposit all such monies to the credit of the Corporation or otherwise as the Board of Directors, the Chairman of the Board or the President shall direct in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Article VI of these Bylaws; (d) cause such funds to be disbursed by checks or drafts on the authorized depositories of the Corporation signed as provided in Article VI of these Bylaws; (e) be responsible for the accuracy of the amounts of, and cause to be preserved proper vouchers for, all monies so disbursed; (f) have the right to require from time to time reports or statements giving such information as he or she may desire with respect to any and all financial transactions of the Corporation from the officers or agents transacting the same; (g) render to the Chairman of the Board, the President or the Board of Directors, whenever they, respectively, shall request him or her so to do, an account of the financial condition of the Corporation and of all his or hers or her transactions as Treasurer; and (h) upon request, exhibit or cause to be exhibited at all reasonable times the cash books and other records to the Chairman of the Board, the President or any of the Directors of the Corporation. In general, the Treasurer shall perform all duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Chairman of the Board, the President or the Board of Directors.
12. Assistant Officers.
Any persons elected as assistant officers shall assist in the performance of the duties of the designated office and such other duties as shall be assigned to them by any Vice President, the Secretary or the Treasurer, as the case may be, or by the Board of Directors, the Chairman of the Board, or the President.
13. Compensation.
The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors.
14. Combination of Offices.
Any two of the offices hereinabove enumerated may be held by one and the same person, if such person is so elected or appointed, except the offices of President and Secretary.
ARTICLE V
COMMITTEES
1. Executive Committee; How Constituted and Powers.
The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may designate one or more of the Directors then in office, who shall include the Chairman of the Board, to constitute an Executive Committee, which shall have and may exercise between meetings of the Board of Directors all the delegable powers of the Board of Directors to the extent not expressly prohibited by the Nevada General Corporation Law or by resolution of the Board of Directors. The Board of Directors may designate one or more Directors as alternate members of the Committee who may replace any absent or disqualified member at any meeting of the Committee. Each member of the Executive Committee shall continue to be a member thereof only during the pleasure of a majority of the whole Board of Directors.
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2. Executive Committee; Organization.
The Chairman of the Board shall act as chairman at all meetings of the Executive Committee and the Secretary shall act as secretary thereof. In case of the absence from any meeting of the Chairman of the Board or the Secretary, the Committee may appoint a chairman or secretary, as the case may be, of the meeting.
3. Executive Committee; Meetings.
Regular meetings of the Executive Committee may be held without notice on such days and at such places as shall be fixed by resolution adopted by a majority of the Committee and communicated to all its members. Special meetings of the Committee shall be held whenever called by the Chairman of the Board or a majority of the members thereof then in office. Notice of each special meeting of the Committee shall be given in the manner provided in Section 6 of Article III of these Bylaws for special meetings of the Board of Directors. Notice of any such meeting of the Executive Committee, however, need not be given to any member of the Committee if waived by him or her in writing or by facsimile, cable, wireless or other form of recorded communication either before or after the meeting, or if he or she is present at such meeting, except when he or she attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Subject to the provisions of this Article V, the Committee, by resolution adopted by a majority of the whole Committee, shall fix its own rules of procedure and it shall keep a record of its proceedings and report them to the Board of Directors at the next regular meeting thereof after such proceedings have been taken. All such proceedings shall be subject to revision or alteration by the Board of Directors; provided, however, that third parties shall not be prejudiced by any such revision or alteration.
4. Executive Committee; Quorum and Manner of Acting.
A majority of the Executive Committee shall constitute a quorum for the transaction of business, and, except as specified in Section 3 of this Article V, the act of a majority of those present at a meeting thereof at which a quorum is present shall be the act of the Committee. The members of the Committee shall act only as a committee, and the individual members shall have no power as such.
5. Other Committees.
The Board of Directors, by resolution adopted by a majority of the whole Board, may constitute other committees other than the Executive Committee, which shall in each case consist of one or more of the Directors and, at the discretion of the Board of Directors, such officers who are not Directors. The Board of Directors may designate one or more Directors or officers who are not Directors as alternate members of any committee other than the Executive Committee who may replace any absent or disqualified member at any meeting of the committee. Each such committee shall have and may exercise such powers as the Board of Directors may determine and specify in the respective resolutions appointing them; provided, however, that (a) unless all of the members of any committee shall be Directors, such committee shall not have authority to exercise any of the powers of the Board of Directors in the management of the business and affairs of the Corporation, and (b) if any committee shall have the power to determine the amounts of the respective fixed salaries of the officers of the Corporation or any of them, such committee shall consist of not less than three (3) members and none of its members shall have any vote in the determination of the amount that shall be paid to him or her as a fixed salary. A majority of all the members of any such committee may fix its rules of procedure, determine its action and fix the time and place of its meetings and specify what notice thereof, if any, shall be given, unless the Board of Directors shall otherwise by resolution provide.
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6. Committee Minutes.
The Executive Committee and any other committee shall keep regular minutes of their proceedings and report the same to the Board of Directors when required.
7. Action by Committees Without a Meeting.
Any action required or permitted to be taken at a meeting of the Executive Committee or any other committee of the Board of Directors may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by all members of the committee and such consent is filed with the minutes of the proceedings of the committee.
8. Resignations.
Any member of the Executive Committee or any other committee may resign therefrom at any time by giving written notice of his or hers or her resignation to the Chairman of the Board, the President or the Secretary. Any such resignation shall take effect at the time specified therein, or if the time when it shall become effective is not specified therein, it shall take effect immediately upon its receipt by the Chairman of the Board or the Secretary; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
9. Vacancies.
Any vacancy in the Executive Committee or any other committee shall be filled by the vote of a majority of the whole Board of Directors.
10. Compensation.
Unless otherwise expressly provided by resolution adopted by the Board of Directors, no member of the Executive Committee or any other committee shall receive any compensation for his or hers or her services as a committee member. The Board of Directors may at any time and from time to time by resolution provide that committee members shall be paid a fixed sum for attendance at each committee meeting or a stated salary as a committee member. In addition, the Board of Directors may at any time and from time to time by resolution provide that such committee members shall be paid their actual expenses, if any, of attendance at each committee meeting. Nothing in this section shall be construed as precluding any committee member from serving the Corporation in any other capacity and receiving compensation therefor, but the Board of Directors may by resolution provide that any committee member receiving compensation for his or hers or her services to the Corporation in any other capacity shall not receive additional compensation for his or hers or her services as a committee member.
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11. Dissolution of Committees; Removal of Committee Members.
The Board of Directors, by resolution adopted by a majority of the whole Board, may, with or without cause, dissolve the Executive Committee or any other committee, and, with or without cause, remove any member thereof.
ARTICLE VI
MISCELLANEOUS
1. Execution of Contracts.
Except as otherwise required by law or by these Bylaws, any contract or other instrument may be executed and delivered in the name of the Corporation and on its behalf by the Chairman of the Board, the President, or any Vice President. In addition, the Board of Directors may authorize any other officer of officers or agent or agents to execute and deliver any contract or other instrument in the name of the Corporation and on its behalf, and such authority may be general or confined to specific instances as the Board of Directors may by resolution determine.
2. Attestation.
Any Vice President, the Secretary, or any Assistant Secretary may attest the execution of any instrument or document by the Chairman of the Board, the President, or any other duly authorized officer or agent of the Corporation and may affix the corporate seal, if any, in witness thereof, but neither such attestation nor the affixing of a corporate seal shall be requisite to the validity of any such document or instrument.
3. Checks, Drafts.
All checks, drafts, orders for the payment of money, bills of lading, warehouse receipts, obligations, bills of exchange and insurance certificates shall be signed or endorsed (except endorsements for collection for the account of the Corporation or for deposit to its credit, which shall be governed by the provisions of Section 4 of this Article VI) by such officer or officers or agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.
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4. Deposits.
All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation or otherwise as the Board of Directors, the Chairman of the Board, or the President shall direct in general or special accounts at such banks, trust companies, savings and loan associations, or other depositories as the Board of Directors may select or as may be selected by any officer or officers or agent or agents of the Corporation to whom power in that respect has been delegated by the Board of Directors. For the purpose of deposit and for the purpose of collection for the account of the Corporation, checks, drafts and other orders for the payment of money which are payable to the order of the Corporation may be endorsed, assigned and delivered by any officer or agent of the Corporation. The Board of Directors may make such special rules and regulations with respect to such accounts, not inconsistent with the provisions of these Bylaws, as it may deem expedient.
5. Proxies in Respect of Stock or Other Securities of Other Corporations.
Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the President, or any Vice President may exercise in the name and on behalf of the Corporation the powers and rights which the Corporation may have as the holder of stock or other securities in any other corporation, including without limitation the right to vote or consent with respect to such stock or other securities.
6. Fiscal Year.
The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors, and may thereafter be changed from time to time by action of the board of Directors. Initially, the fiscal year shall begin on January 1 and end on December 31.
ARTICLE VII
STOCK AND WARRANTS
1. Certificates.
Every holder of stock or warrant to purchase stock in the Corporation shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board, the President, or a Vice President and by the Secretary or an Assistant Secretary. The signatures of such officers upon such certificate may be facsimiles if the certificate is manually signed by a transfer agent or registered by a registrar, other than the Corporation itself or one of its employees. If any officer who has signed or whose facsimile signature has been placed upon a certificate has ceased for any reason to be such officer prior to issuance of the certificate, the certificate may be issued with the same effect as if that person were such officer at the date of issue. All certificates for stock or warrants of the Corporation shall, respectively, be consecutively numbered, shall state the number of shares or warrants represented thereby and shall otherwise be in such form as shall be determined by the Board of Directors, subject to such requirements as are imposed by the Nevada General Corporation Law. The names and addresses of the persons to whom the shares or warrants represented by certificates are issued shall be entered on the stock or warrant transfer books of the Corporation, together with the number of shares or warrants and the date of issue, and in the case of cancellation, the date of cancellation. Certificates surrendered to the Corporation for transfer shall be canceled, and no new certificate shall be issued in exchange for such shares or warrants until the original certificate has been canceled; except that in the case of a lost, stolen, destroyed or mutilated certificate, a new certificate may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe.
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2. Transfer of Stock and Warrants.
Transfers of shares of stock or warrants to purchase stock of the Corporation shall be made only on the stock or warrant transfer books of the Corporation by the holder of record thereof or by his or hers or her legal representative or attorney in fact, who shall furnish proper evidence of authority to transfer to the Secretary, or a transfer clerk or a transfer agent, and upon surrender of the certificate or certificates for such shares properly endorsed and payment of all taxes thereon. The person in whose name shares of stock or warrants stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation.
3. Regulations.
The Board of Directors may make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws, concerning the issue, transfer and registration of certificates for stock of the Corporation. The Board of Directors may appoint, or authorize any officer or officers or any committee to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them.
4. Lost Certificates.
The Board of Directors may direct a new stock or warrant certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of the fact by the person claiming the certificate of stock or warrant to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his or hers legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.
5. Registered Stockholders.
The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share, or warrants issued by the Company, or shares, or warrants, on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada.
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ARTICLE VIII
DIVIDENDS
The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares of stock in the manner and upon the terms and conditions provided in the Nevada General Corporation Law.
ARTICLE IX
SEAL
A corporate seal shall not be requisite to the validity of any instrument executed by or on behalf of the Corporation. Nevertheless, if in any instance a corporate seal is used, the same shall be in such form as designated by the Board of Directors and shall bear the full name of the Corporation and the year and state of incorporation, or words and figures of similar import.
ARTICLE X
INDEMNIFICATION OF DIRECTORS AND OFFICERS
1. General.
The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or hers conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his or hers conduct was unlawful.
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2. Derivative Actions.
The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including amounts paid in settlement and attorneys’ fees) actually and reasonably incurred by him or her in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom to be liable to the Corporation or for amounts paid in settlement to the Corporation unless and only to the extent that the court in which such action or suit was brought or other court of competent jurisdiction shall determine upon application that, in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.
3. Indemnification in Certain Cases.
To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article X, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.
4. Procedure.
Any indemnification under Sections 1 and 2 of this Article X (unless ordered by a court or advanced pursuant to Section 5 of this Article X) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable, when a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders.
5. Advances for Expenses.
Expenses incurred by a director, officer, employee, or agent of the Corporation in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation as they are incurred and in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay the amount if it shall be ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the Corporation as authorized in this
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Article X.
6. Rights Not-Exclusive.
The indemnification and advancement of expenses authorized in or ordered by a court pursuant to the other Sections of this Article X shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any law, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, for either an action in his or hers official capacity or an action in another capacity while holding such office, except that indemnification, unless ordered by a court pursuant to Section 2 of this Article X or for advancement of expenses made pursuant to Section 5 of this Article X, may not be made to or on behalf of any director or officer if a final adjudication establishes that his or hers acts or omissions involved intentional misconduct, fraud or a knowing violation of the law and were material to the cause of action.
7. Insurance.
The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and liability and expenses incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article X.
8. Definition of Corporation.
For the purposes of this Article X, references to “the Corporation” include, in addition to the resulting corporation, all constituent corporations (including any constituent of a constituent) absorbed in consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees and agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be entitled to all rights and benefits set forth in the provisions of this Article X with respect to the resulting or surviving corporation.
9. Other Definitions.
For purposes of this Article X, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article X.
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10. Continuation of Rights.
The indemnification and advancement of expenses provided by, or granted pursuant to this Article X shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. No amendment to or repeal of this Article X shall apply to or have any effect on, the rights of any director, officer, employee or agent under this Article X which rights come into existence by virtue of acts or omissions of such director, officer, employee or agent occurring prior to such amendment or repeal.
ARTICLE XI
AMENDMENTS
These Bylaws may be repealed, altered or amended by the affirmative vote of the holders of a majority of the stock issued and outstanding and entitled to vote at any special meeting of stockholders called for such purpose or at an annual meeting of stockholders or by resolution duly adopted by the affirmative vote of not less than a majority of the Directors in office at any annual or regular meeting of the Board of Directors or at any special meeting of the Board of Directors if notice of the proposed repeal, alteration or amendment be contained in the notice of such special meeting; provided, however, that an affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the stock issued and outstanding and entitled to vote thereon is required to repeal, alter or amend Section 14 of Article II, Section 11 of Article III or Article X.
I, THE UNDERSIGNED, being the Secretary of Piranha Interactive Publishing, Inc., DO HEREBY CERTIFY the foregoing to be the Bylaws of the Corporation, as adopted by the Board of Directors on this 22nd day of November, 1996.
| J. Wade Stallings, II | |
| Secretary |
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CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF
SERIES B SUPER VOTING PREFERRED STOCK,
$0.001 PAR VALUE PER SHARE
(PURSUANT TO NRS 78.1955)
The undersigned, Jeffrey J. Parker do hereby certify that:
1. They are the Officer and Director, respectively, of Asia Travel Corporation, a Nevada corporation (the “Corporation”).
2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, of which 20,000 shares of Series A Convertible Preferred Stock have been designated.
3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”):
WHEREAS, the certificate of incorporation of the Corporation, as amended, provides for a class of its authorized stock known as preferred stock, consisting of 10,000,000 shares, $0.001 par value per share, issuable from time to time in one or more series;
WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and the designation thereof, of any of them; and
WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to a series of the preferred stock, which shall consist of, up to 10,000 shares of the preferred stock, which the Corporation has the authority to issue, as follows:
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred stock as follows:
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SERIES B PREFERRED STOCK
1.DESIGNATION AND AMOUNT; DIVIDENDS
| A. | Designation. The designation of said series of preferred stock shall be Series B Super Voting Preferred Stock, $0.001 par value per share (the “Series B Super Voting Preferred Stock”). | |
| B. | Number of Shares. The number of shares of Series B Super Voting Preferred Stock authorized shall be ten thousand (10,000) shares. Each share of Series B Super Voting Preferred Stock shall have a stated value equal to $0.001 (as may be adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series B Stated Value”). | |
| C. | Dividends. Initially, there will be no dividends due or payable on the Series B Super Voting Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Certificate of Incorporation. Any and all such future terms concerning dividends shall be reflected in an amendment to this Certificate, which the Board shall promptly file or cause to be filed. |
2. LIQUIDATION AND REDEMPTION RIGHTS
Upon the occurrence of a Liquidation Event (as defined below), the holders of Series B Super Voting Preferred Stock are entitled to receive net assets on a pro-rata basis. Each holder of Series B Super Voting Preferred Stock is entitled to receive ratably any dividends declared by the Board, if any, out of funds legally available for the payment of dividends. As used herein, “Liquidation Event” means (i) the liquidation, dissolution or winding-up, whether voluntary or involuntary, of the Corporation, (ii) the purchase or redemption by the Corporation of shares of any class of stock or the merger or consolidation of the Corporation with or into any other corporation or corporations, unless (a) the holders of the Series A Super Voting Preferred Stock receive securities of the surviving Corporation having substantially similar rights as the Series A Super Voting Preferred Stock and the stockholders of the Corporation immediately prior to such transaction are holders of at least a majority of the voting securities of the successor Corporation immediately thereafter (the “Permitted Merger”), unless the holders of the shares of Series B Super Voting Preferred Stock elect otherwise or (b) the sale, license or lease of all or substantially all, or any material part of, the Corporation’s assets, unless the holders of Series B Super Voting Preferred Stock elect otherwise.
3. CONVERSION
No conversion of the Series B Super Voting Preferred Stock is permitted.
4. RANK
All shares of the Series B Super Voting Preferred Stock shall rank (i) senior to the Corporation’s (A) Common Stock, par value $0.001 per share ( “Common Stock” ), and any other class or series of capital stock of the Corporation hereafter created, except as otherwise provided in clauses (ii) and (iii) of this Section 4, (ii) pari passu with any class or series of capital stock of the Corporation hereafter created and specifically ranking, by its terms, on par with the Series B Super Voting Preferred-Stock and (iii) junior to any class or series of capital stock of the Corporation hereafter created specifically ranking, by its terms, senior to the Series B Preferred Stock, in each case as to distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.
5. VOTING RIGHTS
A. If at least one share of Series B Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series B Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting.
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B. Each individual share of Series B Super Voting Preferred Stock shall have the voting rights equal to:
[twenty times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all shares of Series A, Series B and any newly designated Preferred stock issued and outstanding at the time of voting}]
Divided by:
[ the number of shares of Series B Super Voting Preferred Stock issued and outstanding at the time of voting]
With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series B Super Voting Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Certificate of Incorporation or By-laws.
6. PROTECTION PROVISIONS
So long as any shares of Series B Super Voting Preferred Stock are outstanding, the Corporation shall not, without first obtaining the unanimous written consent of the holders of Series B Super Voting Preferred Stock, alter or change the rights, preferences or privileges of the Series B Super Voting Preferred so as to affect adversely the holders of Series B Super Voting Preferred Stock.
7. MISCELLANEOUS
| A. | Status of Redeemed Stock. In case any shares of Series B Super Voting Preferred Stock shall be redeemed or otherwise repurchased or reacquired, the shares so redeemed, repurchased, or reacquired shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series B Preferred Stock. | |
| B. | Lost or Stolen Certificates. Upon receipt by the Corporation of (1) evidence of the loss, theft, destruction or mutilation of any Preferred Stock Certificate(s) and (ii) in the case of loss, theft or destruction, indemnity (with a bond or other security) reasonably satisfactory to the Corporation, or in the case of mutilation, the Preferred Stock Certificate(s) (surrendered for cancellation), the Corporation shall execute and deliver new Preferred Stock Certificates. | |
| C. | Waiver. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the holders of Series B Super Voting Preferred Stock granted hereunder may be waived as to all shares of Series B Super Voting Preferred Stock (and the holders thereof) upon the unanimous written consent of the holders of the Series B Super Voting Preferred Stock. | |
| D. | Notices. Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally, by nationally recognized overnight carrier or by confirmed facsimile transmission, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by nationally recognized overnight carrier or confirmed facsimile transmission, in each case addressed to a party as set forth below, or such other address and telephone and fax number as may be designated in writing hereafter in the same manner its set forth in this Section. |
If to the Corporation:
Asia Travel Corporation
3609
Hammerkop Dr.
N. Las Vegas, NV. 89084
If to the holders of the Series B Super Voting Preferred Stock, to the address listed in the Corporation’s books and records.
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RESOLVED, FURTHER, that the Chairman, the president or any vice-president, and the secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution and the provisions of Nevada law.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this 6th day of March 2018.
| /s/ Jeffrey J. Parker | |
| Name: Jeffrey J. Parker | |
| Title: Officer, Director and Principal Financial Officer |
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SQUARE CHAIN CORP.
SUBSCRIPTION AGREEMENT
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH THIS OFFERING THROUGH THE WEBSITE MAINTAINED BY THE COMPANY OR THROUGH WEALTHFORGE SECURITIES, LLC (THE “BROKER”). ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
INVESTORS WHO ARE NOT “ACCREDITED INVESTORS” (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4. THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY EACH SUBSCRIBER IN THIS SUBSCRIPTION AGREEMENT AND THE OTHER INFORMATION PROVIDED BY SUBSCRIBER IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
PROSPECTIVE INVESTORS MAY NOT TREAT THE CONTENTS OF THE SUBSCRIPTION AGREEMENT, THE OFFERING CIRCULAR OR ANY OF THE OTHER MATERIALS RELATING TO THE OFFERING AND PRESENTED TO INVESTORS ON THE COMPANY’S WEBSITE OR PROVIDED BY THE BROKER (COLLECTIVELY, THE “OFFERING MATERIALS”) OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES OR AGENTS (INCLUDING “TESTING THE WATERS” MATERIALS) AS INVESTMENT, LEGAL OR TAX ADVICE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND THE RISKS INVOLVED. EACH PROSPECTIVE INVESTOR SHOULD CONSULT THE INVESTOR’S OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISOR AS TO INVESTMENT, LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THE INVESTOR’S PROPOSED INVESTMENT.
THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
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THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED.
THE INFORMATION PRESENTED IN THE OFFERING MATERIALS WAS PREPARED BY THE COMPANY SOLELY FOR THE USE BY PROSPECTIVE INVESTORS IN CONNECTION WITH THIS OFFERING. NO REPRESENTATIONS OR WARRANTIES ARE MADE AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN ANY OFFERING MATERIALS, AND NOTHING CONTAINED IN THE OFFERING MATERIALS IS OR SHOULD BE RELIED UPON AS A PROMISE OR REPRESENTATION AS TO THE FUTURE PERFORMANCE OF THE COMPANY.
THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.
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Ladies and Gentlemen:
1. Subscription.
(a) The undersigned (“Subscriber”) hereby irrevocably subscribes for and agrees to purchase Common Stock (the “Securities”), of Square Chain Corp., a Nevada corporation (the “Company”), at a purchase price of $0.____ per share of Common Stock (the “Per Security Price”), upon the terms and conditions set forth herein.
(b) Subscriber understands that the Securities are being offered pursuant to an offering circular (the “Offering Circular”) filed with the SEC as part of the Offering Statement. By executing this Subscription Agreement, Subscriber acknowledges that Subscriber has received this Subscription Agreement, copies of the Offering Circular and Offering Statement, including exhibits thereto, and any other information required by the Subscriber to make an investment decision.
(c) The Subscriber’s subscription may be accepted or rejected in whole or in part, at any time prior to a Closing Date (as hereinafter defined), by the Company at its sole discretion. In addition, the Company, at its sole discretion, may allocate to Subscriber only a portion of the number of Securities Subscriber has subscribed for. The Company will notify Subscriber whether this subscription is accepted (whether in whole or in part) or rejected. If Subscriber’s subscription is rejected, Subscriber’s payment (or portion thereof if partially rejected) will be returned to Subscriber without interest and all of Subscriber’s obligations hereunder shall terminate.
(d) The aggregate number of Securities sold shall not exceed 1,000,000,000 shares (the “Maximum Offering”). The Company may accept subscriptions until the termination date given in the Offering Circular, unless otherwise extended by the Company in its sole discretion in accordance with applicable SEC regulations for such other period required to sell the Maximum Offering (the “Termination Date”). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a “Closing Date”).
(e) In the event of rejection of this subscription in its entirety, or in the event the sale of the Securities (or any portion thereof) is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in force and effect.
2. Purchase Procedure.
(a) Payment. The purchase price for the Securities shall be paid simultaneously with the execution and delivery to the Company of the signature page of this Subscription Agreement. Subscriber shall deliver a signed copy of this Subscription Agreement (which may be executed and delivered electronically), along with payment for the aggregate purchase price of the Securities by ACH electronic transfer or wire transfer to an account designated by the Company, or by any combination of such methods.
(b) No Escrow. The proceeds of this offering will not be placed into an escrow account. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.
3. Representations and Warranties of the Company.
The Company represents and warrants to Subscriber that the following representations and warranties are true and complete in all material respects as of the date of each Closing Date, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have “knowledge” of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have “knowledge” of a particular fact or other matter if one of the Company’s current officers has, or at any time had, actual knowledge of such fact or other matter.
(a) Organization and Standing. The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Nevada. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.
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(b) Issuance of the Securities. The issuance, sale and delivery of the Securities in accordance with this Subscription Agreement have been duly authorized by all necessary corporate action on the part of the Company. The Securities, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable.
(c) Authority for Agreement. The execution and delivery by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Securities) are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon full execution hereof, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.
(d) No filings . Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 4 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the execution, delivery and performance by the Company of this Subscription Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.
(e) Capitalization. The authorized and outstanding securities of the Company immediately prior to the initial investment in the Securities is as set forth in “Securities Being Offered” in the Offering Circular. Except as set forth in the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.
(f) Financial statements. Complete copies of the Company’s financial statements consisting of the balance sheets of the Company given in the Offering Circular and the related statements of income, stockholders’ equity and cash flows for the two-year period then ended (the “Financial Statements”) have been made available to the Subscriber and appear in the Offering Circular. The Financial Statements are based on the books and records of the Company and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the periods indicated.
(g) Proceeds. The Company shall use the proceeds from the issuance and sale of the Securities as set forth in “Use of Proceeds to issuer” in the Offering Circular.
(h) Litigation. There is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company’s knowledge, currently threatened in writing (a) against the Company or (b) against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.
4. Representations and Warranties of Subscriber. By executing this Subscription Agreement, Subscriber (and, if Subscriber is purchasing the Securities subscribed for hereby in a fiduciary capacity, the person or persons for whom Subscriber is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects as of such Subscriber’s respective Closing Date(s):
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(a) Requisite Power and Authority. Such Subscriber has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement and other agreements required hereunder and to carry out their provisions. All action on Subscriber’s part required for the lawful execution and delivery of this Subscription Agreement and other agreements required hereunder have been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Subscription Agreement and other agreements required hereunder will be valid and binding obligations of Subscriber, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (b) as limited by general principles of equity that restrict the availability of equitable remedies.
(b) Investment Representations. Subscriber understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). Subscriber also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Subscriber’s representations contained in this Subscription Agreement.
(c) Illiquidity and Continued Economic Risk. Subscriber acknowledges and agrees that there is a limited public market for the Securities and that there is no guarantee that a market for their resale will ever exist. Subscriber must bear the economic risk of this investment indefinitely and the Company has no obligation to list the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended) with respect to facilitating trading or resale of the Securities. Subscriber acknowledges that Subscriber is able to bear the economic risk of losing Subscriber’s entire investment in the Securities. Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.
(d) Accredited Investor Status or Investment Limits. Subscriber represents that either:
(i) Subscriber is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act. Subscriber represents and warrants that the information set forth in response to question (c) on the signature page hereto concerning Subscriber is true and correct; or
(ii) The purchase price set out in paragraph (b) of the signature page to this Subscription Agreement, together with any other amounts previously used to purchase Securities in this offering, does not exceed 10% of the greater of the Subscriber’s annual income or net worth.
Subscriber represents that to the extent it has any questions with respect to its status as an accredited investor, or the application of the investment limits, it has sought professional advice.
(e) Company Information. Subscriber understands that the Company is subject to all the risks that apply to early-stage companies, whether or not those risks are explicitly set out in the Offering Circular. Subscriber has had such opportunity as it deems necessary (which opportunity may have presented through online chat or commentary functions) to discuss the Company’s business, management and financial affairs with managers, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. Subscriber has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Subscriber acknowledges that except as set forth herein, no representations or warranties have been made to Subscriber, or to Subscriber’s advisors or representative, by the Company or others with respect to the business or prospects of the Company or its financial condition.
(f) Valuation. The Subscriber acknowledges that the price of the Securities was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. The Subscriber further acknowledges that future offerings of Securities may be made at lower valuations, with the result that the Subscriber’s investment will bear a lower valuation.
(g) Domicile. Subscriber maintains Subscriber’s domicile (and is not a transient or temporary resident) at the address shown on the signature page.
(h) No Brokerage Fees. There are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by this Subscription Agreement or related documents based on any arrangement or agreement binding upon Subscriber.
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(i) Issuer-Directed Offering; No Underwriter. Subscriber understands that the offering is being conducted by the Company directly (issuer-directed) and the Company has not engaged a selling agent such as an underwriter or placement agent.
(j) Foreign Investors. If Subscriber is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Subscriber’s subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.
5. Survival of Representations. The representations, warranties and covenants made by the Subscriber herein shall survive the Termination Date of this Agreement.
7. Governing Law; Jurisdiction. This Subscription Agreement shall be governed and construed in accordance with the laws of the State of Maryland.
EACH OF THE SUBSCRIBER AND THE COMPANY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION LOCATED WITHIN MARYLAND AND NO OTHER PLACE AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS SUBSCRIPTION AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF SUBSCRIBER AND THE COMPANY ACCEPTS FOR ITSELF AND HIMSELF AND IN CONNECTION WITH ITS AND HIS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS SUBSCRIPTION AGREEMENT. EACH OF SUBSCRIBER AND THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN THE MANNER AND IN THE ADDRESS SPECIFIED IN SECTION 8 AND THE SIGNATURE PAGE OF THIS SUBSCRIPTION AGREEMENT.
8. Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed, telecopied or cabled, on the date of such delivery to the address of the respective parties as follows:
If to the Company, to:
Square Chain Corp.
3609 Hammerkop Drive N.
Las Vegas, NV 89084
If to a Subscriber, to Subscriber’s address as shown on the signature page hereto
or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by telecopy or cable shall be confirmed by letter given in accordance with (a) or (b) above.
9. Miscellaneous.
(a) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.
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(b) This Subscription Agreement is not transferable or assignable by Subscriber.
(c) The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Subscriber and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.
(d) None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Subscriber.
(e) In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.
(f) The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.
(g) This Subscription Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.
(h) The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.
(i) The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.
(j) This Subscription Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
(k) If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Subscription Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Subscription Agreement.
| (l) | No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. |
[SIGNATURE PAGE FOLLOWS]
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Square Chain Corp.
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
The undersigned, desiring to purchase Common Stock of Square Chain Corp., by executing this signature page, hereby executes, adopts and agrees to all terms, conditions and representations of the Subscription Agreement.
(a) The number of shares of Common Stock the undersigned hereby irrevocably subscribes for is: |
_____________
(print number of Shares)
| |
(b) The aggregate purchase price (based on a purchase price of $0.01 per Share) for the Common Stock the undersigned hereby irrevocably subscribes for is:
|
$_____________
(print aggregate purchase price)
| |
(c) EITHER (i) The undersigned is an accredited investor (as that term is defined in Regulation D under the Securities Act because the undersigned meets the criteria set forth in the following paragraph(s) of Appendix A attached hereto:
OR (ii) The amount set forth in paragraph (b) above (together with any previous investments in the Securities pursuant to this offering) does not exceed 10% of the greater of the undersigned’s net worth or annual income. |
______________
(print applicable number from Appendix A)
_____________
|
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| (d) The Securities being subscribed for will be owned by, and should be recorded on the Company’s books as held in the name of: | |
______________________________________________________
(print name of owner or joint owners) | |
| If the Securities are to be purchased in joint names, both Subscribers must sign: | ||
| Signature | ||
| Signature | ||
| Name (Please Print) | ||
| Name (Please Print) | ||
| Entity Name (if applicable) | ||
| Signatory title (if applicable) | ||
| Email address | Email address | |
| Address | Address | |
| Telephone Number | Telephone Number | |
| Social Security Number/EIN | Social Security Number | |
| Date | Date |
* * * * *
| Square Chain Corp. | |||
| This Subscription is accepted | By: | ||
| on _____________, 2018 | Name: | ||
| Title: | |||
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APPENDIX A
An accredited investor includes the following categories of investor:
(1) Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(a)(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
(2) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
(4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer;
(5) Any natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000.
(i) Except as provided in paragraph (a)(5)(ii) of this section, for purposes of calculating net worth under this paragraph (a)(5):
(A) The person’s primary residence shall not be included as an asset;
(B) Indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and
(C) Indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;
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(ii) Paragraph (a)(5)(i) of this section will not apply to any calculation of a person’s net worth made in connection with a purchase of securities in accordance with a right to purchase such securities, provided that:
(A) Such right was held by the person on July 20, 2010;
(B) The person qualified as an accredited investor on the basis of net worth at the time the person acquired such right; and
(C) The person held securities of the same issuer, other than such right, on July 20, 2010.
(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in §230.506(b)(2)(ii); and
(8) Any entity in which all of the equity owners are accredited investors.
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Square Chain Corp.
INCENTIVE STOCK OPTION PLAN
Plan Summary
The plan provides that an aggregate of up to 5,000,000 shares of the Company’s Common Stock may be optioned to officers and other key employees. The plan provides authority for a Stock Option Plan Committee to select the employees of the Company, and its subsidiaries, to whom incentive stock options will be granted. No person may be granted any option unless he agrees to remain an employee of the Company for at least two years. There are approximately three officers and directors of the Company plus other key employees eligible to receive options under the plan. All officers may participate in the plan.
Following the statutory requirements of new Code 422A, the plan provides that the Committee may establish the purchase price of the stock at the time the option is granted. However, the purchase price may not be less than 100 percent of the fair market value of the Company’s Common Stock. The aggregate fair market value of the stock for which any employee may be granted options in any calendar year shall not exceed $100,000 plus any unused limit carried over (as defined in Plan 3(d)) to such year from any prior calendar year beginning on or after April 1, 2018.
The plan terminates ten years from its effective date. All new options to be granted are nontransferable. The Company is to receive no cash consideration for granting options under the plan. However, when an option is exercise, the holder is required to pay the option price, in cash or certified bank check, shares of the Company’s Common Stock or in any combination of the above, for the number of shares of stock to be issued on exercise of the option unless the holder elects to receive cash or stock by exercise of stock appreciation rights.
Under the plan, a Stock Appreciation Right (SAR) permits the holder of an option to elect to receive cash or a lesser amount of stock without payment, upon exercise of an option. The amount of cash receivable is the difference between the option price stated in the option and the fair market value of the Common Stock on the date of the exercise. The lesser number of shares receivable is the number of shares which could be purchased with the cash receivable. An important distinction between the exercise of an incentive stock option and the exercise of a SAR is that, upon the exercise of an SAR, the option holder need not pay the option price in cash. The shares or cash received by an optionee upon exercising an SAR, however, are subject to tax under Section 83.
1. Purpose of the Plan
This Incentive Stock Option Plan (hereinafter called the “Plan”) for Square Chain Corporation (hereinafter called the “Company”) is intended to advance the interests of the Company by providing officers and other key employees who have substantial responsibility for the direction and management of the Company with additional incentive to promote the success of the business, to increase their proprietary interest in the success of the Company, and to encourage them to remain in its employ. The above aims will be effectuated through the granting of certain stock options. It is intended that options issued under the Plan and designated by the Committee under Section 3(b) will qualify as Incentive Stock Options (hereinafter called “ISOs”) under Section 422A of the Internal Revenue Code and the terms of the Plan shall be interpreted in accordance with this intention.
2. Administration of the Plan
The Board of Directors shall appoint a Stock Option Plan Committee (hereinafter called the “Committee”) which shall consist of not less than three (3) members, at least one of whom shall be a Director of the Company. Subject to the provisions of the Plan, the Committee shall have plenary authority, in its discretion: (a) to determine the employees of the Company and its subsidiaries (from among the class of employees eligible under Section 3 to receive options under the Plan) to whom options shall be granted; (b) to determine the time or times at which options shall be granted; (c) to determine the option price of the shares subject to each option, which price shall not be less than the minimum specified in Section 5; (d) to determine (subject to Section 7) the time or times when each option shall become exercisable and the duration of the exercise period; and (e) to interpret the Plan and to prescribe, amend, and rescind rules and regulations relating to it. The Board may from time to time appoint members of the Committee in substitution for members previously appointed and may fill vacancies, however caused, in the Committee; provided, however, that at all times at least one member shall be a Director of the Company. The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places as it shall deem advisable. All action of the Committee shall be taken by unanimous vote of its members. Any action may be taken by a written instrument signed by all the members of the Committee, and action so taken shall be fully as effective as if it had been taken by a unanimous vote of the members at a meeting duly called and held. The Committee may appoint a secretary to keep minutes of its meetings and shall make rules and regulations for the conduct of its business, as it shall deem advisable.
3. Eligibility and Limitations on Options Granted Under the Plan
(a) Options will be granted only to persons who are key employees of the Company or a subsidiary corporation of the Company who agree, in writing, to remain in the employ of, and render services to, the Company or a subsidiary corporation of the Company for a period of at least two (2) years from the date of the granting of the option. The term “key employees” shall include officers, directors, executives, and supervisory personnel, as well as other employees of the Company or a subsidiary corporation of the Company. The term “Subsidiary Corporation” shall, for the purposes of this Plan be defined in the same manner as such term is defined in Section 425 (f) of the Internal Revenue Code.
(b) At the time of the grant of each option under this Plan, the Committee shall determine whether such option is to be designated as an ISO. If an option is to be so designated as an ISO, then the provisions of Section 7(d) of this Plan shall be made applicable to such option. In addition, no option granted to any employee, who at the time of such grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, may be designated as an ISO, unless at the time of such grant, the option price is fixed at not less than 110 percent of the fair market value of the stock subject to the option, and exercise of such option is prohibited by its terms after the expiration of five (5) years from the date such is granted.
(c) The aggregate fair market value of the stock for which any employee may be granted options designated as ISOs in any calendar year (under this or any other stock option plan established by the Company or a subsidiary corporation of the Company) shall not exceed $100,000 plus any unused limit carryover (as defined in 3(d) hereof) to such year from any prior calendar year beginning on or after April 1. 2018
(d) The unused limit carryover from any such calendar year shall be one-half of any excess of $100,000 over the aggregate fair market value of the stock for which an employee was granted options that qualify (whether from their issuance or as a result of subsequent amendment and election by the Company) as ISOs in any such calendar year (under this and all other stock option plans established by the Company or a subsidiary corporation of the Company). The unused limit for any calendar year shall be carried forward for three (3) years. ISOs granted in any year shall be applied against the current year limitation first and then against the remaining unused limit carryovers to such year in the order of the calendar year in which the carryovers arose.
4. Shares of Stock Subject to the Plan
There will be reserved for use upon the exercise or options to be granted from time to time under the Plan (subject to the provisions of Section 12) an aggregate of 5,000,000 shares of the Common Stock of the $.0.001 par value common stock (hereinafter called the “Common Stock”) of the Company, which shares may be in whole or in part, as the Board of Directors of the Company (hereinafter called the “Board”) shall from time to time determine, authorized but unissued shares of the Common Stock or issued shares of the Common Stock which shall have been reacquired by the Company. Any shares subject to an option under the Plan, which option for any reason expires or is terminated unexercised as to such shares, may again be subject to an option under the Plan.
5. Option Price
The purchase price under each option issued shall be determined by the Committee at the time the option is granted, but in no event shall such purchase price be less than 100 percent of the fair market value of the Company’s Common Stock on the date of grant.
The term “fair market value” shall be defined as either the average of the highest offer and lowest bid market price of said Common Stock on any public market if the stock of the Company is publicly traded, as of the date of the grant of the option, or, if there be no sales on such date, on the most recent date upon which such stock was traded, or if there is no market for the Common Stock of the Company, the book value of the Common Stock as of the end of the most recent preceding month as given on the books of the Company applying generally accepted accounting principles on a consistent basis giving effect to all accruals.
6. Dilutions or Other Agreement
In the event that additional shares of Common Stock are issued pursuant to a stock split or a stock dividend, the number of shares of Common Stock then covered by each outstanding option granted hereunder shall be increased proportionately with no increase in the total purchase price of the shares then so covered, and the number of shares of Common Stock reserved for the purpose of the Plan shall be increased by the same proportion. In the event that the shares of Common Stock of the Company from time to time issued and outstanding are reduced by a combination of shares, the number of shares of Common Stock then covered by each outstanding option granted hereunder shall be reduced proportionately with no reduction in the total price of the shares then so covered, and the number of shares of Common Stock reserved for the purposes of the Plan shall be reduced by the same proportion. In the event that the Company should transfer assets to another corporation and distribute the stock of such other corporation without the surrender of Common Stock of the Company, and if such distribution is not taxable as a dividend and no gain or loss is recognized by reason of Section 355 of the Internal Revenue Code of 1954, or some similar section, then the total purchase price of the shares covered by each outstanding option shall be reduced by an amount which bears the same ratio to the total purchase price then in effect as the market value of the stock distributed in respect of a share of the Common Stock of the Company, immediately following the distribution, bears to the aggregate of the market value at such time of a share of the Common Stock of the Company and the stock distributed in respect thereof. All such adjustments shall be made by the Committee, whose determination upon the same shall be final and binding upon the optionees. No fractional shares shall be issued, and any fractional shares resulting from the computations pursuant to this Section 6 shall be eliminated from the respective option. No adjustment shall be made for cash dividends or the issuance to stockholders of rights to subscribe for additional Common Stock or other securities.
7. Period of Option and Certain Limitations on Right to Exercise
(a) All options issued under the Plan shall be for such period, as the Committee shall determine, but for not more than ten (10) years from the date of grant thereof.
(b) The period of the option, once it is granted, may be reduced only as provided for in Section 9 in connection with the termination of employment or death of the optionee or in Section 7(c) in the case of less than satisfactory performance.
(c) Each option granted under this Plan shall become exercisable only after two (2) years continued employment of the optionee with the Company or a subsidiary corporation of the Company immediately following the date the option is granted. Any option designated as an ISO shall be exercisable in full, or as to any part thereof, at any time after the expiration of two (2) years following the date such option is granted, but only if the optionee chooses to exercise such option and to pay for such option in the manner set forth in Section 7(e) hereof (i.e., in cash or certified check or shares of the Company’s Common Stock, or any combination of the foregoing in an amount equal to the full option price of the shares being purchased). Any option not designated as an ISO and any option designated as an ISO that the optionee chooses to exercise in any manner other than that permitted in the preceding sentence, shall be exercisable only to the extent of one-fifth of the total number of optioned shares after the expiration of two (2) years following the date the option is granted only to the extent of two-fifths of the total number of optioned shares after the expiration of three (3) years following the date the option is granted, only to the extent of three-fifths of the total number of optioned shares after the expiration of four (4) years following the date the option is granted, only to the extent of four-fifths of the total number of optioned shares after the expiration of five (5) years following the date the option is granted, and in full only after the expiration of six (6) years following the date the option is granted, such limitations being calculated, in the case of any resulting fraction, to the nearest lower number of shares.
Notwithstanding the foregoing, the Committee may, in its sole discretion, (i) prescribe longer time periods and additional requirements with respect to the exercise of an option and (ii) terminate in whole or in part such portion of any option as has yet become exercisable at the time of termination if it determines that the optionee is not performing satisfactorily the duties to which he was assigned on the date the option was granted or duties of at least equal responsibility. No option may be exercised unless the optionee is at the time of such exercise in the employ of the Company or of a subsidiary corporation of the Company and shall have been continuously so employed since the grant of his option. Absence or leave approved by the management of the Company shall not be considered an interruption of employment for any purpose under the Plan.
(d) No option granted by the Committee as an ISO may be exercised while there is outstanding in the hands of the optionee any ISO (whether granted under this Plan or any other stock option plan established by the Company or a subsidiary of the Company) which was granted before the granting of the ISO hereunder sought to be exercised. For purposes of this Section 7(d), any ISO shall be treated as outstanding until exercised in full or expired.
(e) Subject to the alternative settlement methods set forth in Section 7(h) hereof, the exercise of any option shall also be contingent upon receipt by the Company of cash or certified check to its order, shares of the Company’s Common Stock, or any combination of the foregoing in an amount equal to the full option price of the shares being purchased. For purposes of this paragraph, shares of the Company’s Common Stock that are delivered in payment of the option price shall be valued at their fair market value determined under the method set forth in Section 5 of this Plan applied as of the date of the exercise of the option. However, in order to facilitate the accumulation of funds to enable employees to exercise their option, they will have the right, if they so elect, to direct the Company or a subsidiary corporation of the Company to withhold from their compensation regular amounts to be applied toward the exercise of the options. Funds credited to the stock option accounts will be under the control of the Company until applied to the payment of the option price at the direction of the employee or returned to the employee in the event the amount is not used for purchase of shares under option, and all funds received or held by the Company under the Plan may be used for any corporate purpose, and no interest shall be payable to a participant on account of any amount held. Such amounts may be withdrawn by the participant at any time, in whole or in part, for any purpose.
(f) No optionee or his legal representative or distributees, as the case may be, will be deemed to be a holder of any share subject to an option unless and until certificates for such shares are issued to him or them under the terms of the Plan. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.
(g) In no event may an option be exercised after the expiration of its term.
(h) As an alternative to payment in full by the optionee for the number of shares of Common Stock in respect of which an option is exercised, the Committee may provide alternative settlement methods as follows:
(i) The Committee, in its discretion, may provide in the initial grant of any option, that the optionee may elect either of the alternative settlement methods set forth in subsection (ii) below.
(ii) The alternative settlement methods are for the optionee, upon exercise of the option, to receive from the Company: (1) cash in an amount equal to the excess of the value of one share over the option price times the number of shares as to which the option is exercised; or
(2) the number of whole shares of Common Stock having an aggregate value not greater than the cash amount calculated under Section 7(h)(ii)(1). For purposes of determining an alternative settlement, the value per share shall be the “Fair market value” determined under the method set forth in Section 5 hereof, applied as of the date of the exercise of the option, or such other price as the Committee shall determine to be the fair market value of the Common Stock on the date of exercise.
(i) An election of any of the alternative settlement methods provided for under Section 7 (h)(ii) shall be binding on the optionee, when made. The optionee may elect to what extent the alternative settlement method elected shall be paid in cash, in Common Stock, or partially in Common Stock, provided that the aggregate value of the payments shall not be greater than the cash amount calculated under Section 7 (h)(ii)(1). No fractional shares of Common Stock shall be issued, and the Committee shall determine whether cash shall be paid in lieu of such fractional share interest or whether such fractional share interest shall be eliminated.
(j) The alternative settlement methods provided above in Section 7(h)(ii) shall not be available unless the cash amount calculated thereunder shall be positive, i.e. when the value of one share shall exceed the option price per share.
(k) Exercise of an option in any manner, including an exercise involving an election of an alternative settlement method with respect to an option, shall result in a decrease in the manner of shares of Common Stock which thereafter may be available under the Plan by the number of shares as to which the option is exercised.
(1) To the extent that the exercise of options by one of the alternative settlement methods provided for in Section (h)(ii) results in compensation income to the optionee, the Company will withhold from the amount due to the optionee utilizing such alternative settlement method, an appropriate amount for federal, state and local taxes.
8. Assignability
Each option granted under this Plan shall be transferable only by will or the laws of descent and distribution and shall be exercisable, during his lifetime, only by the employee to whom the option is granted. Except as permitted by the preceding sentence, no option granted under the Plan or any of the rights and privileges thereby conferred shall be transferred, assigned, pledged, or hypothecated in any way (whether by operation of law or otherwise), and no such option, right, or privilege shall be subject to execution, attachment, or similar process. Upon any attempt to so transfer, assign, pledge, hypothecate, or otherwise dispose of the option, or of the right or privilege conferred thereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon such option, right of privilege, the option and such rights and privileges shall immediately become null and void.
9. Effect of Termination of Employment. Death or Disability
(a) In the event of the termination of employment if an optionee during the two (2) year period after the date of issuance of an option to him either by reason of (i) a discharge for cause or (ii) voluntary separation on the part of the optionee and without consent of his employing company or companies, any option or options theretofore granted to him under this Plan to the extent not theretofore exercised by him shall forthwith terminate.
(b) In the event of the termination of employment of an optionee (otherwise than by reason of death or retirement of the optionee at his Retirement Date by the Company or by any subsidiary corporation of the Company employing the optionee at such time), any option or options granted to him under the Plan to the extent not theretofore exercised shall be deemed cancelled and terminated forthwith, except that, subject to the provisions of section (a) of this Section, such optionee may exercise any options theretofore granted to him, which have not then expired and which are otherwise exercisable within the provisions of Section 7(c) hereof, within three (3) months after such termination. If the employment of an optionee shall be terminated by reason of the optionee’s retirement at his Retirement Date by the Company or by any subsidiary corporation of the Company employing the optionee at such time, the optionee shall have the right to exercise such option or options held by him to the extent that such options have not expired, at any time within three (3) months after such retirement. The provisions of Section 7(c) to the contrary notwithstanding, upon retirement, all options held by an optionee shall be immediately exercisable in full. The transfer of an optionee from the employ of the Company to a subsidiary corporation of the Company or vice versa, or from one subsidiary corporation of the Company to another, shall not be deemed to constitute a termination of employment for purposes of this Plan.
(c) In the event that an optionee shall die while employed by the Company or any subsidiary corporation of the Company or shall die within three (3) months after retirement at his Retirement Date (by the Company or by any subsidiary corporation of the Company) any option or options granted to him under this Plan and not theretofore exercised by him or expired shall be exercisable by the estate of the optionee or by any person who acquired such option by bequest or inheritance at any time within one (1) year after the death of the optionee. References hereinabove to the optionee shall be deemed to include any person entitled to exercise the option after the death of the optionee under the terms of this Section.
(d) In the event of the termination of employment of an optionee by reason of the optionee’s disability, the optionee shall have the right, notwithstanding the provisions of Section 7(c) hereof, to exercise all options held by him, to the extent that options have not previously expired or been exercised, at any time within one (1) year after such termination. The term “disability” shall, for the purposes of this Plan, be defined in the same manner as such term is defined in Section 105(d)(4) of the Internal Revenue Code of 1954.
(e) For the purposes of this Plan, “Retirement Date” shall mean any date an employee is otherwise entitled to retire under the Company’s retirement plans, if any, and shall include normal retirement at age 65, early retirement at age 62, and retirement at age 60 after 30 years of service.
10. Listing and Registration of Shares
Each option shall be subject to the requirement that if at any time the Stock Option Committee shall determine, in its discretion, that the listing, registration, or qualification of the shares covered thereby upon any securities exchange or under any state or federal law or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such option or the issue or purchase of shares thereunder, such option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.
11. Expiration and Termination of the Plan
Options may be granted under the Plan at any time or from time to time as long as the total number of shares optioned or purchased under this Plan does not exceed 5,000,000 shares of Common Stock. The Plan may be abandoned or terminated at any time by the Board of Directors of the Company except with respect to any options then outstanding under the Plan. No option shall be granted pursuant to the Plan after ten (10) years from the effective date of the Plan.
12. Amendment of Plan
The Board of Directors may at any time and from time to time modify and amend the Plan (including such form of option agreement) in any respect; provided, however, that no such amendment shall: (a) increase (except in accordance with Section 6) the maximum number of shares for which options may be granted under the Plan either in the aggregate or to an individual employee; or (b) reduce (except in accordance with Section 6) the minimum option prices which may be established under the Plan; or (c) extend the period or periods during which options may be granted or exercised; or (d) change the provisions relating to the determination of employees to whom options shall be granted and the number of shares to be covered by such options; or (e) change the provisions relating to adjustments to be made upon changes in capitalization; or (f) change the method for selection of the Committee as provided by Section 2 hereof. The termination or any modification or amendment of the Plan shall not, without the consent of an employee, affect his rights under an option theretofore granted to him.
13. Applicability of Plan to Outstanding Stock Options
The Plan shall not affect the terms and conditions of any non-qualified stock options heretofore granted to any employee of the Company or a subsidiary corporation of the Company under any other plan relating to non-qualified stock options; nor shall it affect any of the rights of any employee to whom such a non-qualified stock option was granted.
14. Effective Date of Plan
This Plan shall become effective on the date of its adoption by the Board of Directors or the Company or its approval by the vote of the shareholders of a majority of the outstanding shares of the Company’s common stock. This Plan shall not become effective unless such shareholder approval shall be obtained within twelve (12) months before or after the adoption of the Plan by the Directors.
Square Chain Corp.
PRESIDENT’S LETTER TO STOCKHOLDERS
Dear Stockholder:
I am enclosing this letter with the notice of call of a special meeting of the stockholders of the Corporation as a means of explaining briefly the purpose of the meeting. Your Board of Directors has unanimously recommended that the Corporation adopt a stock option plan allowing the purchase of a limited number of the Corporation’s shares of common stock by key management employees of the Corporation. This proposal has been adopted by the Board of Directors, subject to the approval of the holders of the Corporation’s common stock, and I have been directed to set forth to you the reasons for their action.
In the past several years, plans or programs offering stock participation opportunities to management personnel have become widespread among American businesses. This meaningful trend has come about in response to a realization that the best efforts of the best executives are more surely secured when the executives have a personal stake in the fortunes of their corporate employers. I might add that a number of our major competitors have instituted stock acquisition programs of one type or another for their executive employees, and we in charge of the Corporation are aware of the importance of such programs in attracting and holding employees of the caliber we want in our Corporation.
In judgment of the Directors, your Corporation can best be assured of success in enlisting and retaining top management employees only if these employees are given the opportunity to acquire a proprietary stake in the success of the Corporation. Consequently, the Directors have examined methods of achieving this goal, and have determined that the best approach for the Corporation is that of offering certain stock options known as “Incentive Stock Options,” which satisfy the tests imposed by the Internal Revenue Code for such designation. Specifically, the Directors’ proposal is that a total of 5,000,000 unissued shares of the value common stock of the Corporation be sold to executive employees under options that fix the purchase price at percent of the market price on the date such an option is granted. The particular employees to be given these options, and the number of shares covered by each option, would be left to the decision of the Board of Directors or of a special committee chosen from the Board. However, in no event would the total number of shares placed under option exceed the total of 5,000,000 which would be somewhat less than 10 percent of the total number of common shares to be outstanding once these optioned shares are issued on a fully diluted basis.
The Directors wish to take this step only after full information has been given to all the stockholders affected, and their understanding and approval of this plan has been expressed. For this reason, though I have set forth in this letter what I believe to be a proper summary of the principal points involved, I have instructed the Secretary of the Corporation to mail a copy of the full stock plan and of the relevant Directors’ resolutions to any stockholder requesting it.
Square Chain Corp.
NOTICE OF EXERCISE OF STOCK OPTION AND
RECORD OF STOCK TRANSFER
I hereby exercise my Incentive Stock Option granted by Square Chain Corp., subject to all the terms and provisions thereof and of the Employee Stock Option Plan referred to therein and notify you of my desire to purchase shares of Common Stock of the Company which were offered to me pursuant to said Option. Enclosed is my check in the sum of in full payment for such shares.
I hereby represent that the __________ shares of Common Stock to be delivered to me pursuant to the above-mentioned exercise of the Option granted to me on are being acquired by me as an investment and not with a view to, or for sale in connection with, the distribution of any thereof.
| DATED: | , 20__. | |
| Employee’s Signature |
Receipt is hereby acknowledged of the delivery to me by Square Chain Corp. on of stock certificates for shares of Common Stock purchased by me pursuant to the terms and conditions of the Employee Stock Option Plan referred to above, which shares were transferred to me on the Company’s stock record books on.
| Employee |
Square Chain Corp.
NOTICE OF GRANT OF INCENTIVE STOCK OPTION
[date]
[name of employee]
Dear ______:
At the direction of the Board of Directors of the Corporation, you are hereby notified that the Board has granted to you an option, pursuant to the Employee Stock Option Plan adopted by the Corporation on April ____, and ratified and approved by the stockholders of the Corporation on April ___,
The option granted to you is to purchase Two Hundred Thousand (200,000) shares of the $.0.001 par Common Stock of the Corporation at the price of per share. The date of grant of this option is the date of this notice, and it is the determination of the Board of Directors that on this date the fair market value of the Corporation’s no par common stock was $0.20 per share.
I enclosed a certified copy of the Incentive Stock Option Plan governing the option granted to you and your attention is invited to all the provisions of the Plan. You will observe that the Plan does not require that you exercise this option as to any particular number of shares at one time, but this option must be exercised, if at all and to the extent exercised, by no later than years from the date of this notice.
Your stock option is in all respects limited and conditioned as provided in the Employee Stock Option Plan, including, but not limited to, the following:
a. Your option may be exercised by you, but only by you, at any time during your lifetime prior to the three months following termination of your employment;
b. Your option is nontransferable, otherwise than as may be occasioned by your death, and then only to your estate or according to the terms of your Will or the provision of applicable laws of descent and distribution;
c. In the event that the right to exercise your option is passed to your estate, or to a person to whom such right devolves by reason of your death, then your option shall be nontransferable in the hands of your executor or administrator or of such person, except that your option may be distributed by your executor or administrator to the distributees of your estate as a part of your estate.
At the time or times when you wish to exercise this option, in whole or in part, please refer to the provisions of the Stock Option Plan dealing with methods and formalities of exercise of your option.
| Jeffrey J Parker, Secretary |
Square Chain Corp.
Management Stock Bonus Plan
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Square Chain Corp.
Management Stock Bonus Plan
Purpose
This Plan’s purpose is to keep personnel of experience and ability in the employ of Square Chain Corp. (“Square Chain Corp.”) and its subsidiaries and to compensate them for their contributions to the growth and profits of Square Chain Corp. and its subsidiaries and thereby induce them to continue to make such contributions in the future.
1. Definitions
For the purpose of this Plan, the following terms will have the definitions set forth below:
(a) Company – Square Chain Corp.
(b) Subsidiary or Subsidiaries – A corporation or corporations or other entity of which Square Chain Corp. owns, directly or indirectly, shares having a majority of the ordinary voting power for the election of directors.
(c) Board – Square Chain Corp. board of directors.
(d) Committee – The Management Stock Bonus Plan Committee as appointed from time to time by the Board, consisting of not less than three members. No member of the Committee shall be eligible for selection as a person to whom shares may be allocated pursuant to the Plan or to whom stock options may be granted pursuant to any other Plan of the Company or any of its affiliates, at any time while he is serving on the Committee.
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(e) Date of Issuance – This term shall have the meaning supplied by Section 6(c) below.
(f) Plan – The Square Chain Corp. Management Stock Bonus Plan.
(g) Bonus Share – The shares of Common Stock of Square Chain Corp. reserved pursuant to Section 3 hereof and any such shares issued to a Recipient pursuant to this Plan.
(h) Recipient – An employee of Square Chain Corp. or a subsidiary to whom shares are allocated under this Plan, or such individual’s designated beneficiary, surviving spouse, estate, or legal representative. For this purpose, however, any such beneficiary, spouse, estate, or legal representative shall be considered as one person with the employee.
(i) Restricted Period – This phrase shall have the meaning supplied by Section 7(e) below.
2. Bonus Share Reserve.
(a) Bonus Share Reserve. Square Chain Corp. will establish a Bonus Share Reserve to which will be credited Five Million (5,000,000) shares of the Common Stock of Square Chain Corp., par value $.0.001 per share. Should the shares of the Company’s Common Stock, due to a stock split or dividend or combination of shares or any other change, or exchange for any other securities, by reclassification, merger, consolidation, recapitalization, or otherwise, be increased or decreased, or changed into, or exchanged for, a different number or kind of shares of stock or other securities of Square Chain Corp. or of another corporation or entity, the number of shares then remaining in the Bonus Share Reserve shall be appropriately adjusted to reflect such action. If any such adjustment results in a fractional share, the fraction shall be disregarded.
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(b) Adjustments to Reserve. Upon the allocation of shares hereunder, the reserve will be reduced by the number of shares to be allocated and, upon the failure to make the required payment on the issuance of any Bonus Shares pursuant to Section 6(a) or upon the repurchase thereof pursuant to Section 7(d)(i) or (ii), Section 8 or Section 10 hereof, the reserve shall be increased by such number of shares, and such Bonus Shares may again be the subject of allocation hereunder.
(c ) Distributions of Bonus Shares. Distributions of Bonus Shares, as the Board shall, in its sole discretion, determine, may be made from authorized but unissued shares or from treasury shares. All authorized and unissued shares issued as Bonus Shares in accordance with the Plan shall be fully paid and non-assessable shares free from preemptive rights.
2. Eligibility and Making of Allocations.
(a) Eligible Employees. Any salaried executive employee of Square Chain Corp. or any Subsidiary (including officers and, except for person serving as directors only) shall be eligible to receive an allocation of Bonus Shares.
(b) Selection by the Committee. From the employees eligible to receive allocations pursuant to the Plan, the Committee may from time to time select those employees to whom it recommends that the Board make allocations. Such recommendations shall include a recommendation as to the number of Bonus Shares that should be allocated and in determining the number of Bonus Shares it wishes to recommend, the Committee shall consider the position and responsibilities of the eligible employees, the value of their services to Square Chain Corp. and its subsidiaries and such factors as the Committee deems pertinent.
(c) Review by the Board of Committee’s Recommendations. As promptly as practicable after the Committee recommends making allocations pursuant to (b) above, the Board will review the Committee’s recommendations and, in the Board’s discretion, allocate to the employees the Board selects from those employees recommended by the Committee a number of Bonus Shares not in excess of the number recommended for each employee by the Committee. The date of such action by the Board shall be the “date of allocation,” as that term is used in this Plan.
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(d) Participation in Other Stock Option Plans. A person who has received options to purchase stock under any stock option plan of Square Chain Corp. or any subsidiary may exercise the same in accordance with their terms, and will not by reason thereof be ineligible to receive Bonus Shares under this Plan. A person who has received Bonus Shares under this Plan shall not, for a period of three years from the date of Issuance thereto of such Bonus Shares, be eligible to, and may not, be granted any option or other rights to purchase Common Stock pursuant to any stock option or stock purchase plan of Square Chain Corp. presently in effect or hereafter adopted, nor shall he or she be eligible during such period to receive any additional allocation of Bonus Shares under this Plan or under any similar plan of Square Chain Corp..
(e) Limit on Number of Shares. The total number of Bonus Shares, which may be allocated pursuant to this Plan, will not exceed the amount of available therefore in the Bonus Share reserve.
3. Form of Allocation.
(a) Number Specified. Each allocation shall specify the number of Bonus Shares subject thereto, subject to the provisions of Section 4.
(b) Notice. When an allocation is made, the Board shall advise the Recipient and Square Chain Corp. thereof by delivery of written notice in the Form of Exhibit A hereto attached.
(c) Public Listing of Stock. Square Chain Corp. shall take such action as shall be necessary to cause any Bonus Shares issued pursuant to this Plan and not previously listed to be listed on a public stock market or exchange on which shares of the same s the Bonus Shares are then listed, if any.
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4. Payment Required of Recipients.
(a) Acceptance of Allocation. Within 15 days from the date of allocation, the Recipient shall, if he desires to accept the allocation, pay to Square Chain Corp. an amount equal to the par value of the Bonus Shares so allocated, in cash, buy certified or bank cashier’s check, or by money order at the office of the Treasurer.
(b) Investment Purpose. Square Chain Corp. may require that in acquiring any Bonus Shares, the Recipient agree with, and represent to, Square Chain Corp. that the Recipient is acquiring such Bonus Shares for the purpose of investment and with no present intent to transfer, sell or otherwise dispose of such shares except for such distribution by a legal representative as shall be required by will or the laws of any jurisdiction in winding up the estate of any Recipient. Such shares shall be transferable thereafter only if the proposed transfer is permitted under the Plan and if, in the opinion of counsel (who shall be satisfactory to Square Chain Corp.), such transfer at such time complies with applicable securities laws.
(c) Written Agreement/Date of Issuance. Concurrently with making payment of the par value of the Bonus Shares pursuant to Section 6(a) the Recipient shall deliver to Square Chain Corp., in duplicate, an agreement in writing, signed by the Recipient, in form and substance as set forth in Exhibit B, below, and Square Chain Corp. will promptly acknowledge the receipt thereof. The date of such delivery and receipt shall be deemed the “Date of Issuance,” as that phrase is used in this Plan, of the Bonus Shares to which the shares relate. The failure to make such payment and delivery within 15 days from the date of allocation shall terminate the allocation of such shares to the Recipient.
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5. Restrictions.
(a) Transfer/Issuance. Bonus Shares, after the making of the payment and representations, etc. required by Section 6, will be promptly issued or transferred and a certificate or certificates for such shares shall be issued in the Recipient’s name. As such, the Recipient shall have all of the rights of a shareholder with respect to such shares, including the right to vote them and to receive all dividends and other distributions (subject to Section 7(b)) paid with respect to them, provided, however, that the shares shall be subject to the restrictions in Section 7(d). Stock certificates representing Bonus Shares will be imprinted with a legend stating that the shares represented thereby may not be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of except in accordance with this Plan’s terms, and each transfer agent for the Common Stock shall be instructed to like effect in respect of such shares. In aid of such restrictions, the Recipient shall immediately upon receipt of the certificate for such shares, deposit such certificate(s), together with a stock power or other instrument of transfer, appropriately endorsed in blank, with an escrow agent designated by the Committee, under a deposit agreement containing such terms and conditions as the Committee shall approve, the expenses of such escrow to be borne by Square Chain Corp..
(b) Stock Splits, Stock Dividends, Etc. If, due to a stock split, stock dividend, combination of shares, or any other change or exchange for other securities, by reclassification, reorganization, merger, consolidation, recapitalization, or otherwise, the Recipient, as the owner of the Bonus Shares subject to restrictions hereunder, shall be entitled to new, additional, or different shares of stock or securities, the certificate or certificates for, or other evidences of, such new, additional, or different shares or securities, together with a stock power or other instrument of transfer appropriately endorsed, which shares also shall be imprinted with a legend as provided in Section 7(a) and deposited by the Recipient under the above-mentioned deposit agreement. When the event(s) described in the preceding sentence occur, all Plan provisions relating to restrictions and lapse of restrictions will apply to such new, additional or different shares or securities to the extent applicable to the shares with respect to which they were distributed, provided, however, that if the Recipient shall receive rights, warrants or fractional interests in respect of any such Bonus Shares, such rights or warrants may be held, exercised, sold or otherwise disposed of, and such fractional interests may be settled, by the Recipient free and clear of the restrictions hereafter set forth.
(c) Restricted Period. The term “Restricted Period” with respect to restricted Bonus Shares (after with restrictions shall lapse) means a period starting on the Date of Issuance of such shares to the Recipient and ending on such date not less than three (3) years after the Date of Issuance, as the Committee may establish as the time of allocation of shares hereunder.
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(d) Restrictions on Bonus Shares. The restrictions to which restricted Bonus Shares shall be subject are:
(i) During the Restricted Period to such shares and except as otherwise specifically provided in the Plan, none of such shares shall be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of unless they first, by written notice have been offered to Square Chain Corp. for repurchase, for the same amount as was paid therefore under Section 6, with appropriate adjustment for any change in the Bonus Shares of the nature described in Section 7(b). If Square Chain Corp. shall not within 30 days following such offer have so repurchased the shares and made payment in full for such shares, unless such purchase is otherwise prohibited by the laws of the State of Nevada currently in effect at the time of an offer of Bonus Shares to Square Chain Corp. for repurchase pursuant to the terms of the Plan, Square Chain Corp. shall repurchase said shares and make payment in full for such shares within thirty (30) days following such offer.
(ii) If a Recipient’s employment is terminated for any reason, including such Recipient’s death or disability, at any time before the Restricted Period ends, Square Chain Corp. shall so notify the escrow agent appointed under Section 7(a). Such termination shall be deemed an offer to Square Chain Corp. as described in Section 7(d)(i) as to:
(A) All such shares issued to the Recipient, if such termination occurs within one year from the Date of Issuance;
(B) 75% of the total number of such shares originally issued (including any other or additional securities issued in respect thereof, as contemplated by Section 7(b) to such Recipient, if such termination occurs more than one year after the Date of Issuance but prior to two years after that date;
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(C) 50% of the total number of such shares originally issued (including any other or additional securities issued in respect thereof, as contemplated by Section 7(b) to such Recipient, if such termination occurs on or after two years after the Date of Issuance but prior to the end of the Restricted Period.
(e) Lapse of Restricted Period. The restriction set forth in Section 7(d) hereof, with respect to the Bonus Shares to which such Restricted Period was applicable, will lapse
(i) As to such shares in accordance with the time(s) and number(s) of shares as to which the Retracted Period expires, as described in Section 7(d)(ii), or
(ii) As to any shares which Square Chain Corp. will fail to purchase when they are offered to Square Chain Corp., as described in Section 7(d)(i) upon Square Chain Corp.’s failure to so repurchase.
(f) Transfers Upon Death of Recipient. Nothing in this Plan will preclude the transfer of restricted Bonus Shares on the Recipient’s death, to the Recipient’s legal representatives or estate, or preclude such representatives from transferring any of such shares to the person(s) entitled thereto by will or the laws of descent and distribution; provided, however, that any shares so transferred as to which such restrictions have not lapsed will remain subject to all restrictions and obligations imposed on them by this Plan.
(g) Delivery of Written Notice. All notices in writing required pursuant to this Section 7 will be sufficient only if actually delivered or if sent via registered or certified mail, postage prepaid, to Square Chain Corp., attention Treasurer, and/or escrow agent at its principal office within the City of Clearwater, and will be conclusively deemed given on the date of delivery, if delivered before or on the date first business day following the date of such mailing, if mailed.
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6. Finality of Determination.
The Committee will administer this Plan and construe its provisions. Any determination by the Committee (except insofar as it will make recommendations only) in carrying out, administering, or constructing this Plan will be final and binding for all purposes and upon all interested persons and their heirs, successors and personal representatives.
7. Limitations.
(a) No Right to Allocation. No person will at any time have any prior right to receive an allocation of Bonus Shares hereunder, and no person will have authority to enter into an agreement for the making of an allocation, or any prior right or to make any representation or warranty with respect thereto.
(b) Rights of Recipients. Recipients of allocations will have no rights in respect thereof other than those set forth in this Plan. Except as provided in Section 6(b) or 7(f), such rights may not be assigned or transferred except by will or by the laws of descent or distribution. If any attempt is made to sell, exchange, transfer, pledge, hypothecate, or otherwise dispose of any Bonus Shares held by the Recipient under restrictions which have not yet lapsed, the shares that are the subject of such attempted disposition will be deemed offered to Square Chain Corp. for repurchase, and Square Chain Corp. will repurchase them, as described in Section 7(d)(i) when Square Chain Corp. receives actual notice of such attempted distribution. Before issuance of Bonus Shares, no such shares will be earmarked for the Recipient’s accounts nor will such Recipients have any rights as stockholders with respect to such shares.
(c) No Right to Continued Employment. Neither Square Chain Corp.’s actions in establishing the Plan, nor any action taken by it or by the Board or the Committee under the Plan, nor any provision of the Plan, will be construed as giving to any person the right to be in the employ of Square Chain Corp. or any Subsidiary.
(d) Limitation on Actions. Every right of action by or on behalf of Square Chain Corp. or by any shareholder against any past, present or future member of the Board, the Committee or any officer or employee of Square Chain Corp. arising out of or in connection with this Plan shall, regardless of the place where the action may be brought and regardless of the place of residence of any such director, committee member, officer or employee, cease and be barred by the expiration of three years from the later of:
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(i)The date of the act or omission in respect of which such right of action arises;
(ii) The first date upon which there has been made generally available to shareholders an annual report of Square Chain Corp. and a proxy statement for the annual meeting of shareholders following the issuance of such annual report, which annual report and proxy statement alone or together set forth, for the related period, the amount of the allocation.
In addition, any and all right of action by any employee (past, present or future) against Square Chain Corp. or any member of the Committee arising out of or in connection with this Plan will, regardless of the place where action may be brought and regardless of the place of residence of any Committee member, cease and be barred by the expiration of three years from the date of the act or omission in respect of which such right of action arises.
8. Amendment, Suspension or Termination of Plan.
The Board may amend, suspend or terminate the Plan in whole or in part at any time; provided that such amendment will not affect adversely the rights or obligations with respect to allocations previously made; and provided further, that no modifications of the Plan by the Board without approval by the stockholders will (i) increase the maximum number of Bonus Shares reserved pursuant to Section 3; (ii) alter the provisions of Section 4 with respect to the total number of Bonus Shares that may be allocated under the Plan, or (iii) render any member of the Committee eligible to receive an allocation at any time while he is serving on the Committee.
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9. Governing Laws.
This Plan will be governed by the laws of the State of Nevada.
10. Expenses of Administration.
All costs and expenses incurred in the operation and administration of this Plan will be borne by the Company.
11. Registration of Bonus Shares.
(a) Registration Requirement. If Square Chain Corp. determines at any time to register any of its securities under the Securities Act of 1933 (or similar statute then in effect) Square Chain Corp., at its expense, will include among the securities which it then registers all Bonus Shares or other stock or securities issued in respect thereof, or in replacement thereof as to which the Restricted Period has expired. The requirement of the preceding sentence, however, will not apply to the extent that any Recipient at that time has no present intent to sell or distribute the relevant shares. Also, in the case of stock or securities not of Square Chain Corp., Square Chain Corp.’s obligation under this Section 13 will be limited to using its best efforts to effect such registration and shall not be required to register such shares if, in the opinion of Square Chain Corp.’s investment banker, such registration would materially limit the marketability of other securities registered or to be registered by Square Chain Corp..
(b) Written Notification. As to each registration pursuant to this Section 13, Square Chain Corp. will keep the Recipients advised in writing as to their initiation of proceedings for such registration and as to the completion thereof, and at its expense will keep such registration effective for a period of nine months, or until all sales and distributions contemplated in connection therewith are completed, whichever period is shorter. Each Recipient will at his own expense furnish to Square Chain Corp. such information regarding the Recipient and the Recipient’s ownership of Bonus Shares (or other stock or securities) as Square Chain Corp. may reasonably request in writing in connection with any such registration.
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(c) Prospectus, Indemnification. Square Chain Corp., at its expense, will furnish to each Recipient such number of prospectuses incident to any such registration as such Recipient from time to time reasonably may request. In addition, Square Chain Corp. will indemnify each such Recipient against all claims, losses, damages, and liabilities caused by any untrue statement of a material fact contained in such prospectus (or in any related registration statement) or by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same may have been caused by an untrue statement or omission based upon information furnished in writing to Square Chain Corp. by such Recipient expressly for use therein. Further, as a condition precedent to the obligations of Square Chain Corp. pursuant to Section 1, each Recipient will agree in writing to indemnify Square Chain Corp. against all claims, losses, damages, and liabilities caused by an untrue statement or omission based upon information furnished to Square Chain Corp. by such Recipient expressly for use therein.
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Exhibit I
Square Chain Corp.
Date:
To: , Recipient
From: Treasurer, Square Chain Corp.
This is to advise you that Square Chain Corp.’s Board of Directors has on the date of this Notice allocated to the Recipient above named a total of
Bonus Shares under and pursuant to the Management Stock Bonus Plan.
For these shares to be issued, the Recipient must make payment of $
And deliver to the Treasurer of Square Chain Corp. an agreement in duplicate, in the form of Exhibit II hereto, within 15 days of the date of this Notice.
For the Board
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Exhibit II
Square Chain Corp.
Management Stock Bonus Plan
To:
Treasurer, Square Chain Corp.
Enclosed is the sum of $
Being equal to the par value of
Bonus Shares allocated to and purchased by me pursuant to Square Chain Corp.’s Management Stock Bonus Plan. Upon receipt of these Bonus Shares, I will deposit them together with a stock power duly endorsed in blank with an escrow agent appointed pursuant to Section 7(a) of this Plan.
I represent and agree that I am acquiring these Bonus Shares for investment and that I have no present intention to transfer, sell or otherwise dispose of such shares, except as permitted pursuant to the Plan and in compliance with applicable securities laws. I agree further that I am acquiring these shares in accordance with, and subject to, the terms, provisions, and conditions of said Plan, to all of which I hereby expressly consent. These agreements will bind and inure to the benefit of my heirs, legal representatives, successors and assigns.
My address of record is:
My social security number is:
Receipt of the above, together with the payment referred to, is hereby acknowledged.
Square Chain Corp.
| By: |
Date:
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Square Chain Corporation
ANNUAL BONUS PERFORMANCE PLAN
FOR EXECUTIVE OFFICERS
April 28, 2018
| 1 |
Square Chain Corporation
ANNUAL BONUS PERFORMANCE PLAN
FOR EXECUTIVE OFFICERS
SECTION 1. PURPOSE OF PLAN
The purpose of the Plan is to promote the success of the Company by providing to participating executives bonus incentives that qualify as performance-based compensation within the meaning of Section 162(m) of the Code.
SECTION 2. DEFINITIONS AND TERMS
2.1 Accounting Terms. Except as otherwise expressly provided or the context otherwise requires, financial and accounting terms are used as defined for purposes of, and shall be determined in accordance with, generally accepted accounting principles, as from time to time in effect, as applied and reflected in the consolidated financial statements of the Company, prepared in the ordinary course of business.
2.2 Specific Terms. The following words and phrases as used herein shall have the following meanings unless a different meaning is plainly required by the context:
“Bonus” means a cash payment or a payment opportunity as the context requires.
“Bonus Pool” means the total aggregate of cash payments or payment opportunities in any Year that may be allowed under the Plan.
“Business Criteria” means any one or any combination of Income before Taxes, Net Income, Return on Equity, Return on Assets, Pre-tax Margin, Free Cash Flow, Valuation or EPS.
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“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” means the Performance Plan Subcommittee which has been established to administer the Plan in accordance with Section 3.1 and Section 162(m) of the Code.
“Company” means Square Chain Corporation and any successor, whether by merger, ownership of all or substantially all of its assets, or otherwise.
“EBITDA” for any Year means the consolidated earnings before interest, tax, depreciation, and amortization as reported in the financial statements of the Company for the Year.
“EPS” for any Year means earnings per share of the Company, as reported in the Company’s Consolidated Statement of Income set forth in the financial statements of the Company for the Year.
“Executive” means a key employee (including any officer) of the Company who is (or in the opinion of the Committee may during the applicable Performance Period become) an “executive officer” as defined in Rule 3b-7 under the Securities Exchange Act of 1934.
“Free Cash Flow” for any Year means the Consolidated Net Income plus the sum of the decrease in working capital and depreciation and amortization less the sum of capital expenditures, mandatory debt payments and the increase in working capital as reported in the financial statements of the Company for the Year.
“Income before Taxes” for any Year means the consolidated income before taxes of the Company, as reported in the financial statements of the Company for the Year.
“Net Income” for any Year means the consolidated net income of the Company, as reported in the financial statements of the Company for the Year.
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“Participant” means an Executive selected to participate in the Plan by the Committee.
“Performance Period” means the Year or Years with respect to which the Performance Targets are set by the Committee.
“Performance Target(s)” means the specific objective goal or goals (which may be cumulative and/or alternative) that are timely set in writing by the Committee for each Executive for the Performance Period in respect of any one or more of the Business Criteria.
“Plan” means this Annual Bonus Performance Plan for Executive Officers of the Company, as amended from time to time.
“Pre-tax Margin” for any Year means the Income before Taxes of the Company divided by Consolidated Sales of the Company, as reported in the financial statements of the Company for the Year.
“Return on Assets” means Net Income divided by the average of the total assets of the Company at the end of the four fiscal quarters of the Year, as reported by the Company in its consolidated financial statements.
“Return on Equity” means the Net Income divided by the average of the common stockholders equity of the Company at the end of each of the four fiscal quarters of the Year, as reported by the Company in its consolidated financial statements.
“Section 162(m)” means Section 162(m) of the Code, and the regulations promulgated thereunder, all as amended from time to time.
“Shares” means shares of common stock of the Company or any securities or property, including rights into which the same may be converted by operation of law or otherwise.
“Valuation” for any Year means the product of consolidated EBIDA, as reported in the financial statements of the Company for the Year, and six.
“Working Capital” for any Year means the consolidated current assets of the Company less the consolidated current liabilities of the Company, as reported in the financial statements of the Company for the Year.
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“Year” means any one or more fiscal years of the Company commencing on or after January 1, 2018 that represent(s) the applicable Performance Period and end(s) no later than December 31, 2026.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 The Committee. The Plan shall be administered by a Committee consisting of at least one member of the Board of Directors of the Company, duly authorized by the Board of Directors of the Company to administer the Plan, who (i)are not eligible to participate in the Plan and (ii)are “outside directors” within the meaning of Section 162(m).
3.2 Powers of the Committee. The Committee shall have the sole authority to establish and administer the Performance Target(s) and the responsibility of determining from among the Executives those persons who will participate in and receive Bonuses under the Plan and, subject to Sections 4 and 5 of the Plan, the amount of such Bonuses, and the time or times at which and the form and manner in which Bonuses will be paid (which may include elective or mandatory deferral alternatives) and shall otherwise be responsible for the administration of the Plan, in accordance with its terms. The Committee shall have the authority to construe and interpret the Plan (except as otherwise provided herein) and any agreement or other document relating to any Bonus under the Plan, may adopt rules and regulations governing the administration of the Plan, and shall exercise all other duties and powers conferred on it by the Plan, or which are incidental or ancillary thereto. For each Performance Period, the Committee shall determine, at the time the Business Criteria and the Performance Target(s) are set, those Executives who are selected as Participants in the Plan.
3.3 Requisite Action. A majority of the members of the Committee shall constitute a quorum. The vote of a majority of those present at a meeting at which a quorum is present or the unanimous written consent of the Committee shall constitute action by the Committee.
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3.4 Express Authority (and Limitations on Authority) to Change Terms and Conditions of Bonus; Acceleration or Deferral of Payment. Without limiting the Committee’s authority under other provisions of the Plan, but subject to any express limitations of the Plan and Section 5.8, the Committee shall have the authority to accelerate a Bonus (after the attainment of the applicable Performance Target(s)) and to waive restrictive conditions for a Bonus (including any forfeiture conditions, but not Performance Target(s)), in such circumstances as the Committee deems appropriate. In the case of any acceleration of a Bonus after the attainment of the applicable Performance Target(s), the amount payable shall be discounted to its present value using an interest rate equal to Moody’s Average Corporate Bond Yield for the month preceding the month in which such acceleration occurs. Any deferred payment shall be subject to Section 4.9 and, if applicable, Section 4.10.
SECTION 4. BONUS PROVISIONS.
4.1 Maximum Total Bonus. In any Year the aggregate amount of bonuses awarded by the Company to all Participants may not exceed the Bonus Pool. In any year the bonus Pool is the product of 10% and Income before Taxes.
4.2 Provision for Bonus. Each Participant may receive a Bonus if and only if the Performance Target(s) established by the Committee, relative to the applicable Business Criteria, are attained. The applicable Performance Period and Performance Target(s) shall be determined by the Committee consistent with the terms of the Plan and Section 162(m). Notwithstanding the fact that the Performance Target(s) have been attained, the Company may pay a Bonus of less than the amount determined by the formula or standard established pursuant to Section 4.2 or may pay no Bonus at all, unless the Committee otherwise expressly provides by written contract or other written commitment.
4.3 Selection of Performance Target(s). The specific Performance Target(s) with respect to the Business Criteria must be established by the Committee in advance of the deadlines applicable under Section 162(m) and while the performance relating to the Performance Target(s) remains substantially uncertain within the meaning of Section 162(m). At the time the Performance Target(s) are selected, the Committee shall provide, in terms of an objective formula or standard for each Participant, and for any person who may become a Participant after the Performance Target(s) are set, the method of computing the specific amount that will represent the maximum amount of Bonus payable to the Participant if the Performance Target(s) are attained, subject to Sections 4.1, 4.2, 4.3, 4.8, 5.1 and 5.8.
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4.4 Maximum Individual Bonus. Notwithstanding any other provision hereof, no Executive shall receive a Bonus under the Plan for the Year in excess of $1 million. No Executive shall receive aggregate bonuses under this Plan for the Year in excess of $1 million.
4.5 Selection of Participants. For each Performance Period, the Committee shall determine, at the time the Business Criteria and the Performance Target(s) are set, those Executives who will participate in the Plan.
4.6 Effect of Mid-Year Commencement of Service. To the extent compatible with Sections 4.3 and 5.8, if services as an Executive commence after the adoption of the Plan and the Performance Target(s) are established for a Performance Period, the Committee may grant a Bonus that is proportionately adjusted based on the period of actual service during the Year; the amount of any Bonus paid to such person shall not exceed that proportionate amount of the applicable maximum individual bonus under Section 4.1 and 4.4.
4.7 Changes Resulting From Accounting Changes. Subject to Section 5.8, if, after the Performance Target(s) are established for a Performance Period, a change occurs in the applicable accounting principles or practices, the amount of the Bonuses paid under this Plan for such Performance Period shall be determined without regard to such change.
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4.8 Committee Discretion to Determine Bonuses. The Committee has the sole discretion to determine the standard or formula pursuant to which each Participant’s Bonus shall be calculated (in accordance with Section 4.3), whether all or any portion of the amount so calculated will be paid, and the specific amount (if any) to be paid to each Participant, subject in all cases to the terms, conditions and limits of the Plan and of any other written commitment authorized by the Committee. To this same extent, the Committee may at any time establish additional conditions and terms of payment of Bonuses (including but not limited to the achievement of other financial, strategic or individual goals, which may be objective or subjective) as it may deem desirable in carrying out the purposes of the Plan and may take into account such other factors as it deems appropriate in administering any aspect of the Plan. The Committee may not, however, increase the maximum amount permitted to be paid to any individual under Section 4.3 or 4.4 of the Plan or award a Bonus under this Plan if the applicable Performance Target(s) have not been satisfied.
4.9 Committee Certification. No Executive shall receive any payment under the Plan unless the Committee has certified, by resolution or other appropriate action in writing, that the amount thereof has been accurately determined in accordance with the terms, conditions and limits of the Plan and that the Performance Target(s) and any other material terms previously established by the Committee or set forth in the Plan were in fact satisfied.
4.10 Time of Payment; Deferred Amounts. Any Bonuses granted by the Committee under the Plan shall be paid as soon as practicable following the Committee’s determinations under this Section 4 and the certification of the Committee’s findings under Section 4.9. Any such payment shall be in cash or cash equivalent or in such other form of equal value on such payment date as the Committee may approve or require. Notwithstanding the foregoing, the Committee may, in its sole discretion (but subject to any prior written commitments and to any conditions consistent with Sections 3.4, 4.1, 4.4 and 5.8 that it deems appropriate), defer the payout or vesting of any Bonus and/or provide to Participants the opportunity to elect to defer the payment of any Bonus under a nonqualified deferred compensation plan. In the case of any deferred payment of a Bonus after the attainment of the applicable Performance Target(s), any amount in excess of the amount otherwise payable shall be based on either Moody’s Average Corporate Bond Yield over the deferral period or one or more predetermined actual investments (including Shares) such that the amount payable at the later date will be based upon actual returns, including any decrease or increase in the value of the investment(s), unless the alternative deferred payment is otherwise exempt from the limitations under Section 162(m).
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SECTION 5. GENERAL PROVISIONS
5.1 No Right to Bonus or Continued Employment. Neither the establishment of the Plan nor the provision for or payment of any amounts hereunder nor any action of the Company (including, for purposes of this Section 5.1, any predecessor or subsidiary), the Board of Directors of the Company or the Committee in respect of the Plan, shall be held or construed to confer upon any person any legal right to receive, or any interest in, a Bonus or any other benefit under the Plan, or any legal right to be continued in the employ of the Company. The Company expressly reserves any and all rights to discharge an Executive in its sole discretion, without liability of any person, entity or governing body under the Plan or otherwise. Notwithstanding any other provision hereof and notwithstanding the fact that the Performance Target(s) have been attained and/or the individual maximum amounts pursuant to Section 4.2 have been calculated, the Company shall have no obligation to pay any Bonus hereunder nor to pay the maximum amount so calculated or any prorated amount based on service during the period, unless the Committee otherwise expressly provides by written contract or other written commitment.
5.2 Discretion of Company, Board of Directors and Committee. Any decision made or action taken by the Company or by the Board of Directors of the Company or by the Committee arising out of or in connection with the creation, amendment, construction, administration, interpretation and effect of the Plan shall be within the absolute discretion of such entity and shall be conclusive and binding upon all persons. No member of the Committee shall have any liability for actions taken or omitted under the Plan by the member or any other person.
5.3 Absence of Liability. A member of the Board of Directors of the Company or a member of the Committee of the Company or any officer of the Company shall not be liable for any act or inaction hereunder, whether of commission or omission.
5.4 No Funding of Plan. The Company shall not be required to fund or otherwise segregate any cash or any other assets which may at any time be paid to Participants under the Plan. The Plan shall constitute an “unfunded” plan of the Company. The Company shall not, by any provisions of the Plan, be deemed to be a trustee of any property, and any obligations of the Company to any Participant under the Plan shall be those of a debtor and any rights of any participant or former Participant shall be no greater than those of a general unsecured creditor.
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5.5 Non-Transferability of Benefits and Interests. Except as expressly provided by the Committee, no benefit payable under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any such attempted action be void and no such benefit shall be in any manner liable for or subject to debts, contracts, liabilities, engagements or torts of any Participant or former Participant. This Section 5.5 shall not apply to an assignment of a contingency or payment due after the death of the Executive to the deceased Executive’s legal representative or beneficiary.
5.6 Law to Govern. All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the State of Florida.
5.7 Non-Exclusivity. Subject to Section 5.8, the Plan does not limit the authority of the Company, the Board or the Committee, or any subsidiary of the Company to grant awards or authorize any other compensation under any other plan or authority, including, without limitation, awards or other compensation based on the same Performance Target(s) used under the Plan. In addition, Executives not selected to participate in the Plan may participate in other plans of the Company.
5.8 Section 162(m) Conditions; Bifurcation of Plan. It is the intent of the Company that the Plan and Bonuses paid hereunder satisfy and be interpreted in a manner, that, in the case of Participants who are or may be persons whose compensation is subject to Section 162(m), satisfies any applicable requirements as performance-based compensation. Any provision, application or interpretation of the Plan inconsistent with this intent to satisfy the standards in Section 162(m) of the Code shall be disregarded. Notwithstanding anything to the contrary in the Plan, the provisions of the Plan may at any time be bifurcated by the Board or the Committee in any manner so that certain provisions of the Plan or any Bonus intended (or required in order) to satisfy the applicable requirements of Section 162(m) are only applicable to persons whose compensation is subject to Section 162(m).
SECTION 6. AMENDMENTS, SUSPENSION
OR TERMINATION OF PLAN
The Board of Directors or the Committee may from time to time amend, suspend or terminate in whole or in part, and if suspended or terminated, may reinstate, any or all of the provisions of the Plan. Notwithstanding the foregoing, no amendment may be effective without Board of Directors and/or shareholder approval if such approval is necessary to comply with the applicable rules of Section 162(m) of the Code.
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CERTIFICATION
The undersigned Secretary of the Company certifies that the foregoing constitutes a complete and correct copy of the Plan as amended on April 28, 2018 by the Board of Directors of Square Chain Corporation
| Jeffrey J Parker, Secretary |
Date: April 28, 2018
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Square Chain Corp.
EMPLOYMENT AGREEMENT
Jeffrey J. Parker – President
| 1 |
THIS EMPLOYMENT AGREEMENT (this “Agreement”), effective as of the Effective Date (as defined below), is entered into by and between Square Chain Corp., a Nevada corporation (the “Company”), and Jeffrey J. Parker (the “Executive”).
WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying the terms of such employment; and
WHEREAS, the Executive desires to accept employment with the Company, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. Subject to the provisions for earlier termination hereinafter provided, the Executive’s employment hereunder shall be for a term (the “Employment Period”) commencing on the Effective Date and ending on the fifth anniversary of the Effective Date (the “Initial Termination Date”); provided, however, that this Agreement shall be automatically extended for one additional year on the Initial Termination Date and on each subsequent anniversary of the Initial Termination Date, unless either the Executive or the Company elects not to so extend the term of the Agreement by notifying the other party, in writing, of such election not less than sixty (60) days prior to the last day of the term as then in effect. For purposes of this Agreement, “Effective Date” shall mean the date written below.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, the Executive shall serve as Chairman and President of the Company and shall perform such employment duties as are usual and customary for such positions. At the Company’s request, the Executive shall serve the Company and/or its subsidiaries and affiliates in other offices and capacities in addition to the foregoing. In the event that the Executive, during the Employment Period, serves in any one or more of such additional capacities, the Executive’s compensation shall not be increased beyond that specified in Section 2(b) of this Agreement. In addition, in the event the Executive’s service in one or more of such additional capacities is terminated, the Executive’s compensation, as specified in Section 2(b) of this Agreement, shall not be diminished or reduced in any manner as a result of such termination for so long as the Executive otherwise remains employed under the terms of this Agreement.
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(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote appropriate attention and time during normal business hours to the business and affairs of the Company. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) fulfill limited teaching, speaking and writing engagements or (C) manage his personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement and (D) undertake other business responsibilities. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to Company; provided that no such activity that violates any written non-competition agreement between the parties shall be permitted.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall receive a base salary (the “Base Salary”) as determined by the Board of Directors from time to time with due regard for the state of development of the Company, as the same may be increased thereafter pursuant to the Company’s normal practices for its executives. The Base Salary shall be paid at such intervals as the Company pays executive salaries generally. During the Employment Period, the Base Salary shall be reviewed at least annually for possible increase in the Company’s discretion. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. The Base Salary shall not be reduced after any such increase and the term “Base Salary” as utilized in this Agreement shall refer to Base Salary as so increased.
(ii) Annual Bonus. In addition to the Base Salary, the Executive shall be eligible to earn, for each fiscal year of the Company ending during the Employment Period, an annual cash performance bonus annual Bonus”) under the Company’s bonus plan or plans applicable to senior executives. The amount of the Annual Bonus and the target performance goals applicable to the Annual Bonus shall be determined in accordance with the terms and conditions of such bonus plan as in effect from time to time.
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(iii) Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all other incentive plans, practices, policies and programs, and all savings and retirement plans, practices, policies and programs, in each case that are applicable generally to senior executives of the Company.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive and the Executive’s eligible family members shall be eligible for participation in the welfare benefit plans, practices, policies and programs (including, if applicable, medical, dental, disability, employee life, group life and accidental death insurance plans and programs) maintained by the Company for its senior executives.
(v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses incurred by the Executive in accordance with the policies, practices and procedures of the Company provided to senior executives of the Company.
(vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to such fringe benefits and perquisites as are provided by the Company to its senior executives from time to time, in accordance with the policies, practices and procedures of the Company, and shall receive such additional fringe benefits and perquisites as the Company may, in its discretion, from time-to-time provide.
(vii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company applicable to its senior executives.
(viii) Additional Payments. The amount of compensation payable to Executive pursuant to Sections 2(b)(i) and (ii) above shall be “grossed up” as necessary (on an after-tax basis) to compensate for any additional social security withholding taxes due as a result of Executive’s shared employment by any subsidiary and/or affiliate of the Company, the Company, if applicable.
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3. Termination of Employment.
(a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death or Disability during the Employment Period. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 90 consecutive days or on a total of 180 days in any 12-month period, in either case as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.
(b) Cause. The Company may terminate the Executive’s employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, “Cause” shall mean the occurrence of any one or more of the following events unless the Executive fully corrects the circumstances constituting Cause within a reasonable period of time after receipt of the Notice of Termination (as defined below):
(i) the Executive’s willful and continued failure to substantially perform his duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure after his issuance of a Notice of Termination for Good Reason), after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed his duties;
(ii) the Executive’s willful commission of an act of fraud or dishonesty resulting in economic or financial injury to the Company;
(iii) the Executive’s conviction of, or entry by the Executive of a guilty plea to the commission of a felony or a crime involving moral turpitude;
(iv) a willful breach by the Executive of his fiduciary duty to the Company which results in economic or other injury to the Company; or
(v) the Executive’s willful and material breach of the Executive’s covenants set forth in Section 9 hereof.
For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel for the Executive, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of any of the conduct described in Section 3(b), and specifying the particulars thereof in detail; provided, that if the Executive is a member of the Board, the Executive shall not vote on such resolution nor shall the Executive be counted in determining the “entire membership” of the Board.
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(c) Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason or by the Executive without Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any one or more of the following events without the Executive’s prior written consent, unless the Company fully corrects the circumstances constituting Good Reason (provided such circumstances are capable of correction) prior to the Date of Termination (as defined below):
(i) the assignment to the Executive of any duties materially inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 2 of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;
(ii) the Company’s reduction of the Executive’s annual base salary or bonus opportunity, each as in effect on the date hereof or as the same may be increased from time to time;
(iii) the relocation of the Company’s offices at which the Executive is principally employed (the “Principal Location”) to a location more than thirty (30) miles from such location, or the Company’s requiring the Executive to be based at a location more than thirty (30) miles from the Principal Location, except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;
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(iv) the Company’s failure to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 10 hereof; or
(v) the Company’s failure to cure a material breach of its obligations under the Agreement after written notice is delivered to the Board by the Executive which specifically identifies the manner in which the Executive believes that the Company has breached its obligations under the Agreement and the Company is given a reasonable opportunity to cure any such breach.
(d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other parties hereto given in accordance with Section 12(c) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
(e) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein (which date shall not be more than 30 days after the giving of such notice), as the case may be, (ii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination, (iii) if the Executive’s employment is terminated by the Executive without Good Reason, the Date of Termination shall be the tenth day after the date on which the Executive notifies the Company of such termination, unless otherwise agreed by the Company and the Executive, and (iv) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death or Disability of the Executive, as the case may be.
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4. Obligations of the Company upon Termination.
(a) Without Cause or For Good Reason. If, during the Employment Period, the Company shall terminate the Executive’s employment without Cause or the Executive shall terminate his employment for Good Reason:
(i) The Executive shall be paid, in a single lump sum payment within 60 days after the Date of Termination, the aggregate amount of (A) the Executive’s earned but unpaid Base Salary and accrued vacation pay through the Date of Termination, and any Annual bonus required to be paid to the Executive pursuant to Section 2(b)(ii) above for any fiscal year of the Company that ends on or before the Date of Termination to the extent not previously paid (the “Accrued Obligations”), and (B) two (the “Severance Multiple”) times the sum of (x) the annual Base Salary in effect on the Termination Date plus (y) the average Annual Bonus received by the Executive for the three complete fiscal years (or such lesser number of years as the Executive has been employed by the Company) of the Company immediately prior to the Termination Date (the “Severance Amount”);
(ii) At the time when annual bonuses are paid to the Company’s other senior executives for the fiscal year of the Company in which the Date of Termination occurs, the Executive shall be paid an Annual Bonus in an amount equal to the product of (x) the amount of the Annual Bonus to which the Executive would have been entitled if the Executive’s employment had not been terminated, and (y) a fraction, the numerator of which is the number of days in such fiscal year through the Date of Termination and the denominator of which is the total number of days in such fiscal year (a “Pro-Rated Annual Bonus”);
(iii) For a period of years equal to the Severance Multiple, the Company shall continue to provide the Executive and the Executive’s eligible family members with group health insurance coverage at least equal to that which would have been provided to them if the Executive’s employment had not been terminated; provided, however, that if the Executive becomes re-employed with another employer and is eligible to receive group health insurance coverage under another employer’s plans, the Company’s obligations under this Section 4(a)(iii) shall be reduced to the extent comparable coverage is actually provided to the Executive and the Executive’s eligible family members, and any such coverage shall be reported by the Executive to the Company.
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(iv) The Company shall, at its sole expense and on an as-incurred basis, provide the Executive with outplacement services the scope and provider of which shall be reasonable and consistent with industry practice for similarly situated executives; and
(v) To the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any vested benefits and other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliates (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).
Notwithstanding the foregoing, it shall be a condition to the Executive’s right to receive the amounts provided for in Sections 4(a)(i)(B) and 4(a)(ii), (iii) and (iv) above that the Executive execute, deliver to the Company and not revoke a release of claims in substantially the form attached hereto as Exhibit A.
(b) For Cause or Without Good Reason. If the Executive’s employment shall be terminated by the Company for Cause or by the Executive without Good Reason during the Employment Period, the Company shall have no further obligations to the Executive under this Agreement other than pursuant to Sections 7 and 8 hereof, and the obligation to pay to the Executive the Accrued Obligations in cash within 30 days after the Date of Termination and to provide the Other Benefits.
(c) Death or Disability. If the Executive’s employment is terminated by reason of the Executive’s death or Disability during the Employment Period:
(i) The Accrued Obligations shall be paid to the Executive’s estate or beneficiaries or to the Executive, as applicable, in cash within 30 days of the Date of Termination;
(ii) 100% of the Executive’s annual Base Salary, as in effect on the Date of Termination, shall be paid to the Executive’s estate or beneficiaries or to the Executive, as applicable, in cash within 30 days following the Date of Termination;
(iii) The Pro-Rated Annual Bonus shall be paid to the Executive’s estate or beneficiaries or to the Executive, as applicable, at the time when annual bonuses are paid to the Company’s other senior executives for the fiscal year of the Company in which the Date of Termination occurs;
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(iv) For a period of twelve months following the Date of Termination, the Executive and the Executive’s eligible family members shall continue to be provided with group health insurance coverage at least equal to that which would have been provided to them if the Executive’s employment had not been terminated; provided, however, that if the Executive becomes re-employed with another employer and is eligible to receive group health insurance coverage under another employer’s plans, the Company’s obligations under this Section 4(d)(iv) shall be reduced to the extent comparable coverage is actually provided to the Executive and the Executive’s eligible family members, and any such coverage shall be reported by the Executive to the Company; and
(v) The Other Benefits shall be paid or provided to the Executive on a timely basis.
5. Termination Upon a Change in Control. If a Change in Control (as defined herein) occurs during the Employment Period and the Executive’s employment is terminated (a) by the Company without Cause or by the Executive for Good Reason, in each case within two (2) years after the effective date of the Change in Control or (b) by the Executive for any reason on or within 30 days after the one year anniversary of the effective date of the Change in Control, then the Executive shall be entitled to the payments and benefits provided in Section 4(a), subject to the terms and conditions thereof, except that for purposes of this Section 5, the Severance Multiple shall equal three (3). In addition, in the event of such a termination of the Executive’s employment, all outstanding stock options, restricted stock and other equity awards granted to the Executive under any of the Company’s equity incentive plans (or awards substituted therefore covering the securities of a successor company) shall become immediately vested and exercisable in full. For purposes of this Agreement, “Change in Control” shall mean the occurrence of any of the following events:
(i) the acquisition, directly or indirectly, by any “person” or “group” (as those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules thereunder) of “beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors (“voting securities”) of the Company that represent 35% or more of the combined voting power of the Company’s then outstanding voting securities, other than
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(A) an acquisition of securities by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company or by any employee benefit plan (or related trust) sponsored or maintained by the Company or any person controlled by the Company, or
(B) an acquisition of securities by the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the stock of the Company, or
(C) an acquisition of securities pursuant to a transaction described in clause (iii) below that would not be a Change in Control under clause (iii), or
(D) any direct or indirect acquisition of securities by the Executive or his family, or any entity controlled thereby;
Notwithstanding the foregoing, the following event shall not constitute an “acquisition” by any person or group for purposes of this clause (i): an acquisition of the Company’s securities by the Company which causes the Company’s voting securities beneficially owned by a person or group to represent 35% or more of the combined voting power of the Company’s then outstanding voting securities; provided, however, that if a person or group shall become the beneficial owner of 35% or more of the combined voting power of the Company’s then outstanding voting securities by reason of share acquisitions by the Company as described above and shall, after such share acquisitions by the Company, become the beneficial owner of any additional voting securities of the Company, then such acquisition shall constitute a Change in Control;
(ii) individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election by the Company’s shareholders, or nomination for election by the Board, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an election contest with respect to the election or removal of directors or other solicitation of proxies or consents by or on behalf of a person other than the Board;
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(iii) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction
(A) which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least 50% of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and
(B) after which no person or group beneficially owns voting securities representing 35% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (B) as beneficially owning 35% or more of combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or
(iv) approval by the Company’s shareholders of a liquidation or dissolution of the Company.
For purposes of clause (i) above, the calculation of voting power shall be made as if the date of the acquisition were a record date for a vote of the Company’s shareholders, and for purposes of clause (iii) above, the calculation of voting power shall be made as if the date of the consummation of the transaction were a record date for a vote of the Company’s shareholders.
6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.
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7. Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and except as expressly provided, such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred (within 30 days following the Company’s receipt of an invoice from the Executive), to the full extent permitted by law, all reasonable legal fees and expenses which the Executive or his beneficiaries may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive or his beneficiaries about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code. The preceding sentence shall not apply with respect to any such contest if the court having jurisdiction over such contest determines that the Executive’s claim in such contest is frivolous or maintained in bad faith.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the “Excise Tax Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Excise Tax Gross-Up Payment, the Executive retains an amount of the Excise Tax Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it shall be determined that the Executive is entitled to the Excise Tax Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount, then no Excise Tax Gross-Up Payment shall be made to the Executive and the amounts payable under this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the payments under Section 4(a)(i), unless an alternative method of reduction is elected by the Executive, and in any event shall be made in such a manner as to maximize the Value of all Payments actually made to the Executive. For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amount payable under this Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable under the Agreement shall be reduced pursuant to this Section 8(a). The Company’s obligation to make Excise Tax Gross-Up Payments under this Section 8 shall not be conditioned upon the Executive’s termination of employment.
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(b) Subject to the provisions of Section 8(c), all determinations required to be made under this Section 8, including whether and when an Excise Tax Gross-Up Payment is required, the amount of such Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by such nationally recognized accounting firm as may be selected by the Company and reasonably acceptable to the Executive (the “Accounting Firm”); provided, that the Accounting Firm’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code. The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Excise Tax Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Company to the Executive within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive, unless the Company obtains an opinion of outside legal counsel, based upon at least “substantial authority” within the meaning of Section 6662 of the Code, reaching a different determination, in which event such legal opinion shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Excise Tax Gross-Up Payments that will not have been made by the Company should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
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(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Excise Tax Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after the Executive is informed in writing of such claim. The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the Company relating to such claim,
(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such advance or with respect to any imputed income in connection with such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Excise Tax Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an Excise Tax Gross-Up Payment or an amount advanced by the Company pursuant to Section 8(c), the Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Excise Tax Gross-Up Payment relates or with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 8(c), if applicable) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 8(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Excise Tax Gross-Up Payment required to be paid.
(e) Notwithstanding any other provision of this Section 8, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Excise Tax Gross-Up Payment, and the Executive hereby consents to such withholding.
(f) Any other liability for unpaid or unwithheld Excise Taxes shall be borne exclusively by the Company, in accordance with Section 3403 of the Code. The foregoing sentence shall not in any manner relieve the Company of any of its obligations under this Employment Agreement.
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(g) Definitions. The following terms shall have the following meanings for poses of this Section 8:
(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.
(ii) “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.
(iii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.
(iv) The “Safe Harbor Amount” shall mean 2.99 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.
(v) “Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.
9. Confidential Information and Non-Solicitation.
(a) In no event shall an asserted violation of the provisions of this Section 9 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. However, in recognition of the facts that irreparable injury will result to the Company in the event of a breach by the Executive of his obligations under Sections 9(a) and (b) of this Agreement, that monetary damages for such breach would not be readily calculable, and that the Company would not have an adequate remedy at law therefor, the Executive acknowledges, consents and agrees that in the event of such breach, or the threat thereof, the Company shall be entitled, in addition to any other legal remedies and damages available, to specific performance thereof and to temporary and permanent injunctive relief (without the necessity of posting a bond) to restrain the violation or threatened violation of such obligations by the Executive.
| 16 |
(b) The Employee shall, at all times during and subsequent to the Term, keep secret and retain in strictest confidence all confidential matters of the Company, and the “know-how”, trade secrets, technical processes, inventions, equipment specifications, equipment designs, plans, drawings, research projects, confidential client lists, details of client, subcontractor or consultant contracts, pricing policies, operational methods, marketing plans and strategies, project development, acquisition and bidding techniques and plans, business acquisition plans, and new personnel acquisition plans of the Company and its subsidiaries and divisions (whether now known or hereafter learned by the Employee), except to the extent that (i) such information is generally available to the public without restriction, (ii) the Employee obtains confidentiality agreements with respect to such confidential information, (iii) the Employee is requested by the Board of Directors of the Company or a Committee thereof, or by the Chairman of the Company, to disclose such confidential information, (iv) such information is provided to a customer of the Company pursuant to a request received from such customer in the ordinary course of business, or (v) the Employee is under compulsion of either a court order or a governmental agency’s or authority’s inquiry, order or request to so disclose such information.
(c) Property of the Company.
(i) Except as otherwise provided herein, all lists, records and other non-personal documents or papers (and all copies thereof) relating to the Company and/or any of its subsidiaries or divisions, including such items stored in computer memories, on microfiche or by any other means, made or compiled by or on behalf of the Employee, or made available to the Employee, are and shall be the property of the Company, and shall be delivered to the Company on the date of termination of the Employee’s employment with the Company, or sooner upon request of the Company at any time or from time to time.
(ii) All inventions, including any procedures, formulas, methods, processes, uses, apparatuses, patterns, designs, plans, drawings, devices or configurations of any kind, any and all improvements to them which are developed, discovered, made or produced, and all trade secrets and information used by the Company and/or its subsidiaries and divisions (including, without limitation, any such matters created or developed by the Employee during the term of this Agreement), shall be the exclusive property of the Company or the subject subsidiary, and shall be delivered to the Company or the subject subsidiary (without the Employee retaining any copies, components or records thereof) on the date of termination of the Employee’s employment with the Company; provided, however, that nothing herein contained shall be deemed to grant to the Company any property rights in any inventions or other intellectual property which may at any time be developed by the Employee which is wholly unrelated to any business then engaged in or under development by the Company.
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(d) The Employee shall not, at any time (whether during the term of this Agreement or at any time thereafter), directly or indirectly, for or on behalf of any business enterprise other than the Company and/or its subsidiaries and affiliates, solicit any employee of the Company or any of its subsidiaries to leave his or her employment with the Company or such subsidiary, or encourage any such employee to leave such employment, without the prior written approval of the Company in each instance.
(e) Non-Competition. For so long as the Employee shall be receiving any compensation or remuneration under this Agreement, and for a further period of one (1) year thereafter, the Employee shall not, directly or indirectly, whether individually or as an employee, stockholder (other than the passive ownership of up to 5% of the capital stock of a publicly traded corporation), partner, joint venturer, agent or other representative of any other person, firm or corporation, engage or have any interest in any business (other than the Company or any of its subsidiaries or affiliates) which, in any country in which the Company or any of its subsidiaries or divisions does or solicits business during the Term, is engaged in or derives any revenues from performing any functionally equivalent services or marketing any functionally equivalent products as those services provided and products marketed by the Company or any of its subsidiaries or divisions during the Term.
(f) Severability of Covenants. The Employee acknowledges and agrees that the provisions of this Section 9 of this Agreement are (a) made in consideration of the premises and undertakings of the Company set forth herein, (b) made for good, valuable and adequate consideration received and to be received by the Employee, and (c) reasonable and necessary, in terms of the time, geographic scope and nature of the restrictions, for the protection of the Company and the business and good will thereof. It is intended that the provisions of this Section 9 be fully severable, and in the event that any of the foregoing restrictions, or any portion of the foregoing restrictions, shall be deemed contrary to law, invalid or unenforceable in any respect by any court or tribunal of competent jurisdiction, then such restrictions shall be deemed to be amended, modified and reduced in scope and effect, as to duration and/or geographic area, only to that extent necessary to render same valid and enforceable (and in such reduced form, such provisions shall then be enforceable), and any other of the foregoing restrictions shall be unaffected and shall remain in full force and effect.
| 18 |
(g) Equitable Remedies. The parties hereby acknowledge that, in the event of any breach or threatened breach by the Employee of the provisions of this Section 9, the Company will suffer irreparable harm and will not have an adequate remedy at law. Accordingly, in the event of any such breach or threatened breach, the Company may seek and obtain appropriate equitable relief to restrain or enjoin such breach or threatened breach and/or to compel compliance herewith.
(h) Trade Secrets. The Parties hereby agree and stipulate that any confidential information of the Parties shall be deemed a “trade secret” as that term is defined under the Economic Espionage Act of 1996 (the “Act”), and further agree and stipulate that the Parties by this Agreement have taken all reasonable steps under the Act to keep such information secret.
10. Successors.
(a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
11. Payment of Financial Obligations. The payment or provision to the Executive by the Company of any remuneration, benefits or other financial obligations pursuant to this Agreement shall be allocated to the Company and, if applicable, any subsidiary and/or affiliate thereof from time to time.
| 19 |
12. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
(b) Arbitration. Except as set forth in Section 9(c) above, any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation of this Agreement or any arrangements relating to this Agreement or contemplated in this Agreement or the breach, termination or invalidity thereof shall be settled by final and binding arbitration administered by the America Arbitration Association in Boca Raton, Florida in accordance with the then existing American Arbitration Association Rules and Procedures for Employment Disputes. In the event of such an arbitration proceeding, the Executive and the Company shall select a mutually acceptable neutral arbitrator from among the American Arbitration Association panel of arbitrators. In the event the Executive and the Company cannot agree on an arbitrator, the Administrator of American Arbitration Association will appoint an arbitrator. Neither the Executive nor the Company nor the arbitrator shall disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties. Except as provided herein, the Federal Arbitration Act shall govern the interpretation, enforcement and all proceedings. The arbitrator shall apply the substantive law (and the law of remedies, if applicable) of the state of Florida, or federal law, or both, as applicable, and the arbitrator is without jurisdiction to apply any different substantive law. The arbitrator shall have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure. The arbitrator shall render an award and a written, reasoned opinion in support thereof. Judgment upon the award may be entered in any court having jurisdiction thereof.
(c) Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: at the Executive’s most recent address on the records of the Company,
If to the Company: at the Company’s principal offices, attention of the Company’s Secretary and President.
or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective hen actually received by the addressee.
| 20 |
(d) Sarbanes-Oxley Act of 2002. Notwithstanding anything herein to the contrary, if the Company determines, in its good faith judgment, that any transfer or deemed transfer of funds hereunder is likely to be construed as a personal loan prohibited by Section 13(k) of the Exchange Act and the rules and regulations promulgated thereunder, then such transfer or deemed transfer shall not be made to the extent necessary or appropriate so as not to violate the Exchange Act and the rules and regulations promulgated thereunder.
(e) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(f) Withholding. The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. In addition, notwithstanding any other provision of this Agreement, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Excise Tax Gross-Up Payment, and the Executive hereby consents to such withholding.
(g) No Waiver. The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 3(c) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(h) Entire Agreement. As of the Effective Date, this Agreement, together with any non-competition agreement between the parties, constitutes the final, complete and exclusive agreement between the Executive and the Company with respect to the subject matter hereof and replaces and supersedes any and all other agreements, offers or promises, whether oral or written, made to you by any related entity, or representative of the Company or the transactions related thereto. The Executive agrees that any such agreement, offer or promise between the Executive and Employer (or any representative thereof) is hereby terminated and will be of no further force or effect, and the Executive acknowledges and agrees that upon his execution of this Agreement, he will have no right or interest in or with respect to any such agreement, offer or promise. In the event that the Effective Date does not occur, this Agreement (including, without limitation, the immediately preceding sentence) shall have no force or effect.
(i) Counterparts. This Agreement may be executed simultaneously in two counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year written below.
| Square Chain Corp. | ||
| A Nevada Corporation | ||
| By: | ||
| Name: | Jeffrey J. Parker | |
| Title: | President | |
| EXECUTIVE | |
| Jeffrey J. Parker | |
| EFFECTIVE DATE: |
| 22 |
PROMISSORY NOTE
| March 27, 2018 | $73,978.00 USD | |
| 5%
Interest Payable on or before August 01, 2018 |
FOR VALUE RECEIVED, the undersigned Square Chain Corp (the “Issuer”), hereby promise to pay to the order of Jeffrey J Parker (the “Note Holder”) Seventy Three Thousand Nine Hundred Seventy Eight dollars ($73,978.00) USD DUE UPON DEMAND by the note holder 4 months (or before) after the execution of this Promissory Note. The Note will be paid according to the following terms and conditions:
| 1. | Promise to Pay: Upon demand by the “Note Holder”, the Issuer promises to pay Seventy Three Thousand Nine Hundred Seventy Eight dollars ($73,978.00) USD for monies loaned to the Issuer, from the date hereof. |
| 2. | Responsibility: The Issuer is irrevocably responsible and liable for paying the full amount due on this Promissory Note on demand. |
| 3. | Default: If for any reason the Issuer fails to make the payment on time, then the Issuer shall be in default. The Note Holder can then demand immediate payment of the entire remaining unpaid balance of this Promissory Note, without giving anyone further notices. |
| 4. | The parties agree that should any litigation arise in enforcing this instrument or any terms thereof, the jurisdiction shall be a court of original jurisdiction in Pinellas, Florida. |
IN WITNESS WHEREOF, the Issuers have executed and delivered this Note on the date first above written.
| Lendor/Holder | |
| Jeffrey J. Parker | |
| PO Box 501 | |
| St. Petersburg, FL 33731 | |
| Borrower/Issuer | |
| Jeffrey J. Parker, President | |
| Square
Chain Corp 3609 Hammerkop Drive | |
| North Las Vegas, NV 89084 |
Exhibit 12.1
John E. Lux, Esq.
Attorney at Law
1629 K Street, Suite 300
Washington, DC 20006
(202) 780-1000
Admitted in Maryland and the District of Columbia
May 3, 2018
Board of Directors
Square Chain Corporation
3609 Hammerkop Drive
North Las Vegas, Nevada 89084
Gentlemen:
I have acted, at your request, as special counsel to Square Chain Corporation, a Nevada corporation, (“Square Chain Corporation”) for the purpose of rendering an opinion as to the legality of 80,000,000 shares of Square Chain Corporation common stock, par value $0.001 per share to be offered and distributed by Square Chain Corporation (the “Shares”) pursuant to an Offering Statement to be filed under Regulation A of the Securities Act of 1933, as amended, by Square Chain Corporation with the U.S. Securities and Exchange Commission (the "SEC") on Form 1-A, for the purpose of registering the offer and sale of the Shares (“Offering Statement”).
For the purpose of rendering my opinion herein, I have reviewed statutes of the State of Nevada, to the extent I deem relevant to the matter opined upon herein, certified or purported true copies of the Articles of Incorporation of Square Chain Corporation and all amendments thereto, the By-Laws of Square Chain Corporation, selected proceedings of the board of directors of Square Chain Corporation authorizing the issuance of the Shares, certificates of officers of Square Chain Corporation and of public officials, and such other documents of Square Chain Corporation and of public officials as I have deemed necessary and relevant to the matter opined upon herein. I have assumed, with respect to persons other than directors and officers of Square Chain Corporation, the due and proper election or appointment of all persons signing and purporting to sign the documents in their respective capacities, as stated therein, the genuineness of all signatures, the conformity to authentic original documents of the copies of all such documents submitted to me as certified, conformed and photocopied, including the quoted, extracted, excerpted and reprocessed text of such documents.
Based upon the review described above, it is my opinion that the Shares are duly authorized and when, as and if issued and delivered by Square Chain Corporation against payment therefore, as described in the offering statement, will be validly issued, fully paid and non-assessable.
I have not been engaged to examine, nor have I examined, the Offering Statement for the purpose of determining the accuracy or completeness of the information included therein or the compliance and conformity thereof with the rules and regulations of the SEC or the requirements of Form 1-A, and I express no opinion with respect thereto. My forgoing opinion is strictly limited to matters of Nevada corporation law; and, I do not express an opinion on the federal law of the United States of America or the law of any state or jurisdiction therein other than Nevada, as specified herein.
I hereby consent to the filing of this opinion as Exhibit 12.1 to the Offering Statement and to the reference to our firm under the caption “Legal Matters” in the Offering Circular constituting a part of the Offering Statement. We assume no obligation to update or supplement any of the opinion set forth herein to reflect any changes of law or fact that may occur following the date hereof.
| Very truly yours, | |
| /s/ John E. Lux | |
| John E. Lux |
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