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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BIO LAB NATURALS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE (State or jurisdiction of incorporation or organization) |
7312 (Primary Standard Industrial Classification Code Number) |
84-2288662 (I.R.S. Employer Identification No.) |
201 Columbine St., 3rd Floor, Suite 11, Denver, CO 80206/ Phone 720-273-0433
(Address and telephone number of principal executive offices)
W. Edward Nichols, Chief Executive Officer
201 Columbine St., 3rd Floor, Suite 11, Denver, CO 80206/ Phone 720-273-0433
(Name, address and telephone number of agent for service)
COPIES OF ALL COMMUNICATIONS TO:
Michael A. Littman, Attorney at Law
P.O. Box 1839, Arvada, CO 80001 / phone (720) 530-6184 / malattyco@aol.com
and
Christen Lambert, Attorney at Law /(919) 473-9130
Christen@ChristenLambertLaw.com
Approximate date of commencement of proposed sale to the public: As soon as possible after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | [___] | Accelerated filer | [___] | |
| Non-accelerated filer | [___] | Smaller reporting company | [_X_] | |
| Emerging growth company | [_X_] |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
[ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. [_]
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities To Be Registered | Amount To Be Registered | Proposed Maximum Offering Price Per Share | Proposed Maximum Aggregate Offering Price(1) | Amount of Registration Fee |
| Common Stock by Selling Shareholders | 9,690,999 | $0.40 | $3,876,399.60 | $503.16 |
| (1) | Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(o) under the Securities Act of 1933 ("the Securities Act") based on the average of the 5-day average of the closing price of the common stock on June 30, 2020 as reported on the OTC QB. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION, dated July 2, 2020
BIO LAB NATURALS, INC.
9,690,999 shares of common stock of selling shareholders
We are registering securities listed for sale on behalf of selling shareholders: 9,690,999 shares of Common Stock.
We will not receive any proceeds from sales of shares by selling shareholders.
Our selling shareholders plan to sell common shares at market prices for so long as our Company is quoted on OTC Pink and as the market may dictate from time to time. There is a limited market for the common stock, as traded on the OTC Pink (“BLAB”) at $0.40 in the past 5 days.
| Title | Price Per Share |
| Common Stock | $0.40* |
*Five-day average market price
Our security holders may sell their securities on the OTC Pink at market prices or at any price in privately negotiated transactions.
This offering involves a high degree of risk; see "RISK FACTORS" beginning on page 6 to read about factors you should consider before buying shares of the common stock.
These securities have not been approved or disapproved by the Securities and Exchange Commission (the “SEC”) or any state or provincial securities commission, nor has the SEC or any state or provincial securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
This offering will be on a delayed and continuous basis only for sales of selling shareholders shares. The selling shareholders are not paying any of the offering expenses and we will not receive any of the proceeds from the sale of the shares by the selling shareholders. (See “Description of Securities – Shares”).
The information in this prospectus is not complete and may be changed. We may not sell these securities until the date that the registration statement relating to these securities, which has been filed with the Securities and Exchange Commission, becomes effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
The date of this Prospectus is July 2, 2020.
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ITEM 3. PROSPECTUS SUMMARY INFORMATION, RISK FACTORS AND RATIO OF EARNINGS TO FIXED CHARGES
Our Company
Bio Lab Naturals, Inc. (“We,” “us,” “our,” “Bio Lab,” or “BLAB”), is incorporated in the State of Delaware with operations located in Denver, Colorado providing large screen outdoor presentation and advertising.
CORPORATE HISTORY
Our predecessor,Vyta Corp, was incorporated in Nevada in June 1996. Until June 2009, Vyta Corp, through its wholly owned subsidiary BioAgra, LLC, was involved in the sale and manufacturing of a natural additive for use in the animal feed industry. On May 15, 2009, Vyta Corp ceased its operational activities. On June 30, 2009, Vyta Corp filed a Form 15-15D, with the Securities and Exchange Commission (“SEC”) to cease its filing obligations under the Securities Act of 1934. On August 20, 2010, it changed its state of incorporation to Delaware and on November 5, 2010, and through a holding company reorganization reorganized as Bio Lab Naturals, Inc. (the “Company or “Bio Lab”). Its predecessor was divested as a subsidiary.
The Company changed its year end from June 30th to December 31st and, therefore the consolidated financial statements represent a short year as of and for the period July 1, 2019 (Inception) through December 31, 2019.
Reorganization Activities
On August 20, 2010, Vyta Corp (Nevada) executed a redomicile merger with its wholly owned subsidiary Vyta Corp (Delaware). As a result of the merger the Company’s corporate domicile moved from Nevada to Delaware. On September 16, 2010, Vyta Corp and its wholly owned subsidiaries, 10 Vyta, Inc., with Bio Lab Naturals, Inc. entered into a Holding Company Reorganization/Merger Transaction pursuant to Delaware Statute 251(g), whereby the Company was reorganized with 10 Vyta, Inc., with Bio Lab Naturals, Inc. being the survivor holding company, and 10 Vyta was divested thereafter. The shareholders of the Company became the shareholders of Bio Lab Naturals, Inc. (hereinafter the “Company”) with no change in the number of shares.
In 2010, the Company executed a merger with Bio Protein, Inc. As part of the merger, the Company exchanged 40 shares of its outstanding common stock for one share of Bio Protein, Inc. (Colorado.) This merger was rescinded April 10, 2013 and 6,868,260 shares were agreed to be cancelled. The name was changed back to Vyta Corp, but such was changed back to Bio Lab Naturals, Inc. when there failed to be shareholder approval.
The Company agreed to a merger with Set Net Global, Inc. in 2015 and changed its name, but the merger was never completed and the name was returned to Bio Lab Naturals, Inc.
On December 31, 2019, Bio Lab Naturals, Inc., PTL Acquisition Sub, Inc. (“PTL Acquisition Sub”), a wholly-owned subsidiary of Bio Lab Naturals, Inc., domiciled in Colorado and Prime Time Live, Inc. (“PTL”), a Colorado corporation entered into a Plan of Reorganization. PTL Acquisition Sub merged with PTL where PTL Acquisition Sub became the surviving entity in exchange for one share of the Company’s common stock being issued for each share of PTL’s 5,500,000 issued and outstanding shares of common stock. A total of 6,931,061 shares of the Company’s common stock were cancelled. PTL Acquisition Sub changed its name to Prime Time Live, Inc.
Our executive offices are located at 201 Columbine St., 3rd Floor, Suite 11, Denver, CO 80206 and the telephone number is (720) 273-0433. We maintain a website at www.primetimeliveevents.com, and such website is not incorporated into or a part of this filing.
Implications of Being an Emerging Growth Company
As a company with less than $1.0 billion of revenue during our last fiscal year, we qualify as an emerging growth company as defined in the JOBS Act, and we may remain an emerging growth company for up to five years from the date of the first sale in this offering. However, if certain events occur prior to the end of such five-year period, including if we become a large accelerated filer, our annual gross revenue exceeds $1.0 billion, or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure and other requirements that are applicable to other public companies that are not emerging growth companies. In particular, in this prospectus, we have provided only two years of audited financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from
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other public companies in which you hold equity interests. However, we have irrevocably elected not to avail ourselves of the extended transition period for complying with new or revised accounting standards, and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Summary of Financial Information
The following tables set forth, for the periods and as of the dates indicated, our summary financial data. The statements of operations for the three months ended March 31, 2020, and the balance sheet data as of March 31, 2020 are derived from our unaudited condensed financial statements. The unaudited financial statements include, in the opinion of management, all adjustments consisting of only normal recurring adjustments, that management considers necessary for the fair presentation of the financial information set forth in those statements. You should read the following information together with the more detailed information contained in “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus. Our historical results are not indicative of the results to be expected in the future and results of interim periods are not necessarily indicative of results for the entire year. The statements of operations for the period July 1, 2019 (Inception) through December 31, 2019, and balance sheet data as of December 31, 2019, are derived from our audited financial statements included elsewhere in this prospectus. You should read the following information together with the more detailed information contained in “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this prospectus. Our historical results are not indicative of the results to be expected in the future.
The Company changed its year end from June 30th to December 31st and, therefore the consolidated financial statements as of and for the period July 1, 2019 (Inception) through December 31, 2019 represents a short year.
| July 1, 2019 (Inception) through | ||||||||
| March 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Total Assets | $ | 172,667 | $ | 243,063 | ||||
| Current Liabilities | $ | 55,029 | $ | 22,170 | ||||
| Stockholders’ Equity (Deficit) | $ | 117,638 | $ | 220,893 | ||||
Three Months Ended March 31, 2020 (Unaudited) | July 1, 2019 (Inception) through December 31, 2019 (Audited) | |||||||
| Revenues | $ | 0 | $ | 0 | ||||
| Net Loss | $ | (103,255 | ) | $ | (1,909,107 | ) | ||
At March 31, 2020, the accumulated deficit was ($35,271,325). At December 31, 2019, the accumulated deficit was ($35,168,070). We anticipate that we will operate in a deficit position and continue to sustain net losses for the foreseeable future.
CORPORATE ORGANIZATION CHART
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BIO LAB NATURALS, INC. (a Delaware corporation)
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Prime Time Live, Inc. (a wholly-owned subsidiary) | |||||
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The Offering
We are registering securities listed for sale on behalf of selling shareholders: 9,690,999 shares of Common Stock.
Our common stock, only, will be transferable immediately upon the effectiveness of the Registration Statement. (See “Description of Securities”)
| Common shares outstanding before this offering | 10,833,504 |
| Maximum common shares being offered by our existing selling shareholders | 9,690,999 |
| Maximum common shares outstanding after this offering | 10,833,504 |
We are authorized to issue 200,000,000 shares of common stock with a par value of $0.0001 and 5,000,000 shares of preferred stock with a par value of $0.0001. Our current shareholders, officers and directors collectively own 10,833,504 shares of restricted common stock as of this date. Our shares being registered were issued in the following amounts and at the following prices:
| Number of Shares | Original Consideration | Issue Price Per Share |
| 9,690,999 | Private Placements, Private Purchases, Services and Cash | $0.0001 - $.0.30 |
Currently there is a limited public trading market for our stock on OTC Pink under the symbol “BLAB.” We are in process of uplisting to OTCQB.
Forward Looking Statements
This prospectus contains various forward-looking statements that are based on our beliefs as well as assumptions made by and information currently available to us. When used in this prospectus, the words "believe," "expect," "anticipate," "estimate," and similar expressions are intended to identify forward-looking statements. These statements may include statements regarding seeking business opportunities, payment of operating expenses, and the like, and are subject to certain risks, uncertainties and assumptions which could cause actual results to differ materially from projections or estimates. Factors which could cause actual results to differ materially are discussed at length under the heading "Risk Factors." Should one or more of the enumerated risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Investors should not place undue reliance on forward-looking statements, all of which speak only as of the date made.
RISK FACTORS RELATED TO OUR BUSINESS
WE HAVE AN EVOLVING BUSINESS MODEL.
As event production evolves, so will our business model. We may continue to try to offer additional types of products or services, and we cannot offer any assurance that any of them will be successful. From time to time we may also modify aspects of our business model relating to our product mix and service offerings. We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to the business. We may not be able to manage growth effectively, which could damage our reputation, limit our growth, and negatively affect our operating results.
OUR SUCCESS WILL DEPEND, TO A LARGE DEGREE, ON THE EXPERTISE AND EXPERIENCE OF THE MEMBERS OF OUR MANAGEMENT TEAM.
We will rely exclusively on the skills and expertise of our management team in conducting our business. Our management team has experience in identifying, evaluating and acquiring prospective businesses for which we may ultimately enter a joint venture, but there is no assurance our managements assessments will be successful in any joint venture. Accordingly, there is only a limited basis upon which to evaluate our prospects for achieving our intended business objectives.
We will be wholly dependent for the selection, structuring, closing and monitoring of all of our investments on the diligence and skill of our management team, under the supervision of our Board of Directors. There can be no assurance that we will attain our investment objective. The management team will have primary responsibility for the selection of companies to which we will finance, the terms
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and the monitoring of such investments after they are made. However, not all of the management team will devote all of their time to managing the Company. These factors may affect our profitability.
We have limited resources and limited operating history.
OUR OPERATIONS AS AN EVENT SERVICE PROVIDER MAY AFFECT OUR ABILITY TO, AND THE MANNER IN WHICH, WE RAISE ADDITIONAL CAPITAL, WHICH MAY EXPOSE US TO RISKS.
Our business will require a substantial amount of capital to market our services and then provide the services to clients in order to generate revenues. Our revenues may not be paid until 30-45 days after providing services. We may acquire additional capital from the issuance of senior securities, including borrowings or other indebtedness, or the issuance of additional shares of our common stock. However, we may not be able to raise additional capital in the future on favorable terms or at all. We may issue debt securities, other evidences of indebtedness or preferred stock, and we may borrow money from banks or other financial institutions, which we refer to collectively as "senior securities". If the value of our businesses decline, we may be unable to satisfy loan requirements. If that happens, we may be required to reduce operations and repay a portion of our indebtedness at a time when such reduction may be disadvantageous. As a result of issuing senior securities, we would also be exposed to typical risks associated with leverage, including an increased risk of loss. If we issue preferred stock, the preferred stock would rank "senior" to common stock in our capital structure. Preferred stockholders would have separate voting rights and might have rights, preferences, or privileges more favorable than those of our common stockholders. If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, then the percentage ownership of our stockholders at that time will decrease.
WE ARE DEPENDENT UPON OUR PART-TIME MANAGEMENT FOR OUR SUCCESS WHICH IS A RISK TO OUR INVESTORS.
Our lack of full-time management may be an impediment to our business achievement. Without full-time officers, we may not have sufficient devoted time and effort to find successful loan prospects, additional capital, or manage our loan portfolio, which could impair our ability to succeed in our business plan and could cause investment in our Company to lose value.
WE HAVE A LIMITED AMOUNT OF FUNDS AVAILABLE FOR INVESTMENT IN VENTURES AND AS A RESULT OUR VENTURES MAY LACK DIVERSIFICATION.
Based on the amount of our existing available funds, it is unlikely that we will be able to commit our funds to a large number of ventures. Prospective investors should understand that our venture investments are not, and in the future may not be, substantially diversified. We may not achieve the same level of diversification as larger entities engaged in similar activities. Therefore, our assets may be subject to greater risk of loss than if they were more widely diversified. The loss of one or more of our limited number of investments could have a material adverse effect on our financial condition.
WE HAVE A LACK OF REVENUE HISTORY AND STOCKHOLDERS CANNOT VIEW OUR PAST PERFORMANCE SINCE WE HAVE A LIMITED OPERATING HISTORY.
During the period of inception through our merger with Prime Time Live, Inc. on December 31, 2019, we did not recognize revenues. We are not profitable. We must be regarded as a new venture with all of the unforeseen costs, expenses, problems, risks and difficulties to which such ventures are subject. Prime Time Live, Inc. had historical revenues as reflected in their financial statements.
WE ARE NOT DIVERSIFIED, AND WE WILL BE DEPENDENT ON ONLY ONE BUSINESS, EVENT SERVICE PROVIDER.
Because of the limited financial resources that we have, it is unlikely that we will be able to diversify our operations. Our probable inability to diversify our activities into more than one area will subject us to economic fluctuations within the event services industry and therefore increase the risks associated with our operations due to lack of diversification.
WE CAN GIVE NO ASSURANCE OF SUCCESS OR PROFITABILITY TO OUR STOCKHOLDERS.
There is no assurance that we will ever operate profitably. There is no assurance that we will generate revenues or profits, or that the market price of our common stock will be increased thereby.
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WE MAY HAVE A SHORTAGE OF WORKING CAPITAL IN THE FUTURE WHICH COULD JEOPARDIZE OUR ABILITY TO CARRY OUT OUR BUSINESS PLAN.
Our capital needs consist primarily of expenses related to general and administrative operations and legal and accounting and could exceed $1,000,000 in the next twelve months. Such funds are not currently committed, and we have cash of approximately $60,000 as of the date of this filing.
WE WILL NEED ADDITIONAL FINANCING FOR WHICH WE HAVE NO COMMITMENTS, AND THIS MAY JEOPARDIZE EXECUTION OF OUR BUSINESS PLAN.
We have limited funds, and such funds may not be adequate to carry out our business plan in the event production industry. Our ultimate success depends upon our ability to raise additional capital. We are investigating the availability, sources, and terms that might govern the acquisition of additional capital.
We have no commitment at this time for additional capital. If we need additional capital, we have no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to us. If not available, our operations will be limited to those that can be financed with our modest capital.
WE MAY IN THE FUTURE ISSUE MORE SHARES/UNITS WHICH COULD CAUSE A LOSS OF CONTROL BY OUR PRESENT MANAGEMENT AND CURRENT STOCKHOLDERS.
We may issue further shares as consideration for the cash or assets or services out of our authorized but unissued common stock that would, upon issuance, represent a majority of the voting power and equity of our Company. The result of such an issuance would be those new stockholders and management would control our Company, and persons unknown could replace our management at that time. Such an occurrence would result in a greatly reduced percentage of ownership of our Company by our current stockholders, which could present significant risks to stockholders.
WE HAVE AUTHORIZED AND DESIGNATED CLASS A PREFERRED SUPER MAJORITY VOTING CONVERTIBLE STOCK, WHICH HAVING VOTING RIGHTS OF 60% TO OUR COMMON STOCK AT ALL TIMES.
Class A Preferred Super Majority Voting Convertible Stock (the “Class A Preferred”) of which 500,000 shares of preferred stock have been authorized for the class. The Class A Preferred are to have super majority voting rights over common stock voting 60% at all times. At this time, all shares of the Class A Preferred have been issued to W. Edward Nichols, our CEO, and one of our directors and the M.A. Littman Defined Benefit Plan.
OUR OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTERESTS AS TO CORPORATE OPPORTUNITIES WHICH WE MAY NOT BE ABLE OR ALLOWED TO PARTICIPATE IN AND MAY RECEIVE COMPENSATION FROM OUR PARENT COMPANY.
Presently there is no requirement contained in our Articles of Incorporation, Bylaws, or minutes which requires officers and directors of our business to disclose to us business opportunities which come to their attention. Our officers and directors do, however, have a fiduciary duty of loyalty to us to disclose to us any business opportunities which come to their attention, in their capacity as an officer and/or director or otherwise. Excluded from this duty would be opportunities which the person learns about through his involvement as an officer and director of another company. We have no intention of merging with or acquiring a business opportunity from any affiliate or officer or director. Our current officers and directors also currently serve other companies and as such may present conflicts due to lack of full-time attention to the Company. We intend to diversify and/or expand our Board of Directors in the future.
WE HAVE AGREED TO INDEMNIFICATION OF OFFICERS AND DIRECTORS AS IS PROVIDED BY DELAWARE STATUTES.
Delaware General Corporation Laws provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person’s promise to repay us therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us that we will be unable to recoup.
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OUR DIRECTORS’ LIABILITY TO US AND STOCKHOLDERS IS LIMITED
Delaware General Corporation Laws exclude personal liability of our directors and our stockholders for monetary damages for breach of fiduciary duty except in certain specified circumstances. Accordingly, we will have a much more limited right of action against our directors that otherwise would be the case. This provision does not affect the liability of any director under federal or applicable state securities laws.
We have no full-time employees which may impede our ability to carry on our business. Our officers are independent consultants who devote up to 10 hours per week to Company business. The lack of full-time employees may very well prevent the Company’s operations from being efficient, and may impair the business progress and growth, which is a risk to any investor.
WE MAY NEED TO IMPLEMENT ADDITIONAL FINANCE AND ACCOUNTING SYSTEMS, PROCEDURES AND CONTROLS AS WE GROW OUR BUSINESS AND ORGANIZATION AND TO SATISFY NEW REPORTING REQUIREMENTS.
We may be required to comply with a variety of reporting, accounting, and other rules and regulations. Compliance with existing requirements is expensive. Further requirements may increase our costs and require additional management time and resources. We may need to implement additional finance and accounting systems, procedures and controls to satisfy our reporting requirements. If our internal controls over financial reporting are determined to be ineffective, such failure could cause investors to lose confidence in our reported financial information, negatively affect the market price of our common stock, subject us to regulatory investigations and penalties, and adversely impact our business and financial condition.
COMPETITION FROM SIMILAR SERVICE PROVIDERS.
We expect to encounter competition from other entities having similar business objectives, some of whom may have greater resources than us. Virtually all of our competitors will have a competitive advantage and are much larger. The need to compete for investment opportunities may make it necessary for us to offer clients attractive transaction terms than otherwise might be the case. We anticipate being a co-investor with other venture capital groups, and these relationships with other groups may expand our access to business opportunities.
WE HAVE INCURRED SIGNIFICANT LOSSES AND ANTICIPATE FUTURE LOSSES.
As of December 31, 2019, we had an accumulated deficit of $(35,168,070).
Future losses are likely to occur until we are able to receive returns on our loans and investments since we have no other sources of income to meet our operating expenses. As a result of these, among other factors, we received from our registered independent public accountants in their report for the financial statements for the period July 1, 2019 (Inception) through December 31, 2019, an explanatory paragraph stating that there is substantial doubt about our ability to continue as a going concern.
OUR EXISTING FINANCIAL RESOURCES ARE INSUFFICIENT TO MEET OUR ONGOING OPERATING EXPENSES.
We have no sources of income at this time and insufficient assets to meet our ongoing operating expenses. In the short term, unless we are able to raise additional debt and/or equity, we shall be unable to meet our ongoing operating expenses. On a longer-term basis, we may seek to merge with another entity with experienced management and opportunities for growth in return for shares of our common stock to create value for our shareholders. There can be no assurance that these events will be successfully completed.
BECAUSE INSIDERS CONTROL OUR ACTIVITIES, THAT MAY CAUSE US TO ACT IN A MANNER THAT IS MOST BENEFICIAL TO THEM AND NOT TO OUTSIDE SHAREHOLDERS WHICH COULD CAUSE US NOT TO TAKE ACTIONS THAT OUTSIDE INVESTORS MIGHT VIEW FAVORABLY
Our officers, directors, and holders of 5% or more of our issued and outstanding common stock beneficially own approximately 48% of our issued and outstanding common stock and the Super Majority Voting Class A Preferred Stock votes 60% at all times until redeemed. As a result, they effectively control all matters requiring director and stockholder approval, including the election of directors, the approval of significant corporate transactions, such as mergers and related party transaction. These insiders also have the ability to delay or perhaps even block, by their ownership of our stock, an unsolicited tender offer. This concentration of ownership could have the effect of delaying, deterring or preventing a change in control of our Company that you might view favorably.
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OUR TWO OFFICERS AND FOUR DIRECTORS HAVE THE ABILITY TO EFFECTIVELY CONTROL SUBSTANTIALLY ALL ACTIONS TAKEN BY STOCKHOLDERS.
Mr. Nichols and Mr. Avey, the officers, and Mr. Nichols, Mr. Avey, Mr. Smiley, Sr. and Mr. Ostler, directors of the Company control in excess of 5.00% of our issued and outstanding common stock and with the Class A Super Majority voting stock (held by Mr. Nichols, officer and director) are able to effectively control substantially all actions taken by our stockholders, including the election of directors. Such concentration of ownership could also have the effect of delaying, deterring or preventing a change in control that might otherwise be beneficial to stockholders and may also discourage the market for our stock due to the concentration.
WE MAY DEPEND UPON OUTSIDE ADVISORS, WHO MAY NOT BE AVAILABLE ON REASONABLE TERMS AND AS NEEDED.
To supplement the business experience of our officers and directors, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. Our Board without any input from stockholders will make the selection of any such advisors. Furthermore, it is anticipated that such persons may be engaged on an "as needed" basis without a continuing fiduciary or other obligation to us. In the event we consider it necessary to hire outside advisors, we may elect to hire persons who are affiliates, if they are able to provide the required services.
THE INABILITY OF OUR COMPANY TO ADEQUATELY EXECUTE OUR GROWTH OR EXPANSION STRATEGIES WOULD HAVE A NEGATIVE IMPACT ON OUR COMPANY VALUE.
The possibility that our Company will not be able to fully carry out or execute on its expansion or growth plans presents significant risk. Our success will ultimately depend on the success of our marketing. If our intended expansion or growth plan does not come to fruition or is otherwise impeded, or is unprofitable, we may not be able to stay in business or have any value.
RISK FACTORS RELATED TO OUR STOCK
WE CAN GIVE NO ASSURANCE OF SUCCESS OR PROFITABILITY TO OUR INVESTORS.
Cash flows generated from operating activities were not enough to support all working capital requirements for the three months ended March 31, 2020 and the period July 1, 2019 (Inception) through December 31, 2019. Financing activities described below, have helped with working capital and other capital requirements. We incurred $(103,255) and $(1,909,107), respectively, in losses, and we used $69,877 and $25,000, respectively, in cash for operations for the three months ended March 31, 2020 and the period July 1, 2019 (Inception) through December 31, 2019, Cash flows from financing activities were $10,930 and $25,000, respectively for the same periods. These factors cause substantial doubt about our ability to continue as a going concern for a period of one year from the issuance of these financial statements.
In order for us to continue as a going concern, we will need to obtain additional debt or equity financing and look for companies with cash flow positive operations that we can acquire. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to acquire cash flow positive operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet all our future obligations. Most of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to significantly reduce or cease operations.
Our sources of capital are loans and sales of equity from common or preferred stock. We have no commitments for loans or equity sales at this date.
WE MAY IN THE FUTURE ISSUE MORE SHARES OF COMMON STOCK WHICH COULD CAUSE A LOSS OF CONTROL BY OUR PRESENT MANAGEMENT AND CURRENT STOCKHOLDERS.
We may issue further shares as consideration for the cash or assets or services out of our authorized but unissued common stock that would, upon issuance, represent a majority of the voting power and equity of our Company. The result of such an issuance would be those new stockholders and management would control our Company, and persons unknown could replace our management at this time. Such an occurrence would result in a greatly reduced percentage of ownership of our Company by our current shareholders, which could present significant risks to investors.
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WE CAN ISSUE FUTURE SERIES OF SHARES OF PREFERRED STOCK WITHOUT SHAREHOLDER APPROVAL, WHICH COULD ADVERSELY AFFECT THE RIGHTS OF COMMON SHAREHOLDERS.
Our Articles of Incorporation permit our Board of Directors to establish the rights, privileges, preferences and restrictions, including voting rights, of future series of stock and to issue such stock without approval from our shareholders. The rights of holders of common stock may suffer as a result of the rights granted to holders of preferred stock that may be issued in the future. In addition, we could issue preferred stock to prevent a change in control of our Company, depriving common shareholders of an opportunity to sell their stock at a price in excess of the prevailing market price.
OUR OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTERESTS AS TO CORPORATE OPPORTUNITIES WHICH WE MAY NOT BE ABLE OR ALLOWED TO PARTICIPATE IN.
Presently there is no requirement contained in our Articles of Incorporation, Bylaws, or minutes which requires officers and directors of our business to disclose to us business opportunities which come to their attention. Our officers and directors do, however, have a fiduciary duty of loyalty to us to disclose to us any business opportunities which come to their attention, in their capacity as an officer and/or director or otherwise. Excluded from this duty would be opportunities which the person learns about through his involvement as an officer and director of another company. We have no intention of merging with or acquiring business opportunity from any affiliate or officer or director. (See “Conflicts of Interest” at page 32)
WE HAVE AGREED TO INDEMNIFICATION OF OFFICERS AND DIRECTORS AS IS PROVIDED BY DELAWARE GENERAL CORPORATION LAW
Delaware General Corporation Laws provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person’s promise to repay us therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us that we will be unable to recoup.
OUR DIRECTORS’ LIABILITY TO US AND SHAREHOLDERS IS LIMITED.
Delaware General Corporation Laws exclude personal liability of our directors and our stockholders for monetary damages for breach of fiduciary duty except in certain specified circumstances. Accordingly, we will have a much more limited right of action against our directors than otherwise would be the case. This provision does not affect the liability of any director under federal or applicable state securities laws.
OUR STOCK PRICES IN THE MARKET MAY BE VOLATILE.
The value of our Common stock following this offering may be highly volatile and could be subject to fluctuations in price in response to various factors, some of which are beyond our control. These factors include:
| • | quarterly variations in our results of operations or those of our competitors; | |
| • | announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments; | |
| • | disruption to our operations or those of other sources critical to our operations; | |
| • | the emergence of new competitors or new technologies; | |
| • | our ability to develop and market new and enhanced products on a timely basis; | |
| • | seasonal or other variations in our subscriber base; | |
| • | commencement of, or our involvement in, litigation; | |
| • | availability of additional spectrum; | |
| • | dilutive issuances of our stock or the stock of our subsidiaries, or the incurrence of additional debt; | |
| • | changes in our board or management; | |
| • | adoption of new or different accounting standards; | |
| • | changes in governmental regulations or in the status of our regulatory approvals; | |
| • | changes in earnings estimates or recommendations by securities analysts; and | |
| • | general economic conditions and slow or negative growth of related markets. |
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In addition, the stock market in general, and the market for shares of event companies in particular, has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. We expect the value of our common stock will be subject to such fluctuations.
WE MAY NOT BE ABLE TO SUCCESSFULLY IMPLEMENT OUR BUSINESS STRATEGY WITHOUT SUBSTANTIAL ADDITIONAL CAPITAL. ANY SUCH FAILURE MAY ADVERSELY AFFECT THE BUSINESS AND RESULTS OF OPERATIONS.
Unless we can generate revenues sufficient to implement our business plan, we will need to obtain additional financing through debt or bank financing, or through the sale of shareholder interests to execute our business plan. We expect to need $1,000,000 in the next twelve months in capital or loans to expand our plans and operations. We may not be able to obtain this financing at all. We have not sought commitments for this financing, and we have no terms for either debt or equity financing, and we realize that it may be difficult to obtain on favorable terms. Moreover, if we issue additional equity securities to support our operations, Investor holdings may be diluted. Our business plans are at risk if we cannot continually achieve additional capital raising to complete our plans.
WE MAY BE UNABLE TO COMPETE WITH LARGER, MORE ESTABLISHED COMPETITORS.
The market for providing large screen display and advertising services is competitive. We expect competition to intensify in the future. Many of our potential competitors have longer operating histories, larger customer bases, greater recognition and significantly greater resources. As a result, competitors may be able to respond more quickly to emerging technologies, trends, and changes in customer requirements than we can. The continuous and timely introduction of competitively priced services offerings into the market is critical to our success, and there can be no assurance that we will be able to introduce such services offerings. We may not be able to compete successfully against competitors, and the competitive pressures we face may have an adverse effect on our business.
A LIMITED PUBLIC MARKET EXISTS FOR OUR COMMON STOCK AT THIS TIME, AND THERE IS NO ASSURANCE OF A FUTURE MARKET.
There is a limited public market for our common stock, and no assurance can be given that a market will continue or that a shareholder ever will be able to liquidate his investment without considerable delay, if at all. If a market should continue, the price may be highly volatile. Factors such as those discussed in the “Risk Factors” section may have a significant impact upon the market price of the digital equities offered hereby. Due to the low price of our securities, many brokerage firms may not be willing to effect transactions in our securities. Even if a purchaser finds a broker willing to affect a transaction in our shares or digital equities, the combination of brokerage commissions, state transfer taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of our shares or digital equities as collateral for any loans.
OUR STOCK WILL, IN ALL LIKELIHOOD, BE THINLY TRADED AND AS A RESULT YOU MAY BE UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR SHARES.
The shares of our common stock may be thinly-traded. We are a small Company which is relatively unknown to stock analysts, stock brokers, institutional stockholders and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage Company such as ours or purchase or recommend the purchase of any of our securities until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our securities is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on Securities price. We cannot give you any assurance that a broader or more active public trading market for our common securities will develop or be sustained, or that any trading levels will be sustained. Due to these conditions, we can give stockholders no assurance that they will be able to sell their shares at or near ask prices or at all if they need money or otherwise desire to liquidate their securities.
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY DISCOURAGE THE TRADABILITY OF OUR SECURITIES.
We are a “penny stock” company. None of our securities currently trade in any market and, if ever available for trading, will be subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase “accredited investors” means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse’s income, exceeds $300,000). For transactions
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covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny stocks. Consequently, the rule will affect the ability of purchasers in this offering to sell their securities in any market that might develop therefore because it imposes additional regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange Commission has adopted a number of rules to regulate “penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. Because our securities constitute “penny stocks” within the meaning of the rules, the rules would apply to us and to our securities. The rules will further affect the ability of owners of shares to sell our securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions.
Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities.
Inventory in penny stocks have limited remedies in the event of violations of penny stock rules. While the courts are always available to seek remedies for fraud against us, most, if not all, brokerages require their customers to sign mandatory arbitration agreements in conjunctions with opening trading accounts. Such arbitration may be through an independent arbiter. Investors may file a complaint with FINRA against the broker allegedly at fault, and FINRA may be the arbiter, under FINRA rules. Arbitration rules generally limit discovery and provide more expedient adjudication, but also provide limited remedies in damages usually only the actual economic loss in the account. Investors should understand that if a fraud case is filed against a company in the courts it may be vigorously defended and may take years and great legal expenses and costs to pursue, which may not be economically feasible for small investors.
That absent arbitration agreements, specific legal remedies available to investors of penny stocks include the following:
If a penny stock is sold to the investor in violation of the requirements listed above, or other federal or states securities laws, the investor may be able to cancel the purchase and receive a refund of the investment.
If a penny stock is sold to the investor in a fraudulent manner, the investor may be able to sue the persons and firms that committed the fraud for damages.
The fact that we are a penny stock company will cause many brokers to refuse to handle transactions in the stocks, and may discourage trading activity and volume, or result in wide disparities between bid and ask prices. These may cause investors significant illiquidity of the stock at a price at which they may wish to sell or in the opportunity to complete a sale. Investors will have no effective legal remedies for these illiquidity issues.
WE WILL PAY NO DIVIDENDS IN THE FORESEEABLE FUTURE.
We have not paid dividends on our common stock and do not anticipate paying such dividends in the foreseeable future.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding shares of common stock held by our present officers, directors, and affiliate stockholders are “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted Shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required under applicable state securities laws. Rule 144 provides in essence that a person who has held restricted securities for six months, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1.0% of a company’s outstanding common stock or the average weekly trading volume during the four calendar weeks prior to the sale. There is no limit on the amount of restricted securities that may be sold by a non-affiliate after the owner has held the restricted securities for a period of six months. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to subsequent registration of shares of common stock of present stockholders, may have a depressive effect upon the price of the common stock in any market that may develop.
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ANY SALES OF OUR COMMON STOCK, IF IN SIGNIFICANT AMOUNTS, ARE LIKELY TO DEPRESS THE FUTURE MARKET PRICE OF OUR SECURITIES.
Assuming all of the shares of common stock held by the selling security holders registered hereby are sold, we would have 9,690,999 new shares that are freely tradable and therefor available for sale, in market or private transactions.
Unrestricted sales of 9,690,999 shares of stock by our selling stockholders could have a huge negative impact on our share price, and the market for our shares.
OUR STOCKHOLDERS MAY SUFFER FUTURE DILUTION DUE TO ISSUANCES OF SHARES FOR VARIOUS CONSIDERATIONS IN THE FUTURE.
There may be substantial dilution to Bio Lab Naturals, Inc. stockholders as a result of future decisions of the Board to issue shares without shareholder approval for cash, services, or acquisitions.
ANY NEW POTENTIAL INVESTORS WILL SUFFER A DISPROPORTIONATE RISK AND THERE WILL BE IMMEDIATE DILUTION OF EXISTING INVESTOR’S INVESTMENTS.
Our present shareholders have acquired their securities at a cost significantly less than that which the investors purchasing pursuant to shares will pay for their stock holdings or at which future purchasers in the market may pay. Therefore, any new potential investors will bear most of the risk of loss.
COVID-19 EFFECTS ON THE ECONOMY MAY NEGATIVELY AFFECT OUR COMPANY BUSINESS.
In December 2019, COVID-19 emerged and has subsequently spread worldwide. The World Health Organization has declared COVID-19 a pandemic resulting in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining of people who may have been exposed to the virus.
As the COVID-19 pandemic is complex and rapidly evolving, the Company's business may be negatively affected for a sustained time frame. At this point, we cannot reasonably estimate the duration and severity of this pandemic, which could have a material adverse impact on our business, results of operations, financial position and cash flows.
WE CAN ISSUE SHARES OF PREFERRED STOCK WITHOUT SHAREHOLDER APPROVAL, WHICH COULD ADVERSELY AFFECT THE RIGHTS OF COMMON SHAREHOLDERS.
Our Articles of Incorporation permit our Board of Directors to establish the rights, privileges, preferences and restrictions, including voting rights, of future series of stock and to issue such stock without approval from our shareholders. The rights of holders of common stock may suffer as a result of the rights granted to holders of preferred stock that may be issued in the future. In addition, we could issue preferred stock to prevent a change in control of our Company, depriving common shareholders of an opportunity to sell their stock at a price in excess of the prevailing market price.
WE WILL BECOME A REPORTING COMPANY UPON THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT.
We will become subject to the reporting requirements under the Securities and Exchange Act of 1934, Section 13a, after the effectiveness of this offering, pursuant to Section 15d of the Securities Act and we intend to be registered under Section 12(g). As a result, shareholders will have access to the information required to be reported by publicly held companies under the Exchange Act and the regulations thereunder. As a result, we will be subject to legal and accounting expenses that private companies are not subject to and this could affect our ability to generate operating income.
We will not receive any proceeds from the sale of the shares being registered on behalf of our selling shareholders.
We may raise additional funds through a placement of shares of our common stock. At this time, there is no committed source for such funds and we cannot give any assurances of being able to raise such funds. We will require additional funds to carry out our business plan. The availability and terms of any future financing will depend on market and other conditions.
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The monies we have raised thus far from private placements to our current shareholders (approximately $225,000) is anticipated to be sufficient to pay all expenses of this registration statement, which is estimated to be $100,000.
ITEM 5. DETERMINATION OF OFFERING PRICE
We have a limited established market for our common stock as quoted on the OTC Pink under the symbol “BLAB.” We are in the process of uplisting to the OTCQB.
Our selling shareholders plan to sell shares at such market prices as the market may dictate from time to time or in private transactions.
| Title | Per Share * |
| Common Stock | $0.40 |
* 5 day average closing price preceding filing of this Registration Statement.
As of July 2, 2020, there were 10,833,504 shares of common stock issued and outstanding.
The market share price likely bears no relationship to any criteria of goodwill value, asset value, market price or any other measure of value.
The following table sets forth with respect to existing shares being offered and under this registration, the number of our shares of common stock offered by shareholders, the percentage ownership of such shares, the total consideration paid, the percentage of total consideration paid and the average price per share. All percentages are computed based upon cumulative shares and consideration assuming sale of all shares in the line item as compared to maximum in each previous line.
| Shares Purchased and being offered for resale | ||||||||||||
| Number | Percent (1) | Price/Share (2) | ||||||||||
| Existing Shareholders whose shares are being registered | 9,690,999 | 89.45 | % | $ | 0.40 | |||||||
| (1) | Percentage relates to total percentage of shares to be registered for existing shareholders. |
| (2) | Based upon 5-day average closing price. |
“Net tangible book value” is the amount that results from subtracting the total liabilities and intangible assets from the total assets of an entity. Dilution occurs because we determined the offering price based on factors other than those used in computing book value of our stock. Dilution exists because the book value of shares held by existing stockholders is lower than the offering price offered to new investors.
As of March 31, 2020 and December 31, 2019, the net tangible book value of our stock was ($0.012) and ($0.023) per share, respectively.
ITEM 7. SELLING SECURITY HOLDERS
The selling shareholders obtained their shares of our stock in the following transactions:
| Number of Shares | Original Consideration | Issue Price Per Share |
| 9,609,999 | Private Placements, Private Purchases, Services and Cash | $0.0001 - $0.30 |
Other than the stock transactions discussed above, we have not entered into any transaction nor are there any proposed transactions in which any founder, director, executive officer, significant shareholder of our company or any member of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.
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No person who may, in the future, be considered a promoter of this offering, will receive or expect to receive assets, services or other considerations from us except those persons who are our salaried employees or directors. No assets will be, nor expected to be, acquired from any promoter on behalf of us. We have not entered into any agreements that require disclosure to the shareholders.
| (a) | All of the securities listed below are being registered in this Registration Statement. |
COMMON SHARES
| Name | Common Shares Held by Each Shareholder Before Offering | Common Shares to be Registered | Percent Owned Before Offering (1) | Shares Owned After Offering (5) | Percent Owned After Offering (%) (5) | |||||||||||||||
| Kenneth Helfer (6) | 350,000 | 350,000 | 3.23 | % | 0 | 0 | % | |||||||||||||
| Darrell Avey (2)(4)(6) | 270,000 | 270,000 | 2.49 | % | 0 | 0 | % | |||||||||||||
| NextWave Development Group LLC (3)(6) | 395,000 | 395,000 | 3.65 | % | 0 | 0 | % | |||||||||||||
| Bleu Ridge Consultants, Inc. (3)(6) | 205,000 | 205,000 | 1.89 | % | 0 | 0 | % | |||||||||||||
| Dave Crowley | 30,000 | 30,000 | .28 | % | 0 | 0 | % | |||||||||||||
| Chad Stephens | 25,000 | 25,000 | .23 | % | 0 | 0 | % | |||||||||||||
| Gunslinger Capital Group, LLC (3)(6) | 50,000 | 50,000 | .46 | % | 0 | 0 | % | |||||||||||||
| Joe McShane Jr. (6) | 40,000 | 40,000 | .37 | % | 0 | 0 | % | |||||||||||||
| Village Partners, LLC (3)(6) | 100,000 | 100,000 | .92 | % | 0 | 0 | % | |||||||||||||
| Tyler J. Brasel (6) | 50,000 | 50,000 | .46 | % | 0 | 0 | % | |||||||||||||
| MJ Brasel, LLC (3)(6) | 500,000 | 500,000 | 4.62 | % | 0 | 0 | % | |||||||||||||
| Brasel Family Holdings Trust (3) | 650,000 | 650,000 | 6.00 | % | 0 | 0 | % | |||||||||||||
| Scott Owen | 55,000 | 55,000 | .52 | % | 0 | 0 | % | |||||||||||||
| Joe Logsdon (6) | 100,000 | 100,000 | .92 | % | 0 | 0 | % | |||||||||||||
| Joe Bruno (6) | 40,000 | 40,000 | .37 | % | 0 | 0 | % | |||||||||||||
| Michael B. Owens (6) | 200,000 | 200,000 | 1.85 | % | 0 | 0 | % | |||||||||||||
| Paul Dragul or Paulette Dragul (6) | 50,000 | 50,000 | .46 | % | 0 | 0 | % | |||||||||||||
| William Bossung (6) | 1,805,000 | 1,805,000 | 16.68 | % | 0 | 0 | % | |||||||||||||
| David Graham (6) | 90,000 | 90,000 | .83 | % | 0 | 0 | % | |||||||||||||
| Maurice W. Hansen Trust (3)(6) | 50,000 | 50,000 | .46 | % | 0 | 0 | % | |||||||||||||
| Jay Decker (6) | 100,000 | 100,000 | .92 | % | 0 | 0 | % | |||||||||||||
| Logan Decker (6) | 100,000 | 100,000 | .92 | % | 0 | 0 | % | |||||||||||||
| James Jenkens (6) | 15,000 | 15,000 | .14 | % | 0 | 0 | % | |||||||||||||
| Kyle Israel | 200,000 | 200,000 | 1.85 | % | 0 | 0 | % | |||||||||||||
| Shelton Decker (6) | 100,000 | 100,000 | .92 | % | 0 | 0 | % | |||||||||||||
| Jeremy Ostler (2)(4)(6) | 80,000 | 80,000 | .74 | % | 0 | 0 | % | |||||||||||||
| David L. Hayes (6) | 70,000 | 70,000 | .65 | % | 0 | 0 | % | |||||||||||||
| Calvin D. Smiley Sr. (2)(4) | 50,000 | 50,000 | .46 | % | 0 | 0 | % | |||||||||||||
| Ben Coates (6) | 100,000 | 100,000 | .92 | % | 0 | 0 | % | |||||||||||||
| Mike & Susan McShane (6) | 90,000 | 90,000 | .83 | % | 0 | 0 | % | |||||||||||||
| John & Loretta McShane (6) | 140,000 | 140,000 | 1.29 | % | 0 | 0 | % | |||||||||||||
| Jeffrey P. Ploen | 160,000 | 160,000 | 1.48 | % | 0 | 0 | % | |||||||||||||
| Coronado Ventures Number One (3) | 80,000 | 80,000 | .74 | % | 0 | 0 | % | |||||||||||||
| Janet Brasel | 190,000 | 190,000 | 1.75 | % | 0 | 0 | % | |||||||||||||
| First Capital Properties (3) | 200,000 | 200,000 | 1.85 | % | 0 | 0 | % | |||||||||||||
| Causeway LLC (3) | 300,000 | 300,000 | 2.77 | % | 0 | 0 | % | |||||||||||||
| Mathis Family Partners (3) | 25,000 | 25,000 | .23 | % | 0 | 0 | % | |||||||||||||
| Charitable Remainder Trust Of Susan Anne Brasel (3) | 100,000 | 100,000 | .92 | % | 0 | 0 | % | |||||||||||||
| La Mirage Trust (3) | 50,000 | 50,000 | .46 | % | 0 | 0 | % | |||||||||||||
| Justin T. Brasel | 50,000 | 50,000 | .46 | % | 0 | 0 | % | |||||||||||||
| Theodore Block (6) | 20,000 | 20,000 | .18 | % | 0 | 0 | % | |||||||||||||
| High Speed Aggregate, Inc. (3) | 800,000 | 800,000 | 7.88 | % | 0 | 0 | % | |||||||||||||
| Zhuge Liang, LLC (3) | 116,000 | 116,000 | 1.06 | % | 0 | 0 | % | |||||||||||||
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| San Gabriel Fund, LLC (3) | 160,000 | 160,000 | 1.48 | % | 0 | 0 | % | |||||||||||||
| JMW Fund, LLC (3) | 320,000 | 320,000 | 2.95 | % | 0 | 0 | % | |||||||||||||
| Richland Fund, LLC (3) | 320,000 | 320,000 | 2.95 | % | 0 | 0 | % | |||||||||||||
| Justin Yorke | 33,333 | 33,333 | .30 | % | 0 | 0 | % | |||||||||||||
| JPG Investments (3) | 33,333 | 33,333 | .30 | % | 0 | 0 | % | |||||||||||||
| Christopher Bragg | 33,333 | 33,333 | .30 | % | 0 | 0 | % | |||||||||||||
| W. Edward Nichols (2) (4) (7) | 200,000 | 200,000 | 1.85 | % | 0 | 0 | % | |||||||||||||
| Michael A. Littman Atty Defined Benefit Plan (4) (7) | 400,000 | 400,000 | 3.69 | % | 0 | 0 | % | |||||||||||||
| TOTAL | 9,690,999 | 9,690,999 | 89.45 | % | 0 | 0 | % |
| (1) | Based upon 10,833,504 shares of common stock issued and outstanding at July 2, 2020. Certain shareholders not included in total above are due to small amounts. Series A Preferred Convertible for 1,000,000 common shares are not included in the total shares of common stock. |
| (2) | Officer and/or director of our Company. |
| (3) | The individuals have voting control for the entities noted in the list below (b). |
| (4) | We are registering a total of 1,000,000 shares of common stock in which our officers/directors and control shareholders are considered to have beneficial ownership. |
| (5) | Assumes resale of all shares registered for resale. |
| (6) | Material Relationships (PTL). All shareholders marked with (6) were shareholders of predecessor, Prime Time Live, Inc. |
| (7) | Material Relationships (Bio Lab Naturals, Inc.). W. Edward Nichols has been CEO and director (since 2015) of Bio Lab Naturals, Inc. Michael A. Littman has been a shareholder and legal counsel to Bio Lab Naturals, Inc. since 2013 and has owned shares since 2010. |
(b) The table below shows the person with voting control for the entities listed in (a) above.
| Name of the Entity | Person With Voting Control | Number of Common Shares Being Registered | Affiliate of Company? |
| NextWave Development Group LLC | Justin T. Brasel | 395,000 | No |
| Bleu Ridge Consultants, Inc. | Timothy J. Brasel | 205,000 | Yes |
| Gunslinger Capital Group, LLC | Matt Gregarek | 50,000 | No |
| Village Partners, LLC | George Lee | 100,000 | No |
| MJ Brasel, LLC | Susan A. Brasel | 500,000 | Yes |
| Brasel Family Holdings Trust | Susan A. Brasel | 650,000 | Yes |
| Maurice W. Hansen Trust | Wayne Hanson | 50,000 | No |
| Coronado Ventures Number One | Matt Gregarek | 80,000 | No |
| First Capital Properties | Jim Sjoerdsma | 200,000 | No |
| Causeway LLC | Susan A. Brasel | 300,000 | Yes |
| Mathis Family Partners | Valerie Mathis | 25,000 | No |
| Charitable Remainder Trust Of Susan Anne Brasel | Timothy J. Brasel | 100,000 | Yes |
| La Mirage Trust | Timothy J. Brasel | 50,000 | Yes |
| High Speed Aggregate, Inc. | Jeffrey P. Ploen | 800,000 | Yes |
| Zhuge Liang, LLC | Zhuge Liang | 116,000 | No |
| San Gabriel Fund, LLC | John P. McGavin | 160,000 | No |
| JMW Fund, LLC | John McGrain | 320,000 | No |
| Richland Fund, LLC | Justin W. Yorke | 320,000 | No |
| JPG Investments | John McGrain | 33,333 | No |
| Michael A. Littman Atty Defined Benefit Plan | Michael A. Littman | 400,000 | Yes |
| TOTAL | 4,854,333 |
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Upon effectiveness of this amendment to the registration statement, of which this prospectus is a part, our existing selling shareholders may sell their securities at market prices or at any price in privately negotiated transactions.
Our selling shareholders may be deemed underwriters in this offering.
The selling shareholders are not paying any of the offering expenses and we will not receive any of the proceeds from the sale of the shares by the selling shareholders.
ITEM 9. DESCRIPTION OF SECURITIES
The securities being registered and/or offered by this Prospectus are common shares.
Common Stock
The Company is presently authorized to issue two hundred million (200,000,000) shares of its $0.0001 par value common shares. A total 10,833,504 common shares are issued and outstanding as of July 2, 2020.
All shares, when issued, will be fully paid and non-assessable. All shares are equal to each other with respect to voting, liquidation, and dividend rights. Special Stockholders' meetings may be called by the Officers or Directors, or upon the request of holders of at least one-tenth (1/10th) of the outstanding shares. Holders of shares are entitled to one vote at any Stockholders' meeting for each share they own as of the record date set by the Board of Directors. There is no quorum requirement for Stockholders’ meetings. Therefore, a vote of the majority of the shares represented at a meeting will govern even if this is substantially less than a majority of the shares outstanding. Holders of shares are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefore, and upon liquidation are entitled to participate pro rata in a distribution of assets available for such a distribution to Stockholders. There are no conversion, pre-emptive or other subscription rights or privileges with respect to any shares. Reference is made to the Company's Articles of Incorporation and its By-Laws as well as to the applicable statutes of the State of Delaware for a more complete description of the rights and liabilities of holders of shares. It should be noted that the Board of Directors without notice to the Stockholders may amend the By-Laws. The shares of the Company do not have cumulative voting rights, which mean that the holders of more than fifty percent (50%) of the shares voting for election of Directors may elect all the Directors if they choose to do so. In such event, the holders of the remaining shares aggregating less than fifty percent (50%) of the shares voting for election of Directors may not be able to elect any Director.
Preferred Stock
The Company is presently authorized to issue Five Million (5,000,000) shares of its $0.0001 par value Preferred Stock. A total of 500,000 shares of Class A Preferred Convertible Super Majority Voting Stock are issued and outstanding as of July 2, 2020.
Class A Preferred Convertible Super Majority Voting Stock
The Certificate of Incorporation of the Company authorizes the issuance of up to five million (5,000,000) shares of Preferred Stock, $0.0001 par value per share (herein, “Preferred Stock” or “Preferred Shares”), and expressly vests in the Board of Directors of the Company the authority provided therein to issue any or all of the Preferred Shares in one (1) or more Class or classes and by resolution or resolutions to establish the designation and number and to fix the relative rights and preferences of each Class to be issued. The Board authorized Five Hundred Thousand (500,000) of the Five Million (5,000,000) authorized shares of Preferred Stock of the Company to be designated Class A Preferred Convertible Super Majority Voting Stock, $0.0001 par value per share (herein, “Class A Preferred” or “Class A Preferred Convertible Stock”), and shall possess the rights and preferences set forth below:
Rank. The Class A Preferred Convertible Stock shall rank: (i) senior to any other class or Class of outstanding Preferred Shares or Class of capital stock of the Company; (ii) prior to all of the Company's common stock, ("common stock"); and (iii) prior to any other class or Class of capital stock of the Company hereafter created "Junior Securities"); and in each case as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (all such distributions being referred to collectively as "Distributions").
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Dividends. The Class A Preferred Convertible Stock shall bear no dividends, except that in the event dividends are declared for common stock, the same rate of dividend per share shall be due and payable to the Class A Preferred shareholders on the same terms.
Liquidation / Merger Preference.
(a) So long as a majority of the shares of Class A Preferred authorized are outstanding, the Company will not, without the written consent of the holders of at least 51% of the Company’s outstanding Class A Preferred, either directly or by amendment, merger, consolidation, or otherwise: (i) liquidate, dissolve or wind-up the affairs of the Company, or effect any Liquidation Event; (ii) amend, alter, or repeal any provision of the Certificate of Incorporation or Bylaws in a manner adverse to the Class A Preferred (iii) create or authorize the creation of, or issue any other security convertible into or exercisable for, any equity security, having rights, preferences or privileges senior to the Class A Preferred, or (iv) purchase or redeem or pay any dividend on any capital stock prior to the Class A Preferred, other than stock repurchased from former employees or consultants in connection with the cessation of their employment/services.
(b) In the event of any liquidation, merger, dissolution or winding up of the Company, either voluntary or involuntary, the holders of shares of Class A Preferred Convertible Stock (each a “Holder” and collectively the “Holders”) shall be entitled to receive, prior in preference to any distribution to Junior Securities, an amount per share equal to $1.00 plus any allocable and due dividends per share.
(c) Upon the completion of the distribution required to Class A Preferred holders, if assets remain in the Company, they shall be distributed to holders of Junior Securities in accordance with the Company's Certificate of Incorporation including any duly adopted Certificate(s) of Designation.
Conversion Rights:
The Holders of the Class A Preferred Convertible Stock shall, individually and collectively, have the right to convert all of their Class A Preferred Convertible Stock, in one transaction, by electing, in writing, to convert the 500,000 shares of Class A Preferred into shares of common stock of the Company, on the basis of 2 common shares for each share of Class A Preferred, subject to
Adjustment to Conversion Rate. The conversion price will be subject to adjustments for stock dividends, splits, combinations and similar events and to Adjustment Due to Merger, Consolidation, Etc. If, prior to the conversion of all Class A Preferred Convertible Stock, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of common stock of the Company shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities of the Company or another entity or there is a sale of all or substantially all the Company’s assets, then the Holders of Class A Preferred Convertible Stock shall thereafter have the right to receive upon conversion of Class A Preferred Convertible Stock, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of common stock immediately theretofore issuable upon conversion, such stock, securities and/or other assets (“New Assets”) which the Holder would have been entitled to receive in such transaction had the Class A Preferred Convertible Stock been convertible into New Assets from the date hereof, at the market price of such New Assets on the date of conversion, and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holders of the Class A Preferred Convertible Stock to the end that the provisions hereof (including, without limitation, provisions for the adjustment of the conversion price and of the number of shares of common stock issuable or New Assets deliverable upon conversion of the Class A Preferred Convertible Stock) shall thereafter be applicable, as nearly as may be practicable in relation to any securities thereafter deliverable upon the exercise here.
Redemption by Company. The Company may, at its sole discretion redeem all or any portion of the Class A Preferred Convertible Stock by paying in cash by wire transfer the stated value of US $1.00 per share, plus all accrued and unpaid dividends on the Class A Preferred Convertible Stock to be redeemed, to the Holder pursuant to the Holder’s written instructions. The Holders may convert Class A Preferred Convertible Stock into common stock of the Company until such cash has been transmitted to the Holder, at which time conversion rights shall cease and the Holder shall surrender all redeemed Class A Preferred Certificates to the Company for cancellation.
Super Majority Voting Rights. The record Holders of the Class A Preferred Convertible Stock shall have the right to vote on any matter with holders of common stock and may vote as required on any action, which Delaware law provides may or must be approved by vote or consent of the holders of the specific Class of voting preferred shares and the holders of common shares. The Record Holders of the Class A Preferred shall have the right to vote on any matter with holders of common stock voting together as one (1) class. The Record Holders of the Class A Preferred shall have that number of votes (identical in every other respect to the voting rights of the holders of other Class of voting preferred shares and the holders of common stock entitled to vote at any Regular or Special Meeting of the Shareholders) equal to that number of common shares which is not less than 60% of the vote required to approve any action, which Delaware law provides may or must be approved by vote or consent of the holders of other Class of voting preferred shares and the holders of common shares or the holders of other securities entitled to vote, if any.
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Class B Preferred Convertible Stock
In November 2019, we designated 2,000,000 shares of Preferred Stock as Class B Preferred Convertible Stock (herein, “Class B Preferred Stock”).
The Class B Preferred Stock was designated in November 2019, has a par value of $0.0001, is senior to any other class or series of outstanding Preferred Stock, except the Class A Preferred, or common stock and does not bear dividends. The Class B Preferred Stock has a liquidation preference immediately after any Senior Securities, as defined and currently the Class A Preferred, and of an amount equal to $0.005 per share. Holders of the Class B Preferred Stock have a right to convert all or any part of the Class B Preferred Stock and will receive an equal number of common shares at the time of conversion. The Class B Preferred Stockholders have a right to vote on any matter with holders of common stock and shall have a number of votes equal to that number of Common Shares on a one to one basis. There are no shares of Class B Preferred Stock issued and outstanding as of July 2, 2020.
Transfer Agent
The transfer agent and registrar for our common stock is Mountain Share Transfer, LLC. The transfer agent’s address is 2030 Powers Ferry Road, SE, Suite #212, Atlanta, GA 30339, and its telephone number is (404) 474-3110.
ITEM 10. INTEREST OF NAMED EXPERTS AND COUNSEL
Except as set forth at the end of this paragraph, no expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the Common Stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the Registrant or any of its parents or subsidiaries. Nor was any such person connected with the Registrant or any of its parents, subsidiaries as a promoter, managing or principal underwriter, voting trustee, Director, officer, or employee. Michael A. Littman, as legal counsel to the company, had substantial participation in the preparation of the S-1, and owns both Series A Preferred shares and common shares, and is registering 400,000 common shares for resale for his Defined Benefit Plan, and has owned common shares in the Company since 2010.
ITEM 11. INFORMATION WITH RESPECT TO THE REGISTRANT
BUSINESS SUMMARY
This prospectus contains various forward-looking statements that are based on our beliefs as well as assumptions made by and information currently available to us. When used in this prospectus, the words "believe," "expect," "anticipate," "estimate," and similar expressions are intended to identify forward-looking statements. These statements may include statements regarding seeking business opportunities, payment of operating expenses, and the like, and are subject to certain risks, uncertainties and assumptions which could cause actual results to differ materially from projections or estimates. Factors which could cause actual results to differ materially are discussed at length under the heading "Risk Factors". Should one or more of the enumerated risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Investors should not place undue reliance on forward-looking statements, all of which speak only as of the date made.
In this prospectus, unless the context requires otherwise, references to “we,” “our,” or “us,” refer to Bio Lab Naturals, Inc. and our consolidated subsidiaries.
Company Overview
Business
Our predecessor,Vyta Corp, was incorporated in Nevada in June 1996. Until June 2009, Vyta Corp, through its wholly owned subsidiary BioAgra, LLC, was involved in the sale and manufacturing of a natural additive for use in the animal feed industry. On May 15, 2009, Vyta Corp ceased its operational activities. On June 30, 2009, Vyta Corp filed a Form 15-15D, with the Securities and Exchange Commission (“SEC”) to cease its filing obligations under the Securities Act of 1934. On August 20, 2010, it changed its state of incorporation to Delaware and on November 5, 2010, and through a holding company reorganization reorganized as Bio Lab Naturals, Inc. (the “Company or “Bio Lab”). Its predecessor was divested as a subsidiary.
The Company changed its year end from June 30th to December 31st and, therefore the consolidated financial statements represent a short year as of and for the period July 1, 2019 through December 31, 2019.
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Reorganization Activities
On August 20, 2010, Vyta Corp (Nevada) executed a redomicile merger with its wholly owned subsidiary Vyta Corp (Delaware). As a result of the merger the Company’s corporate domicile moved from Nevada to Delaware.
On September 16, 2010, Vyta Corp and its wholly owned subsidiaries, 10 Vyta, Inc., with Bio Lab Naturals, Inc. entered into a Holding Company Reorganization/Merger Transaction pursuant to Delaware Statute 251(g), whereby the Company was reorganized with 10 Vyta, Inc., with Bio Lab Naturals, Inc. being the survivor holding company, and 10 Vyta was divested thereafter. The shareholders of the Company became the shareholders of Bio Lab Naturals, Inc. (hereinafter the “Company”) with no change in the number of shares.
In 2010, the Company executed a merger with Bio Protein, Inc. As part of the merger, the Company exchanged 40 shares of its outstanding common stock for one share of Bio Protein, Inc. (Colorado.) This merger was rescinded April 10, 2013 and 6,868,260 shares were agreed to be cancelled. The name was changed back to Vyta Corp, but such was changed back to Bio Lab Naturals, Inc. when there failed to be shareholder approval.
The Company agreed to a merger with Set Net Global, Inc. in 2015 and changed its name, but the merger was never completed and the name was returned to Bio Lab Naturals, Inc.
On December 31, 2019, Bio Lab Naturals, Inc., PTL Acquisition Sub, Inc. (“PTL Acquisition Sub”), a wholly-owned subsidiary of Bio Lab Naturals, Inc., domiciled in Colorado and Prime Time Live, Inc. (“PTL”), a Colorado corporation entered into a Plan of Reorganization. PTL Acquisition Sub merged with PTL where PTL Acquisition Sub became the surviving entity in exchange for one share of the Company’s common stock being issued for each share of PTL’s 5,500,000 issued and outstanding shares of common stock. A total of 6,931,061 shares of the Company’s common stock were cancelled. PTL Acquisition Sub changed its name to Prime Time Live, Inc.
Our executive offices are located at 201 Columbine St., 3rd Floor, Suite 11, Denver, CO 80206 and the telephone number is (720) 273-0433. We maintain a website at www.primetimeliveevents.com, and such website is not incorporated into or a part of this filing.
Our Business
Summary
Our subsidiary, Prime Time Live, Inc., is a Denver, CO based company that specializes in providing clients with the largest, highest resolution mobile LED screens available for entertainment, corporate, civic and sporting events. With a long history of service in the event services industry, Prime Time Live, Inc. is revered for its 30’ x 18’ premium LED mobile video display that travels around the United States every year. Having the rare tools to attract attention, boost attendance, collect valuable data, and offer wifi solutions are some of the key reasons why Prime Time Live, Inc. is in high demand for major events nationwide. Along with using this high tech 30’ x 18’ LED screen, Prime Time Live, Inc. has built a credible reputation in the event industry for creating irreplaceable experiences that cannot be found anywhere else. Through the use of our strong relationships with sponsors, event companies, and vendors, Prime Time Live, Inc. thrives on being able to strategically help put together the best events that will produce the greatest experience for each captivated audience.
Screens
Prime Time Live, Inc. currently offers three different screen sizes that customers can choose to rent for their events. The most popular choice is a 30’ x 18’ mobile LED screen that is attached to a 71ft semi-truck. The second screen size that customers can choose from is a 15’ x 8’ mobile LED screen that can easily be transported by a mid-size SUV. The final screen size that Prime Time Live, Inc. offers is an 8’ x 5’ mobile LED screen that can easily fit inside a trailer. These screens make the perfect addition for any type of event as they help grab attention, educate participants on information they need to know, and offer event planners a way to gather and entertain everyone for a specific period of time. The high-resolution quality is also what makes these screens stand out from the competition as they provide such an unbelievable experience that cannot be found anywhere else. This is due to the fact that Prime Time Live, Inc. only buys their equipment from the largest manufacturer of LED event screens around the world.
Sponsors
Prime Time Live, Inc. is also offering companies a new way to get involved with these great events by becoming a valued sponsor. Companies are always trying to find new and innovative ways to promote their brands to as many people as possible in a short period of time. Prime Time Live Inc.’s new business platform allows these companies the ability to promote themselves in a way that is hard to find anywhere else. Companies of all sizes now have the opportunity to promote their brands to over 10,000+ people at each event
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through the use of putting their logos/slogans/commercials on the large LED screens. While event participants are watching their favorite sports teams/entertainers, companies can now be ensured that their brand is reaching the mass audience. The great advantage about this service is that companies can strategically choose from all different types of Prime Time Live, Inc. events in order to make sure that they are targeting the right audience with their marketing budget.
Fan Villages
The success of any event is usually centered on how much time participants are willing to stay for and also if they would return for another event. Prime Time Live, Inc. offers event planners a rare opportunity to help create a great experience through the use of fan villages. Fan villages are the main places throughout an event where people are able to get something good to eat and drink, watch their favorite entertainment perform, and also interact with companies that want to promote their brands. Prime Time Live Inc.’s fan villages are strategically created for each event in order to increase people’s desire to stay for longer periods of time, incentivize them to want to spend more money throughout the venue, and also make them want to share their experience with others in how they want to return for future events. By combining the large mobile LED screens, strong relationships with sponsors, and extremely interactive fan villages, Prime Time Live, Inc. is the perfect addition for any event.
Going Forward
Prime Time Live, Inc.’s goals include establishing the Company as an iconic rental brand that can be used for all types of events such as entertainment, corporate, civic, and sporting.
Prime Time Live, Inc. plans to:
| · | purchase a new higher resolution LED screen for its semi-truck; |
| · | acquire top companies in the industry that will enhance our current services; |
| · | increase the number of events around the United States with the purchase of more screens; |
| · | offer more opportunities for sponsors to partner with us to increase revenue; |
| · | use our LED screens for security purposes such as facial recognition, important announcements, and crowd flow; |
| · | develop a marketing and social media strategy to achieve a well-known and respectable brand in this competitive industry. |
We anticipate needing an estimated $1,000,000 in capital to continue our business operations and expansion. We do not have committed sources for these additional funds and will need to be obtained through debt or equity placements or a combination of those.
Our principal executive offices are located at 201 Columbine St., 3rd Floor, Suite 11, Denver, CO 80206 and our office telephone number is (720) 273-0433. We maintain a website at www.primetimeliveevents.com, Information on or accessed through our website is not incorporated into this prospectus and is not a part of this prospectus.
Below is an overview of the Bio Lab’s corporate structure.
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BIO LAB NATURALS, INC. (a Delaware corporation)
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Prime Time Live, Inc. (a wholly-owned subsidiary) | |||||
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Our Capital Budget for the next 12 months
Our Budget for operations in the next year is as follows:
| Years | ||||||||||||||||||||
| Three Months Ending | 2020-2021 | |||||||||||||||||||
| 6/30/2020 | 9/30/2020 | 12/31/2020 | 3/30/2020 | Total | ||||||||||||||||
| Revenues | $ | 35,000 | $ | 120,000 | $ | 113,000 | $ | 52,000 | $ | 320,000 | ||||||||||
| Cost of revenue | 39,110 | 40,277 | 41,479 | 42,717 | 163,583 | |||||||||||||||
| Selling, general and administrative expense | 11,595 | 11,939 | 12,294 | 12,663 | 48,491 | |||||||||||||||
| Revenues excess of (short of) cost and expense | $ | (15,705 | ) | $ | 67,784 | $ | 59,227 | $ | (3,380 | ) | $ | 107,926 | ||||||||
The Company may change any or all the budget categories in the execution of its business model. None of the line items are to be considered fixed or unchangeable. The Company may need substantial additional capital to support its budget. We have not recognized revenues from our operational activities.
Based on our current cash reserves of approximately $230,000 as of July 2, 2020, we have the cash for an operational budget for the next 12 months. If we are unable to generate enough revenue to cover our operational costs, we will need to seek additional sources of funds. Currently, we have no committed source for any funds as of date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised if and when needed, we may not be able to carry out our business plan and could fail in business as a result of these uncertainties.
The independent registered public accounting firm’s report on our financial statements as of December 31, 2019, includes a “going concern” explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.
Liquidity and Capital Resource Needs & Plan of Operations
The Company currently has approximately $230,000 in cash for operations. Its capital resource is its common and preferred stock. We believe the cash sufficient to conduct limited operations for six months.
COVID-19
In December 2019, COVID-19 emerged and has subsequently spread worldwide. The World Health Organization has declared COVID-19 a pandemic resulting in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining of people who may have been exposed to the virus. The Company continues to monitor developments, including government requirements and recommendations at the national, state, and local level to evaluate possible extensions to all or part of such closures.
As the COVID-19 pandemic is complex and rapidly evolving, the Company's plans as described above may change. At this point, we cannot reasonably estimate the duration and severity of this pandemic, which could have a material adverse impact on our business, results of operations, financial position and cash flows.
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INDUSTRY ANALYSIS AND HISTORY
Barriers to Entry in the Event Production Industry
There is one major barrier to entry into the Event Production Industry which is capital. We have very limited capital with which to compete in this industry. Many other competitors have been in the business for many years and have very large capital resources and an established reputation. Our barriers to entry are, in addition to lack of capital, lack of reputation, lack of recognition, part-time management, lack of financial history to raise money, and lack of equity in our Company upon which to base a capital raise.
Competitive Factors Impacting Our Ability to Gain Market Share
Our competition enjoys advantages which may prevent us from achieving a market share due to our competitors’ known reputations, large funding abilities, competent management, and capital resources all of which will impede our abilities to achieve market share.
Competitive Factors in the Industry
There are numerous entities, large advertising companies, and private investors which will compete for the same business in which we intend to engage. We will be at a significant disadvantage to all of these other competitors for the foreseeable future. All of our competitors should be considered to be far better capitalized than we are.
Registrant’s Competitive Position in the Industry
Registrant is an insignificant participant in the event production industry and cannot be expected to obtain a market share even discernable percentage wise. Without a large infusion of capital, it will remain a very small participant in the industry.
Historical Track Records
Our Company has no historical track record and we should be deemed a pure start-up of earning or operating with all of the risks of an unproven Company (see “Risk Factors”).
COMPETITION, MARKETS, REGULATION AND TAXATION
Competition
There are a large number of companies and individuals engaged in the event production industry; accordingly, there is a high degree of competition. Almost all of the companies and individuals so engaged have substantially greater technical and financial resources than we do.
We are an insignificant participant among the firms which engage in the funding of business opportunities. There are many established venture capital and financial concerns that have significantly greater financial and personnel resources and technical expertise than we have. In view of our limited financial resources and limited management availability, we will continue to be at a significant competitive disadvantage compared to our competitors.
Investment Company Act 1940
Although we will be subject to regulation under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, we believe we will not be subject to regulation under the Investment Company Act of 1940 (the "1940 Act") insofar as we will not be engaged in the business of investing or trading in securities within the definitions and parameters which would make us subject to the “1940 Act.” In the event we engage in business activities that result in us holding investment interests in a number of entities, we might become subject to regulation under the 1940 Act. In such event, we would be required to register as an Investment Company and incur significant registration and compliance costs. Under no circumstances does the Company intend to become an investment Company and its activities and its financial statement ratios of assets and cash will be carefully monitored and other activities reviewed by the Board to prevent being classified or inadvertently becoming an investment Company which would be subject to regulation under the Investment Company Act of 1940.
As a fundamental concept, the 1940 Act requires registration of companies that invest and manage funds to invest for others and trade in securities of other companies. Those companies that cross a threshold of 40% of assets in cash and stock in other companies may be required to register. Investment companies may issue face amount certificates, be a Unit Investment Trust, or be a mutual fund. We intend to do several things to remain outside of the 1940 Act: a) we will not trade in securities of other companies or manage investments
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for others, b) we intend to carefully monitor our ratios of cash and securities to total assets to avoid crossing the 1940 Act threshold, c) we do not intend to issue face amount certificates, d) we do not intend to distribute profits and dividends to our shareholders on an annual or shorter basis, if ever, e) we do not pass through profits and losses to our shareholders on a tax basis, f) we will not issue Units in investment trusts, g) we will not act as a mutual fund, and h) we will not invest funds on behalf of others.
We have obtained no formal determination from the SEC as to our status under the 1940 Act and, consequently, any violation of the 1940 Act would subject us to material adverse consequences. We believe that, currently, we are exempt under Regulation 3(c)(4) and (5) of the 1940 Act.
Markets.
Our market is highly competitive and constantly changing. Commercial success is frequently dependent on capital availability, the effectiveness and sufficiency of which are very difficult to predict accurately.
Governmental Regulation.
Federal Regulations.
We are subject to regulations by securities laws as a public Company. We do not intend to become an investment Company under the Investment Company Act of 1940, but if we exceed certain thresholds of certain assets or our business operations cease to fall within certain exemptions, we might inadvertently become subject to the Act.
Compliance with Environmental Laws and Regulations.
We are not involved in operations with environmental considerations for our business.
State Regulations.
Certain states may require that we obtain a Local Business License. We intend to address this on an as needed basis. We know of no other regulations that would affect our business for temporary screen locations for events as the locations generally allow our screens.
For additional information about these matters, see “Risk Factors.”
LICENSES
None.
TITLE TO PROPERTIES
None.
BACKLOG OF ORDERS
We currently have no backlogs of orders for sales, at this time.
GOVERNMENT CONTRACTS
We have no government contracts.
COMPANY SPONSORED RESEARCH AND DEVELOPMENT
We are not conducting any research.
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NUMBER OF PERSONS EMPLOYED
We have 3 independent contractors who work approximately 20 hours per week. All officers and directors work approximately 10 hours per week under their appropriate responsibility.
DESCRIPTION OF PROPERTIES/ASSETS
| (a) | Real Estate. | None. |
| (b) | Title to properties. | None. |
| (c) | Patents, Trade Names, Trademarks and Copyrights | None. |
Our executive offices are located in Denver, Colorado. We do not own any real property, but lease and office space consisting of approximately 1100 sq. ft. among all of our corporate and subsidiary locations. We believe that substantially all of our property and equipment is in good condition, subject to normal wear and tear, and that our facilities have sufficient capacity to meet the current needs of our business.
We may be subject to various claims and legal actions arising in the ordinary course of business from time to time. We believe that the ultimate resolution of these matters, whether individually or in the aggregate, will not have a material adverse effect on our business, prospects, financial condition and results of operations.
We currently are not involved in any legal proceedings.
d. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Currently there is a limited public trading market for our stock as quoted on the OTC Pink under the symbol BLAB.
The following table sets forth the high and low bid quotations of our common stock for the periods indicated:
| Fiscal 2019 | Low | High | ||||||
| First Quarter – ended March 31, 2019 | $ | 0.005 | $ | 0.007 | ||||
| Second Quarter – ended June 30, 2019 | $ | 0.007 | $ | 0.007 | ||||
| Third Quarter – ended September 30, 2019 | $ | 0.07 | $ | 1.00 | ||||
| Fourth Quarter – ended December 31, 2019 | $ | 0.20 | $ | 0.40 | ||||
| Fiscal 2018 | Low | High | ||||||
| First Quarter – ended March 31, 2018 | $ | 0.035 | $ | 0.35 | ||||
| Second Quarter – ended June 30, 2018 | $ | 0.035 | $ | 0.035 | ||||
| Third Quarter – ended September 30, 2018 | $ | 0.005 | $ | 0.035 | ||||
| Fourth Quarter – ended December 31, 2018 | $ | 0.005 | $ | 0.005 | ||||
Rules Governing Low-price Stocks That May Affect Our Shareholders' Ability to Resell Shares of Our Common Stock
Quotations on the OTC Pink reflect inter-dealer prices, without retail mark-up, markdown or commission and may not reflect actual transactions. Our common stock will be subject to certain rules adopted by the SEC that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks generally are securities with a price of less than $5.00, other than securities registered on certain national exchanges or quoted on the NASDAQ system, provided that the exchange or system provides current price and volume information with respect to transaction in such securities. The additional sales practice and disclosure requirements imposed upon broker-dealers are and may discourage broker-dealers from effecting transactions in our shares which could severely limit the market liquidity of the shares and impede the sale of shares in the secondary market.
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The penny stock rules require broker-dealers, prior to a transaction in a penny stock not otherwise exempt from the rules, to make a special suitability determination for the purchaser to receive the purchaser’s written consent to the transaction prior to sale, to deliver standardized risk disclosure documents prepared by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer's account and information with respect to the limited market in penny stocks.
Holders
As of the filing of this prospectus, we have 517 shareholders of record of our common stock. Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. Under Rule 144, a person who has not been an affiliate at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least 6 months, is entitled to sell shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144.
As of the date of this prospectus, our shareholders hold 10,833,504 shares of common stock and 500,000 shares of Class A Preferred, of which 9,690,999 common shares may be sold pursuant to this Registration Statement.
Dividends
As of the filing of this prospectus, we have not paid any dividends to shareholders. There are no restrictions which would limit our ability to pay dividends on common equity or that are likely to do so in the future. The Delaware General Corporation Law, however, does prohibit us from declaring dividends where, after giving effect to the distribution of the dividend; we would not be able to pay our debts as they become due in the usual course of business; or our total assets would be less than the sum of the total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
Securities Authorized for Issuance Under Equity Compensation Plans.
We adopted a Stock Option and Award Plan on January 15, 2020. We have authorized 2,000,000 shares of common stock to be available for the Plan. We have granted no options exercisable for shares of our common stock under the Plan.
Share Issued for Asset Acquisition Agreement
| Persons and/or Entities | Nature |
| Prime Time Live, Inc. | 5,500,000 shares of common stock issued for founders and for services |
Shares or Warrants Issued for Compensation or Services
Since January 1, 2018 through July 2, 2020, we have issued shares of our common stock in exchange for services to the individuals and/or entities and the amounts set forth below:
| Persons and/or Entities | Nature |
| M.A. Littman | 400,000 shares of common stock for legal services |
| Michael A. Littman Atty Defined Benefit Plan | 250,000 shares of Class A Preferred stock for services |
| W. Edward Nichols | 250.000 shares of Class A Preferred stock for services |
| Jeremy Ostler | 50,000 shares of common stock for Director services |
| Calvin D. Smiley, Sr. | 50,000 shares of common stock for Director services |
| 25 |
Material Relationships
Michael A. Littman Atty Defined Benefit Plan holds 250,000 Class A Preferred Shares. W. Edward Nichols is our CEO and director and holds 250,000 Class A Preferred Shares. Michael A. Littman is legal counsel to the Company. The Class A Preferred Shares are convertible to a total of 1,000,000 common shares and have super majority voting rights until an exchange listing may be achieved. Mr. Ostler and Mr. Smiley, Sr. are Directors of the Company.
Exemption from Registration Claimed
All of the sales by us of the unregistered securities listed immediately above were made by us in reliance upon Section 4(a)(2) of the Act. All of the individuals and/or entities listed above that purchased the unregistered securities were all known to us and our management, through pre-existing business relationships, as long-standing business associates, friends, and employees. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to our management in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to us. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.
Issuer Purchases of Equity Securities
We did not repurchase any shares of our common stock during the period January 1, 2018 through ended July 2, 2020.
The following is a complete list of the financial statements filed as a part of this Report.
|
Bio Lab Naturals, Inc. Consolidated Financial Statements for the period July 1, 2019 (Inception) through December 31, 2019 | |
| Report of Independent Registered Public Accounting Firm | F-2 |
| Consolidated Balance | F-3 |
| Consolidated Statement of Operations | F-4 |
| Consolidated Statement of Changes in Stockholders’ Equity (Deficit) | F-5 |
| Consolidated Statements of Cash Flows | F-6 |
| Notes to the Financial Statements | F-7 |
|
Bio Lab Naturals, Inc. Condensed Consolidated Financial Statements as of March 31, 2020 (Unaudited)
| |
| Condensed Consolidated Balance Sheets | F-14 |
| Condensed Consolidated Statements of Operations | F-15 |
| Condensed Consolidated Statements of Cash Flows | F-16 |
| Notes to Condensed Consolidated Financial Statements | F-17 |
| 26 |
Bio Lab Naturals, Inc.
Consolidated Financial Statements
For the period July 1, 2019 (Inception) through
December 31, 2019
Audited
| F-1 |
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Bio Lab Naturals, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Bio Lab Naturals, Inc. (the "Company") as of December 31, 2019, the related statement of operations, stockholders' equity (deficit), and cash flows for the period July 1, 2019 (Inception) through December 31, 2019 and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the period July 1, 2019 (Inception) through December 31, 2019, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s BF Borgers CPA PC
BF Borgers CPA PC
We have served as the Company's auditor since 2019
Lakewood, CO
July 2, 2020
| F-2 |
| BIO LAB NATURALS, INC. AND SUBSIDIARY | ||||
| CONSOLIDATED BALANCE SHEET | ||||
| DECEMBER 31, 2019 | ||||
| Assets | ||||
| Current assets | ||||
| Cash | $ | 69,527 | ||
| Accounts receivable, net | 13,000 | |||
| Total current assets | 82,527 | |||
| Equipment | ||||
| Equipment, net | 160,536 | |||
| Total Assets | $ | 243,063 | ||
| Liabilities and Stockholders' Equity | ||||
| Current liabilities | ||||
| Accounts payable | $ | 18,900 | ||
| Due to related party | 3,270 | |||
| Total current liabilities | 22,170 | |||
| Total liabilities | 22,170 | |||
| Commitments and Contingencies | — | |||
| Stockholders' Equity | ||||
| Preferred shares, $0.0001 par value, 5,000,000 shares authorized; | ||||
| Class A Convertible, deemed par value $0.04 per share; 500,000 | ||||
| shares issued and outstanding at December 31, 2019 | 50 | |||
| Common shares, $0.0001 par value, 200,000,000 shares authorized; | ||||
| 8,477,505 shares issued and outstanding at December 31, 2019 | 848 | |||
| Additional paid in capital | 35,388,065 | |||
| Retained (deficit) | (35,168,070 | ) | ||
| Total stockholders' equity | 220,893 | |||
| Total Liabilities and Stockholders' Equity | $ | 243,063 | ||
| The accompanying notes are an integral part of these financial statements. | ||||
| F-3 |
| BIO LAB NATURALS, INC. AND SUBSIDIARY | ||||
| CONSOLIDATED STATEMENT OF OPERATIONS | ||||
| PERIOD JULY 1, 2019 THROUGH DECEMBER 31, 2019 | ||||
| Operating expenses | ||||
| Consulting fees, related party | $ | 420,000 | ||
| General and administrative expenses - other | 25,000 | |||
| Asset impairment | 1,429,107 | |||
| Total operating expenses | 1,874,107 | |||
| Loss from operations | (1,874,107 | ) | ||
| Other expenses | ||||
| Loss on extinguishment of debt | 34,103 | |||
| Interest expense | 897 | |||
| Total other expenses | 35,000 | |||
| Loss before income taxes | (1,909,107 | ) | ||
| Income taxes | — | |||
| Net loss | $ | (1,909,107 | ) | |
| Net loss per common share - basic and diluted | $ | (0.21 | ) | |
| Weighted average number of common shares | 9,240,816 | |||
| The accompanying notes are an integral part of these financial statements. | ||||
| F-4 |
| BIO LAB NATURALS, INC. AND SUBSIDIARY | ||||||||||||||||||||
| CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||||||||||||
| Preferred Shares $0.0001 Par Value | ||||||||||||||||||||
| Class A Convertible | Series AA | |||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||
| BALANCES, July 1, 2019 | — | $ | — | 2,000 | $ | 2 | ||||||||||||||
| Issuance of shares for services, related party | 500,000 | 50 | — | — | ||||||||||||||||
| Issuance of shares for debt | — | — | — | — | ||||||||||||||||
| Issuance of shares to acquire subsidiary | — | — | — | — | ||||||||||||||||
| Redemption of shares | — | — | (2,000 | ) | (2 | ) | ||||||||||||||
| Net loss for the period | — | — | — | — | ||||||||||||||||
| BALANCES, December 31, 2019 | 500,000 | $ | 50 | — | $ | — | ||||||||||||||
| Common Shares $0.0001 Par Value Shares | Amount | Additional Paid-in Capital | Accumulated (Deficit) | Total Stockholders’ Equity | ||||||||||||||||
| BALANCES, July 1, 2019 | 9,308,566 | $ | 931 | $ | 33,258,030 | $ | (33,258,963 | ) | $ | — | ||||||||||
| Issuance of shares for services, related party | 400,000 | 40 | 419,910 | — | 420,000 | |||||||||||||||
| Issuance of shares for debt | 200,000 | 20 | 59,980 | — | 60,000 | |||||||||||||||
| Issuance of shares to acquire subsidiary | 5,500,000 | 550 | 1,649,450 | — | 1,650,000 | |||||||||||||||
| Redemption of shares | (6,931,061 | ) | (693 | ) | 695 | — | — | |||||||||||||
| Net loss for the period | — | — | — | (1,909,107 | ) | (1,909,107 | ) | |||||||||||||
| BALANCES, December 31, 2019 | 8,477,505 | $ | 848 | $ | 35,388,065 | $ | (35,168,070 | ) | $ | 220,893 | ||||||||||
| The accompanying notes are an integral part of these financial statements. | ||||||||||||||||||||
| F-5 |
| BIO LAB NATURALS, INC. AND SUBSIDIARY | ||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||
| PERIOD JULY 1, 2019 THROUGH DECEMBER 31, 2019 | ||||
| OPERATING ACTIVITIES | ||||
| Net loss | $ | (1,909,107 | ) | |
| Adjustment to reconcile net loss to net cash flows used | ||||
| in operating activities | ||||
| Issuance of common shares for services, related party | 420,000 | |||
| Asset impairment | 1,429,107 | |||
| Loss on extinguishment of debt | 34,103 | |||
| Changes in: | ||||
| Accrued expenses | 897 | |||
| Net cash (used in) operating activities | (25,000 | ) | ||
| INVESTING ACTIVITIES | ||||
| Cash acquired in purchase of subsidiary | 69,527 | |||
| FINANCING ACTIVITIES | ||||
| Funds provided from short term loan | 25,000 | |||
| Net increase in cash | 69,527 | |||
| Cash at beginning of period | — | |||
| Cash at end of period | $ | 69,527 | ||
| Supplemental Schedule of Cash Flow Information: | ||||
| Interest paid | $ | — | ||
| Income taxes paid | $ | — | ||
| Supplemental Schedule of Non-Cash Flow Information: | ||||
| Issuance of common shares for property | $ | 1,650,000 | ||
| Issuance of common shares for debt | $ | 60,000 | ||
| The accompanying notes are an integral part of these financial statements. | ||||
| F-6 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
for the period July 1, 2019 (Inception) through December 31, 2019
Note 1 – Organization and History
Vyta Corp (the “Company”) was incorporated in Nevada in June 1996. On August 20, 2010, it changed its state of incorporation to Delaware and on November 5, 2010 it changed its name to Bio Lab Naturals, Inc. On August 20, 2010, the Company executed a redomicile merger with its wholly owned subsidiary Vyta Corp (Delaware), as result of the merger the Company’s corporate domicile moved from Nevada to Delaware.
Prior to 2011, the Company was involved in various business activities and since then the Company has been seeking a business opportunity.
Effective December 31, 2019, the Company entered into a Reorganization Agreement with Prime Time Live, Inc., a Colorado corporation (“PTL”), whereby PTL merged with a newly formed wholly owned subsidiary of the Company, and the subsidiary being the survivor in exchange for the Company issuing one share of its common stock for each share of PTL’s 5,500,000 issued and outstanding shares of common stock. See Note 4 – Significant Acquisition.
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Bio Lab Naturals, Inc. and its wholly owned subsidiary. All intercompany balances have been eliminated during consolidation.
The Company changed its year end from June 30th to December 31st and, therefore the consolidated financial statement represents a short year as of and for the period July 1, 2019 through December 31, 2019.
Use of Estimates in the Preparation of Consolidated Financial Statements
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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 periods. Actual results could differ from those estimates. Significant estimates include the fair value of assets and liabilities, income taxes and the valuation allowances related to accounts receivable, deferred tax assets and contingencies.
Cash and Cash Equivalents
The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits carried at cost which approximates fair value. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”).
Concentration of Credit Risk
The Company offers its services to 2 customers. This risk of non-payment by these customers is considered minimal and the Company does not generally obtain collateral for sales. The Company continually monitors the credit standing of its customers.
Accounts Receivable
The Company records accounts receivable at net realizable value. This value includes an appropriate allowance for uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and is charged to other income (expense) in the statements of operations. Management calculates this allowance based on its history of write-offs, the level of past-due accounts based on the contractual terms of the receivables, and the Company’s relationships with, and the economic status of, its customers. At December 31, 2019, there is no allowance for uncollectible accounts.
| F-7 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
for the period July 1, 2019 (Inception) through December 31, 2019
Equipment
Equipment is recorded at cost and consists of video equipment. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation of video equipment is over the estimated useful life of five years using the straight-line method for consolidated financial statement purposes. At December 31, 2019 there were capitalized costs of $160,536 and depreciation for the period July 1, 2019 through December 31, 2019 was $0 due to the Company acquiring the equipment at December 31, 2019. See Note 4 – Fair Value Measurements.
Revenue recognition
The Company follows the provisions of Accounting Standards Update (“ASU”) No. 2014 - 09, Revenue from Contracts with Customers (Topic 606), using the full retrospective transition method. The Company’s adoption of ASU 2014 - 09 did not have a material impact on the amount and timing of revenue recognized in its consolidated financial statements.
Under ASU 2014 - 09, the Company recognizes revenue when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.
The Company derives its revenues from the rendering of entertainment rental services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its contracts:
Identify the contract with a customer;
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to performance obligations in the contract; and
Recognize revenue as the performance obligation is satisfied.
Impairment of Long-Lived Assets
In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC, the Company assesses the recoverability of the carrying value of its long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
Other Comprehensive Loss
The Company has no material components of other comprehensive loss and accordingly, net loss is equal to comprehensive loss for the period.
| F-8 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
for the period July 1, 2019 (Inception) through December 31, 2019
Income Taxes
The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of the Company’s assets and liabilities. The deferred tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.
The Company's deferred income taxes include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.
The Company has adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At December 31, 2019, there were no uncertain tax positions that required accrual.
Goodwill
In accordance with generally accepted accounting principles, goodwill cannot be amortized, however, it must be tested annually for impairment. This impairment test is calculated at the reporting unit level. The goodwill impairment test has two steps. The first identifies potential impairments by comparing the fair value of a reporting unit with its book value, including goodwill. If the fair value of the reporting unit exceeds the carrying amount, goodwill is not impaired and the second step is not necessary. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied goodwill is less than the carrying amount, a write-down is recorded. Management tests goodwill each year for impairment, or when facts or circumstances indicate impairment has occurred.
Net Loss per Share
Basic net loss per common share of stock is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding, including the effect of other dilutive securities. The Company’s had no potentially dilutive securities issued as of and during the period July 1, 2019 through December 31, 2019.
Equity Based Payments
The Company recognizes compensation cost for equity based awards based on estimated fair value of the award and records capitalized cost or compensation expense over the requisite service period.
Off-Balance Sheet Arrangements
As part of its ongoing business, the Company has not participated in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. For the period through December 31, 2019, the Company has not been involved in any unconsolidated SPE transactions.
| F-9 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
for the period July 1, 2019 (Inception) through December 31, 2019
Subsequent Events
The Company evaluates events and transactions after the balance sheet date but before the consolidated financial statements are issued.
Note 3 – Going Concern and Managements’ Plan
The Company’s consolidated financial statements for the period July 1, 2019 through December 31, 2019 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company reported a net loss of $1,909,107 for the such period and an accumulated deficit of $35,158,070 at December 31, 2019.
The future success of the Company is dependent on its ability to attract additional capital and ultimately, upon its ability to develop future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.
Note 4 – Fair Value Measurements
The Company applies the authoritative guidance applicable to all financial assets and liabilities required to be measured and reported on a fair value basis, as well as to non-financial assets and liabilities measured at fair value on a non-recurring basis, including impairments of long-lived assets. The fair value of an asset or liability is the amount that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from sources independent of the Company. Unobservable input are inputs that reflect the Company’s assumptions of what market participants would use in valuing the asset or liability based on the information available in the circumstances.
Financial and non-financial assets and liabilities are classified within the valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. The Company’s policy is to recognize transfers in and out of the fair value hierarchy as of the end of the reporting period in which the event or change in circumstances caused the transfer. The Company has consistently applied the valuation techniques discussed below in all periods presented. The hierarchy is organized into three levels based on the reliability of the inputs as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities; or
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs, quoted prices for identical or similar assets or liabilities in markets that are not active and model-derived valuations whose inputs or significant value drivers are observable; or
Level 3: Unobservable pricing inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.
The following table presents the Company’s non-financial assets and liabilities that were measured at fair value on a non-recurring basis at December 31, 2019 by level within the fair value hierarchy:
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Assets | ||||||||||||||||||
| Equipment | $ | — | $ | — | $ | 160,536 | $ | 160,536 | ||||||||||
| Goodwill | $ | — | $ | — | $ | 1,429,107 | $ | 1,429,107 | ||||||||||
| F-10 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
for the period July 1, 2019 (Inception) through December 31, 2019
Effective December 31 2019, the Company’s equipment was tested under ASC 360 as to its recoverability to determine if impairment is required under the accounting guidance. The Company used Level 3 inputs to measure the fair value of the assets. As such, there was no impairment during the period July 1, 2019 through December 31, 2019.
Effective December 31, 2019, the Company acquired Prime Time Live Inc. and as a result realized goodwill in the amount of $1,429,107. Thus, due to the significance of this event, goodwill was tested under ASC 360 as to its recoverability. Therefore, goodwill is recorded at fair value if impairment is required under the accounting guidance. The Company used Level 3 inputs to measure the fair value of the asset and management determined that there were no future undiscounted cash flows associated with goodwill. As such, the Company’s goodwill was fully impaired during the period July 1, 2019 through December 31, 2019 in the amount of $1,429,107 and reported in the consolidated statement of operations.
Note 5 – Significant Acquisition
Effective December 31, 2019, the Company acquired Prime Time Live, Inc., a company in the entertainment related industry in exchange for 5,500,000 shares of the Company’s common stock valued at $0.30 per share, based upon the stock price on the OTC markets at December 31, 2019, or a total value of $1,650,000.
The following table presents the allocation of the consideration given to the assets acquired and liabilities assumed, based on their fair values at December 31, 2019:
| Consideration Given | ||||
| Shares of common stock | $ | 1,650,000 | ||
| Total purchase price | $ | 1,650,000 | ||
| Allocation of Consideration Given | ||||
| Cash | $ | 69,527 | ||
| Accounts receivable, net | 13,000 | |||
| Equipment | 160,536 | |||
| Goodwill | 1,429,107 | |||
| Total assets | 1,672,170 | |||
| Current liabilities | 22,170 | |||
| Net assets acquired | $ | 1,650,000 | ||
Note 6 – Stockholders’ Equity
Preferred Shares
Class A Convertible
During the period July 1, 2019 through December 31, 2019, the Company issued 500,000 shares of its Class A Convertible shares of preferred stock (“Class A”) in exchange for services valued at $300,000. The Class A shares provide that when voting as a single class, the shares shall have the votes and the voting power at all times to be at least 60% of the voting power of the Company. Also, the holders of the Class A shares at their discretion and subject to a change of control and to the qualification by application to either NASQAD or NYSE Emerging Markets, convert their one share of Class A into two shares of the Company’s common stock, subject to adjustment. In addition, the holder of the shares of Class A is entitled to a liquidation preference of the Company senior to all other securities of the Company. See Note 7 – Related Party Transactions.
| F-11 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
for the period July 1, 2019 (Inception) through December 31, 2019
Series AA
During the period July 1, 2019 through December 31, 2019, the Company cancelled its 2,000 Series AA shares of preferred stock and there were no holders of such shares.
Common Shares
The Company’s capital stock at December 31, 2019 consists of 200,000,000 authorized shares of $0.0001 par value common stock. At December 31, 2019, there are a total of 8,477,505 shares of common stock issued and outstanding.
During the period July 1, 2019 through December 31, 2019, the Company issued 400,000 shares of its common stock in exchange for services valued at $120,000. See Note 7 – Related Party Transactions.
In addition, the Company issued 200,000 shares of its common stock in exchange for payment of debt in the amount of $25,897 and realized a loss on extinguishment of debt in the amount of $34,103 that was reported in the consolidated statement of operations.
As part of the acquisition of Prime Time Live, Inc., the Company issued 5,500,000 shares of its common stock valued at $1,650,000. See Note 5 – Significant Acquisition.
Note 7 – Related Party Transactions
Due to Related Parties
At December 31, 2019, the Company owes affiliates of two of its officers $3,270.
Equity for Services
At December 31, 2019, the Company issued 500,000 shares of its Class A shares of preferred stock to an officer and more than five percent shareholder of the Company in exchange for consulting fees valued at $300,000.
During the period July 1, 2019 through December 31, 2019, the Company issued 400,000 shares of its common stock to a more than five percent shareholder of the Company in exchange for consulting fees valued at $120,000.
Note 8 – Subsequent Events
The Company evaluated events and transactions after the balance sheet date and before the issuance of its financial statements and no subsequent events need to be disclosed.
| F-12 |
Bio Lab Naturals, Inc.
Consolidated Financial Statements
For the three-month period ended
March 31, 2020
Unaudited
| F-13 |
| BIO LAB NATURALS, INC. AND SUBSIDIARY | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| March 31, | December 31, | |||||||
| Assets | 2020 | 2019 | ||||||
| Current assets | (Unaudited) | (Audited) | ||||||
| Cash | $ | 10,580 | $ | 69,527 | ||||
| Accounts receivable, net | — | 13,000 | ||||||
| Deposit | 10,000 | — | ||||||
| Total current assets | 20,580 | 82,527 | ||||||
| Equipment | ||||||||
| Equipment, net of accumulated depreciation, $8,449 | 152,087 | 160,536 | ||||||
| Total Assets | $ | 172,667 | $ | 243,063 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 30,829 | $ | 18,900 | ||||
| Due to related party | 10,000 | 3,270 | ||||||
| Note payable, related party | 14,200 | — | ||||||
| Total current liabilities | 55,029 | 22,170 | ||||||
| Total liabilities | 55,029 | 22,170 | ||||||
| Commitments and Contingencies | — | |||||||
| Stockholders' Equity | ||||||||
| Preferred shares, $0.0001 par value, 5,000,000 shares authorized; | ||||||||
| Class A Convertible, deemed par value $0.04 per share; 500,000 | ||||||||
| shares issued and outstanding at March 31, 2020 and | ||||||||
| December 31, 2019 | 50 | 50 | ||||||
| Common shares, $0.0001 par value, 200,000,000 shares authorized; | ||||||||
| 8,477,505 shares issued and outstanding at March 31, 2020 | ||||||||
| and December 31, 2019 | 848 | 848 | ||||||
| Additional paid in capital | 35,388,065 | 35,388,065 | ||||||
| Retained (deficit) | (35,271,325 | ) | (35,168,070 | ) | ||||
| Total stockholders' equity | 117,638 | 220,893 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 172,667 | $ | 243,063 | ||||
| The accompanying notes are an integral part of these financial statements. | ||||||||
| F-14 |
| BIO LAB NATURALS, INC. AND SUBSIDIARY | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| Sales | $ | — | $ | — | ||||
| Cost of sales | ||||||||
| Cost of sales - other | 6,394 | — | ||||||
| Depreciation | 8,449 | — | ||||||
| Total cost of sales | 14,843 | — | ||||||
| Gross profit | (14,843 | ) | — | |||||
| Operating expenses | ||||||||
| Consulting fees, related party | 27,000 | — | ||||||
| Consulting fees | 10,500 | — | ||||||
| General and administrative expenses - other | 10,134 | — | ||||||
| Professional fees | 40,778 | — | ||||||
| Total operating expenses | 88,412 | — | ||||||
| Loss before income taxes | (103,255 | ) | — | |||||
| Income taxes | — | — | ||||||
| Net loss | $ | (103,255 | ) | $ | — | |||
| Net loss per common share - basic and diluted | $ | (0.01 | ) | * | ||||
| Weighted average number of common shares | 9,308,566 | 9,308,566 | ||||||
| * Net loss is less than $0.01 per share. | ||||||||
| The accompanying notes are an integral part of these financial statements. | ||||||||
| F-15 |
| BIO LAB NATURALS, INC. AND SUBSIDIARY | ||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| Class A Convertible Preferred | Common Shares | Additional | Total | |||||||||||||||||||||||||
| $0.0001 Par Value | $0.0001 Par Value | Paid-in | Accumulated | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | (Deficit) | Equity | ||||||||||||||||||||||
| BALANCES, December 31, 2019 | 500,000 | $ | 50 | 8,477,505 | $ | 848 | $ | 35,388,065 | $ | (35,168,070 | ) | $ | 220,893 | |||||||||||||||
| Net loss for the period | — | — | — | — | — | (103,255 | ) | (103,255 | ) | |||||||||||||||||||
| BALANCES, March 31, 2020 | 500,000 | $ | 50 | 8,477,505 | $ | 848 | $ | 35,388,065 | $ | (35,271,325 | ) | $ | 117,638 | |||||||||||||||
| The accompanying notes are an integral part of these financial statements. | ||||||||||||||||||||||||||||
| F-16 |
| BIO LAB NATURALS, INC. AND SUBSIDIARY | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2020 | 2019 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (103,255 | ) | $ | — | |||
| Adjustment to reconcile net loss to net cash flows used | ||||||||
| in operating activities | ||||||||
| Depreciation | 8,449 | — | ||||||
| Changes in: | ||||||||
| Accounts receivable - net | 13,000 | — | ||||||
| Deposit | (10,000 | ) | — | |||||
| Accounts payable | 21,929 | — | ||||||
| Net cash (used in) operating activities | (69,877 | ) | — | |||||
| INVESTING ACTIVITIES | — | — | ||||||
| FINANCING ACTIVITIES | ||||||||
| Funds from related party, net of repayment | 10,930 | — | ||||||
| Net (decrease) in cash | (58,947 | ) | — | |||||
| Cash at beginning of period | 69,527 | — | ||||||
| Cash at end of period | $ | 10,580 | $ | — | ||||
| Supplemental Schedule of Cash Flow Information: | ||||||||
| Interest paid | $ | — | $ | — | ||||
| Income taxes paid | $ | — | $ | — | ||||
| The accompanying notes are an integral part of these financial statements. | ||||||||
| F-17 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
March 31, 2020
Note 1 – Organization and History
Vyta Corp (the “Company”) was incorporated in Nevada in June 1996. On August 20, 2010, it changed its state of incorporation to Delaware and on November 5, 2010 it changed its name to Bio Lab Naturals, Inc. On August 20, 2010, the Company executed a redomicile merger with its wholly owned subsidiary Vyta Corp (Delaware), as result of the merger the Company’s corporate domicile moved from Nevada to Delaware.
Prior to 2011, the Company was involved in various business activities and since then the Company has been seeking a business opportunity.
Effective December 31, 2019, the Company entered into a Reorganization Agreement with Prime Time Live, Inc., a Colorado corporation (“PTL”), whereby PTL merged with a newly formed wholly owned subsidiary of the Company, and the subsidiary being the survivor in exchange for the Company issuing one share of its common stock for each share of PTL’s 5,500,000 issued and outstanding shares of common stock. See Note 5 – Significant Acquisition.
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Bio Lab Naturals, Inc. and its wholly owned subsidiary. All intercompany balances have been eliminated during consolidation.
Use of Estimates in the Preparation of Consolidated Financial Statements
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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 periods. Actual results could differ from those estimates. Significant estimates include the fair value of assets and liabilities, income taxes and the valuation allowances related to accounts receivable, deferred tax assets and contingencies.
Cash and Cash Equivalents
The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits carried at cost which approximates fair value. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”).
Concentration of Credit Risk
The Company offers its services to 2 customers. This risk of non-payment by these customers is considered minimal and the Company does not generally obtain collateral for sales. The Company continually monitors the credit standing of its customers.
Accounts Receivable
The Company records accounts receivable at net realizable value. This value includes an appropriate allowance for uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and is charged to other income (expense) in the statements of operations. Management calculates this allowance based on its history of write-offs, the level of past-due accounts based on the contractual terms of the receivables, and the Company’s relationships with, and the economic status of, its customers. At March 31, 2020 and December 31, 2019, there are no allowance for uncollectible accounts.
Equipment
Equipment is recorded at cost and consists of video equipment. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation of video equipment is over the estimated useful life of five years using the straight-line method for consolidated financial statement purposes. At March 31, 2020 and
| F-18 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
March 31, 2020
December 31, 2019 there were capitalized costs of $160,536 and $152,087, respectively. Depreciation for the three months ended March 31, 2020 and 2019 was $8,449 and $0, respectively due to the Company acquiring the equipment at December 31, 2019. See Note 4 – Fair Value Measurements.
Revenue recognition
The Company follows the provisions of Accounting Standards Update (“ASU”) No. 2014 – 09, Revenue from Contracts with Customers (Topic 606), using the full retrospective transition method. The Company’s adoption of ASU 2014 – 09 did not have a material impact on the amount and timing of revenue recognized in its consolidated financial statements.
Under ASU 2014 – 09, the Company recognizes revenue when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.
The Company derives its revenues from the rendering of entertainment rental services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its contracts:
Identify the contract with a customer;
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to performance obligations in the contract; and
Recognize revenue as the performance obligation is satisfied.
Impairment of Long-Lived Assets
In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC, the Company assesses the recoverability of the carrying value of its long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
Other Comprehensive Loss
The Company has no material components of other comprehensive loss and accordingly, net loss is equal to comprehensive loss for the period.
Income Taxes
The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of the Company’s assets and liabilities. The deferred tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.
The Company’s deferred income taxes include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.
The Company has adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At March 31, 2020 and December 31, 2019, there were no uncertain tax positions that required accrual.
| F-19 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
March 31, 2020
Goodwill
In accordance with generally accepted accounting principles, goodwill cannot be amortized, however, it must be tested annually for impairment. This impairment test is calculated at the reporting unit level. The goodwill impairment test has two steps. The first identifies potential impairments by comparing the fair value of a reporting unit with its book value, including goodwill. If the fair value of the reporting unit exceeds the carrying amount, goodwill is not impaired and the second step is not necessary. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied goodwill is less than the carrying amount, a write-down is recorded. Management tests goodwill each year for impairment, or when facts or circumstances indicate impairment has occurred.
Net Loss per Share
Basic net loss per common share of stock is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding, including the effect of other dilutive securities. The Company’s had no potentially dilutive securities issued as of and during the three months ended March 31, 2020 and 2019.
Equity Based Payments
The Company recognizes compensation cost for equity based awards based on estimated fair value of the award and records capitalized cost or compensation expense over the requisite service period.
Off-Balance Sheet Arrangements
As part of its ongoing business, the Company has not participated in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. For the period through March 31, 2020, the Company has not been involved in any unconsolidated SPE transactions.
Subsequent Events
The Company evaluates events and transactions after the balance sheet date but before the consolidated financial statements are issued.
Note 3 – Going Concern and Managements’ Plan
The Company’s consolidated financial statements for the three months ended March 31, 2020 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company reported a net loss of $103,255 for the three months ended March 31, 2020 and an accumulated deficit of $35,271,325 at March 31, 2020.
The future success of the Company is dependent on its ability to attract additional capital and ultimately, upon its ability to develop future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.
Note 4 – Fair Value Measurements
The Company applies the authoritative guidance applicable to all financial assets and liabilities required to be measured and reported on a fair value basis, as well as to non-financial assets and liabilities measured at fair value on a non-recurring basis, including impairments of long-lived assets. The fair value of an asset or liability is the amount that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair
| F-20 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
March 31, 2020
value. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from sources independent of the Company. Unobservable input are inputs that reflect the Company’s assumptions of what market participants would use in valuing the asset or liability based on the information available in the circumstances.
Financial and non-financial assets and liabilities are classified within the valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. The Company’s policy is to recognize transfers in and out of the fair value hierarchy as of the end of the reporting period in which the event or change in circumstances caused the transfer. The Company has consistently applied the valuation techniques discussed below in all periods presented. The hierarchy is organized into three levels based on the reliability of the inputs as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities; or
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs, quoted prices for identical or similar assets or liabilities in markets that are not active and model-derived valuations whose inputs or significant value drivers are observable; or
Level 3: Unobservable pricing inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.
The following table presents the Company’s non-financial assets and liabilities that were measured at fair value on a non-recurring basis at December 31, 2019 by level within the fair value hierarchy:
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
| Assets | ||||||||||||||||||
| Equipment | $ | — | $ | — | $ | 160,536 | $ | 160,536 | ||||||||||
| Goodwill | $ | — | $ | — | $ | 1,429,107 | $ | 1,429,107 | ||||||||||
Effective December 31 2019, the Company’s equipment was tested under ASC 360 as to its recoverability to determine if impairment is required under the accounting guidance. The Company used Level 3 inputs to measure the fair value of the assets. As such, there was no impairment.
Effective December 31, 2019, the Company acquired Prime Time Live Inc. and as a result realized goodwill in the amount of $1,429,107. Thus, due to the significance of this event, goodwill was tested under ASC 360 as to its recoverability. Therefore, goodwill is recorded at fair value if impairment is required under the accounting guidance. The Company used Level 3 inputs to measure the fair value of the asset and management determined that there were no future undiscounted cash flows associated with goodwill. As such, the Company’s goodwill was fully impaired at December 31, 2019 in the amount of $1,429,107.
Note 5 – Significant Acquisition
Effective December 31, 2019, the Company acquired Prime Time Live, Inc., a company in the entertainment related industry in exchange for 5,500,000 shares of the Company’s common stock valued at $0.30 per share, based upon the stock price on the OTC markets at December 31, 2019, or a total value of $1,650,000.
The following table presents the allocation of the consideration given to the assets acquired and liabilities assumed, based on their fair values at December 31, 2019:
| F-21 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
March 31, 2020
| Consideration Given | ||||
| Shares of common stock | $ | 1,650,000 | ||
| Total purchase price | $ | 1,650,000 | ||
| Allocation of Consideration Given | ||||
| Cash | $ | 69,527 | ||
| Accounts receivable, net | 13,000 | |||
| Equipment | 160,536 | |||
| Goodwill | 1,429,107 | |||
| Total assets | 1,672,170 | |||
| Current liabilities | 22,170 | |||
| Net assets acquired | $ | 1,650,000 | ||
Note 6 – Debt
Convertible Promissory Note
An affiliate of an officer of the Company, loaned the Company $14,200 in exchange for an unsecured convertible promissory note that includes interest at the rate of six percent (6%) per annum on the unpaid principal balance with any accrued and unpaid interest due on or before December 31, 2020 (the “Note”). The Note allows for the note holder to convert, at their discretion, any accrued and unpaid interest and principal balance due on the Note in whole or in part into shares of the Company’s common stock at a conversion price of $0.125 per share. At March 31, 2020, the Company owes $14,200 on the debt. – See Note 8 – Related Party Transactions.
Note 7 – Stockholders’ Equity
Preferred Shares
Class A Convertible
At March 31, 2020, there are a total of 500,000 shares of Class A Convertible shares of preferred stock (“Class A”) issued and outstanding. The Class A shares provide that when voting as a single class, the shares shall have the votes and the voting power at all times to be at least 60% of the voting power of the Company. Further, the holders of the Class A shares at their discretion and subject to a change of control and to the qualification by application to either NASQAD or NYSE Emerging Markets, can convert their one share of Class A into two shares of the Company’s common stock, subject to adjustment. In addition, the holder of the shares of Class A is entitled to a liquidation preference of the Company senior to all other securities of the Company.
Common Shares
The Company’s capital stock at March 31, 2020 consists of 200,000,000 authorized shares of $0.0001 par value common stock. At March 31, 2020, there are a total of 8,477,505 shares of common stock issued and outstanding.
Note 8 – Related Party Transactions
Due to Related Parties
During the three months ended March 31, 2020, the Company borrowed $14,200 from an affiliate of one of its officers in exchange for an unsecured convertible promissory note.
| F-22 |
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
March 31, 2020
During the three months ended March 31, 2020, the Company incurred consulting fees in the amount of $27,000 to an officer and an affiliate of one of its officers of which $9,800 is due by the Company as of March 31, 2020.
At March 31, 2020, the Company owes an affiliate of one of its officers $200 and at December 31, 2019 the Company owes affiliates of two of its officers $3,270.
Note 9 – Subsequent Events
During the month of April 2020, the Company sold 40,000 shares of its common stock for $5,000 in cash at $0.125 per share.
| F-23 |
f. SELECTED FINANCIAL INFORMATION
Not applicable.
g. SUPPLEMENTARY FINANCIAL INFORMATION
Not applicable.
h. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our unaudited and audited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements.
Our plan of operations for the next 12 months is as follows:
MILESTONES
| 2nd Quarter 2020 | Marketing and Operations | $50,705 |
| 3rd Quarter 2020 | Marketing and Operations | $52,216 |
| 4th Quarter 2020 | Marketing and Operations | $53,713 |
| 1st Quarter 2021 | Marketing and Operations | $55,380 |
Results of Operations
For the Three Months Ended March 31, 2020 Compared to the Three Months Ended March 31, 2019
During the three months ended March 31, 2020 and 2019, we recognized total revenues of $0. This low or no revenues is expected to continue until the Company has sufficient access to capital or loans to properly execute marketing activities.
Gross profit loss for the three months ended March 31, 2020 was $(14,843) compared to $0 for the prior period. The decrease of $14,843 pertained primarily to increase in cost of sales of $14,843.
During the three months ended March 31, 2020, we recognized $88,412 in operating expenses compared to $0 for the prior period. The change results primarily from $88,412 in consulting fees, professional fees and general and administrative expenses for the current period.
During the three months ended March 31, 2020, we recognized a net loss of $(103,255) compared to $0 for the prior period. The increase in the net loss of $103,255 was a result of an increase in cost of sales and operating expenses of $103,255 during the current period.
For the Period July 1, 2019 (Inception) through December 31, 2019 (The Company has no operations prior to July 1, 2019).
During the period July 1, 2019 (Inception) through December 31, 2019, we recognized total revenues of $0. We acquired an operating at December 31, 2019 and therefore had yet to realize any revenues.
| 27 |
During the period July 1, 2019 (Inception) through December 31, 2019, we recognized $1,874,107 in operating expenses comprised of $420,000 in consulting fees to an officer and an affiliate of the Company, $25,000 in other general and administrative expenses and $1,429,107 in asset impairment related to the write off of goodwill.
During the period July 1, 2019 (Inception) through December 31, 2019, we recognized $35,000 in other expenses comprised of $34,103 in the loss on the extinguishment of debt that was converted into shares of common stock and interest expense of $897.
During the period July 1, 2019 (Inception) through December 31, 2019, we recognized a net loss of $(1,909,017).
LIQUIDITY AND CAPITAL RESOURCES
Operating activities used cash flows of $69,877 for the three months ended March 31, 2020 as compared to $0 for the three months ended March 31, 2019. Cash flows from financing activities for the three months ended March 31, 2020 were $10,930 that helped with working capital needs as compared to $0 for the prior period.
Operating activities used cash flows of $25,000 for the period from July 1, 2019 (Inception) through December 31, 2019. Cash flows from financing activities were $25,000 for the same period.
In order for us to continue as a going concern, we will need to obtain additional debt or equity financing and look for companies with cash flow positive operations that we can acquire. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to acquire cash flow positive operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet all our future obligations. Most of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to significantly reduce or cease operations.
We expect to need approximately $200,000 in capital or loans to complete our plans and operations for the next 12 months. Our sources of capital are loans and sales of equity from common or preferred stock. We have approximately $230,000 in cash as of July 2, 2020 and no further commitments for loans or equity sales at this date.
CRITICAL ACCOUNTING POLICIES
We changed our year end from June 30th to December 31st and, therefore the consolidated financial statement represents a short year as of and for the period July 1, 2019 (Inception) through December 31, 2019.
Revenue Recognition
We follow the provisions of Accounting Standards Update (“ASU”) No. 2014 – 09, Revenue from Contracts with Customers (Topic 606), using the full retrospective transition method. The adoption of ASU 2014 – 09 did not have a material impact on the amount and timing of revenue recognized in our consolidated financial statements.
Under ASU 2014 – 09, we recognize revenues when control of the promised services is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
We derive revenues from the rendering of entertainment rental services. We apply the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills our obligations under each of our contracts:
Identify the contract with a customer;
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to performance obligations in the contract; and
Recognize revenue as the performance obligation is satisfied.
Share-based Compensation
We are required to measure and recognize compensation expense for all share-based payment awards (including stock options) made to employees and directors based on estimated fair value. Compensation expense for equity-classified awards is measured at the grant date based on the fair value of the award and is recognized as an expense in earnings over the requisite service period.
| 28 |
We record compensation expense related to non-employees that are awarded stock in conjunction with selling goods or services and recognize compensation expenses over the vesting period of such awards.
In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which amends ASC 718, Compensation – Stock Compensation. This ASU requires that most of the guidance related to stock compensation granted to employees be followed for non-employees, including the measurement date, valuation approach, and performance conditions. The expense is recognized in the same period as though cash were paid for the good or service. The effective date is the first quarter of fiscal year 2020, with early adoption permitted, including in interim periods. The ASU has been adopted using a modified-retrospective transition approach. The adoption is not considered to have a material effect on the consolidated financial statements.
Income Taxes
We use the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of our assets and liabilities. The deferred tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.
Our deferred income taxes include certain future tax benefits. We record a valuation allowance against any portion of those deferred income tax assets when we believe, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.
We have adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At December 31, 2019, there were no uncertain tax positions that required accrual.
Goodwill
In accordance with generally accepted accounting principles, goodwill cannot be amortized, however, it must be tested annually for impairment. This impairment test is calculated at the reporting unit level. The goodwill impairment test has two steps. The first identifies potential impairments by comparing the fair value of a reporting unit with its book value, including goodwill. If the fair value of the reporting unit exceeds the carrying amount, goodwill is not impaired and the second step is not necessary. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied goodwill is less than the carrying amount, a write-down is recorded. Management tests goodwill each year for impairment, or when facts or circumstances indicate impairment has occurred.
Impairment of Long-Lived Assets
In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC, we assess the recoverability of the carrying value of its long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
Fair Value Measurements
We apply the authoritative guidance applicable to all financial assets and liabilities required to be measured and reported on a fair value basis, as well as to non-financial assets and liabilities measured at fair value on a non-recurring basis, including impairments of long-lived assets. The fair value of an asset or liability is the amount that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. We maximize the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from sources independent of us. Unobservable input are inputs that reflect our assumption of what market participants would use in valuing the asset or liability based on the information available in the circumstances.
Financial and non-financial assets and liabilities are classified within the valuation hierarchy based upon the lowest level of input that
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is significant to the fair value measurement. Our policy is to recognize transfers in and out of the fair value hierarchy as of the end of the reporting period in which the event or change in circumstances caused the transfer. We have consistently applied the valuation techniques discussed below in all periods presented. The hierarchy is organized into three levels based on the reliability of the inputs as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities; or
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs, quoted prices for identical or similar assets or liabilities in markets that are not active and model-derived valuations whose inputs or significant value drivers are observable; or
Level 3: Unobservable pricing inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.
i. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
Not applicable.
j. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
k. DIRECTORS and EXECUTIVE OFFICERS
The Company currently has no employees that it identifies as significant employees. The directors and executive officers are set forth in the chart below.
| Name | Position | Age | Term of Office (if indefinite, give date appointed) | Approximate hours per week (if part-time)/full-time |
| W. Edward Nichols | Chief Executive Officer and Director | 78 | Annual | 10 |
| Darrell Avey | Chief Financial Officer, Vice President and Director | 64 | Annual | 10 |
| Jeremy Ostler | Director | 45 | Annual | 5 |
| Calvin D. Smiley, Sr. | Director | 67 | Annual | 2 |
Our officers are elected by the board of directors at the first meeting after each annual meeting of our stockholders and hold office until their successors are duly elected and qualified under our bylaws.
The directors named above will serve until the next annual meeting of our stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the board of directors absent any employment agreement. There is no arrangement or understanding between our directors and officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer.
BIOGRAPHICAL INFORMATION
W. Edward Nichols, Chief Executive Officer and Director since 2015
Mr. Nichols is an attorney located in Littleton, Colorado. He is authorized to practice in the States of Colorado and Kansas, United States Federal Courts, and the Supreme Court of the United States. He is also Managing Director of Nichols & Company LLC, a management consulting firm. Prior to Nichols & Company, Mr. Nichols practiced with Nichols and Wolfe where he specialized in municipal bonds. After 16 years he sold his interest in the firm and moved to Denver. He was instrumental in structuring and providing approving legal opinions for several hundred million dollars of General Obligation Bonds, Tax Anticipation Notes and Revenue Bonds. He has since worked as an attorney in investment banking and as a consultant with public and private companies in the U.S. and Europe.
Mr. Nichols has served as a Director and member of the Executive Staff of several public companies.
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Mr. Nichols holds a Bachelor of Business Administration from Washburn University and a Juris Doctorate degree from Washburn University School of Law in Topeka, Kansas. Mr. Nichols is a member of the Board of Governors of the Law School and an Advisor to the Transaction Law Center at the University.
Darrell Avey, Chief Financial Officer, Vice President and Director since February, 2020
Mr. Avey started his career in the Video Display Business in 1985. For the last 19 years, Mr. Avey has been involved in the building and rentals of video displays for special events around the United States. In that time, he has been involved in the manufacturing and sales of video displays to learning and participating in all aspects of a publicly owned company. He has been a Manager of Prime Time Mobile Video Event Screens from May 2010 through present. He is responsible for building the largest highest mobile video screen in the country as well as startup and daily operations of the mobile video screen rental company.
Jeremy Ostler, Director since February, 2020
Mr. Ostler has been an owner of several businesses in the Audio, Music and Production industry since 1996. He has managed installation and Live production crews on over 1000 installations and 1500 events.
From 2016 until present, he has been Owner and Manager of Rezolution AV, an Audio Visual Production Company, where he handles large scale concerts, festivals, corporate conferences such as Utah Department of Transportation Annual Conference, Deer Valley Music Festival, Video for Mackenzie Exhibit Tradeshow Booths.
From 2005 to 2016, he was Owner and Manager of Trax AV, an Audio Visual Production Company, where he handled installations and all Live Productions across USA. Productions included Video for 2 NFL Super Bowl Events, Jeep King of the Mountain, Deer Valley Music Festival, Chive Tour, Park City & SLC Jazz Festivals. Telluride Blues Festival, PGA Champions Tournament, Nitro Circus, University of Idaho, Utah, Montana, and Washington commencements, Stadium of Fire and many more events. Installations included All Utah and some southern Idaho Kohls Department store audio systems, Canyons School District, Weber School District High School Auditorium upgrades.
Mr. Ostler is also a present Partner and Owner of Warehouse 22 overseeing all technology in a Visually stunning event center that uses Projection Mapping to add video and scenic elements to any type of event. He is also a current Partner in BD Catering Company which provides a broad range of Catering options for Events inside and outside the venue.
Mr. Ostler was an Apprentice with Jeffrey Ostler. He obtained a BS in Audio from BYU.
Calvin D. Smiley, Sr., Director since February, 2020
Mr. Smiley has more than 30 years in the broadcasting and cable television industries. He was appointed the Chief Executive Officer, President and a Director of the Nexhorizon, Inc. in October 2006. He previously had co-founded Sunrise Broadband Group, Inc. from 2004 through 2006. From 2001 to 2003, he was a telecommunications consultant and began work to develop the Sunrise business strategy. Mr. Smiley held various executive positions with TCOM Ventures Corporation headquartered in Englewood, Colorado. From 2000 to 2001 he served as a director, President and CEO of TCOM Ventures, with a business focus to use a digital wireless platform to provide broadband services to customers of acquired rural ISP’s and competitive local exchange carriers (“CLEC’s”). From 1998 to 1999, he co-founded and served as President of Communicast, Inc., a successful turn-key marketing and advertising sales company which developed revenues for rural cable television systems, wireless providers and independent television stations. Mr. Smiley attended Geneva College in Beaver Falls, Pennsylvania. He completed strategic management courses of study at the University of Pittsburgh.
PROMOTER
Michael A. Littman
Due to his beneficial ownership of 250,000 Class A Super Majority Voting Convertible Preferred Shares with common rights he is deemed a Promoter.
Michael A. Littman, (J.D. 1973 Stetson College of Law) (Eckerd College 1970 B.A.) served as house counsel for Chicago Title Insurance Company 1973 – 1975 in Denver office. Increasing securities matters in the real estate syndication business led to a Securities practice emphasis since 1981, to where the practice has been exclusively corporate securities practice for public companies. Career experience includes commercial litigation, public and private offerings, mergers and acquisitions, mortgage banking, REO management, bankruptcy reorganizations, and private corporate restructuring.
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He has filed and brought effective IPO's and Secondary Registrations with SEC. He handled quarterly and annual reporting with the SEC for over 50 public reporting companies. He has acted as securities counsel in acquisitions and mergers of public companies (average of 4-6 per year) and in acquisitions of private companies by public companies in conjunction with recapitalizations. He has handled duties of getting companies cleared for trading with FINRA, and its predecessor NASD, for over 65 companies. He has acted as legal counsel for companies and individuals in civil proceedings with the SEC. He has handled private placements of securities including Memorandum drafting for over 50 Private Placements.
He has negotiated PIPEs and convertible debt situations for clients, from the public/private company side, and occasionally from the funder's side. He was a Panel Speaker for the IQPC PIPEs conferences (January 2007, July 2007 and January 2008).
He has legal experience in representing companies in the industry fields of software, oil and gas, real estate, mining, nutritional supplements, energy saving technology, publishing, and manufacturing.
CONFLICTS OF INTEREST – GENERAL
There can be no assurance that management will resolve all conflicts of interest in favor of the Company.
Our directors and officers are, or may become, in their individual capacities, officers, directors, controlling shareholder and/or partners of other entities engaged in a variety of businesses. Thus, there exist potential conflicts of interest including, among other things, time, efforts and corporation opportunity, involved in participation with such other entities. Consequently, there are potential inherent conflicts of interest in their acting as officers and directors of the Company. Insofar as the officers and directors are engaged in other business activities, management anticipates it will devote only up to approximately 10 hours per week to the Company’s affairs.
CONFLICTS OF INTEREST – CORPORATE OPPORTUNITIES
Presently no requirement contained in our Articles of Incorporation, Bylaws, or minutes which requires officers and directors of our Company to disclose business opportunities which come to their attention. Our officers and directors do, however, have a fiduciary duty of loyalty to our Company to disclose to it any business opportunities which come to their attention, in their capacity as an officer and/or director or otherwise. Excluded from this duty would be opportunities which the person learns about through his involvement as an officer and director of another Company. We have no intention of merging with or acquiring an affiliate, associate person or business opportunity from any affiliate or any client of any such person.
Our Board of Directors has adopted a policy that the Company will not seek a fund of, any entity in which any officer or director serves as an officer or director or in which they or their family members own or hold a controlling ownership interest. Although the Board of Directors could elect to change this policy, the Board of Directors has no present intention to do so.
COMMITTEES OF THE BOARD OF DIRECTORS
We are managed under the direction of its board of directors.
EXECUTIVE COMMITTEE
We do not have an executive committee, at this time.
AUDIT COMMITTEE
We have formed a non-independent audit committee in May 2020 to assist the Board in monitoring (1) the integrity of the financial statements of the Company, (2) the compliance by the Company with legal and regulatory requirements and (3) the independence and performance of the Company’s internal and external auditors. Ed Nichols, as Chairman, and Calvin D. Smiley, Sr. act as the initial members of the Audit Committee.
The functions of the audit committee are to review the scope of the audit procedures employed by our independent auditors, to review with the independent auditors our accounting practices and policies and recommend to whom reports should be submitted, to review with the independent auditors their final audit reports, to review with our internal and independent auditors our overall accounting and financial controls, to be available to the independent auditors during the year for consultation, to approve the audit fee charged by the independent auditors, to report to the board of directors with respect to such matters and to recommend the selection of the independent auditors.
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In the absence of a separate audit committee our board of directors functions as audit committee and performs some of the same functions of an audit committee, such as recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditors independence, the financial statements and their audit report; and reviewing management’s administration of the system of internal accounting control We expect that the selection of a business opportunity will be complex. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, we believe that there are numerous firms seeking the benefits of an issuer who has complied with the 1934 Act. Such benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes) for all stockholders and other factors. Potentially, available business opportunities may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. We have, and will continue to have, essentially no assets to provide the owners of business opportunities. However, we will be able to offer owners of acquisition candidates the opportunity to acquire a controlling ownership interest in an issuer who has complied with the 1934 Act without incurring the cost and time required to conduct an initial public offering.
ANNUAL MEETING
The annual meeting of stockholders is anticipated in the 4th Quarter of 2020 and will include the election of directors. The annual meeting will be held at our principal office or at such other place as permitted by the laws of the State of Delaware and on such date as may be fixed from time to time by resolution of our board of directors.
PREVIOUS “BLANK CHECK” OR “SHELL” COMPANY INVOLVEMENT
No members of our management have been involved in previous “blank-check” or “shell” companies, except Ed Nichols. He has been officer and director of the Company while it has been a “shell” since 2015.
INVOLVEMENT IN LEGAL PROCEEDINGS
No executive Officer or Director of our Company has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding that is currently pending.
No executive Officer or Director of our Company is the subject of any pending legal proceedings.
No Executive Officer or Director of our Company is involved in any bankruptcy petition by or against any business in which they are a general partner or executive officer at this time or within two years of any involvement as a general partner, executive officer, or Director of any business.
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l. EXECUTIVE AND DIRECTORS COMPENSATION
COMPENSATION
The following table sets forth the compensation paid to officers and board members during the three months ended March 31, 2020 and the period July 1, 2019 (Inception) through December 31, 2019 and for the years ended June 30, 2019 and 2018. The table sets forth this information for Bio Lab Naturals, Inc. including salary, bonus, and certain other compensation to the Board members and named executive officers for the three months ended March 31, 2020 and for the period July 1, 2019 (Inception) through December 31, 2019 and for the years ended June 30, 2019 and 2018.
SUMMARY EXECUTIVE COMPENSATION TABLE
| Name & Position | Year | Salary ($) | Bonus ($) | Stock awards | Option awards ($) | Non-equity incentive plan compensation ($) | Non-qualified deferred compensation earnings ($) | All other compensation ($) | Total ($) | |||||||||||||||||||||||||||
| W. Edward Nichols, CEO and President | 2020 | (1) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
| 2019 | (2) | 0 | 0 | 250,000 | 0 | 0 | 0 | 0 | $ | 150,000 | ||||||||||||||||||||||||||
| 2019 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
| 2018 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
| Darrell Avey, CFO and Vice President (3) and (4) | 2020 | (1) | 0 | 0 | 0 | 0 | 0 | 0 | $ | 15,000 | $ | 15,000 | ||||||||||||||||||||||||
| TOTAL | 0 | 0 | 250,000 | 0 | 0 | 0 | $ | 15,000 | $ | 90,000 | ||||||||||||||||||||||||||
(1) Represents three months ended March 31, 2020.
(2) Represents period July 1, 2019 (Inception) through December 31, 2019.
(3) Engaged in February 2020.
(4) Represents $15,000 in consulting fees paid on a month to month basis at the rate of $5,000 per month.
OPTION/WARRANT GRANTS IN THE LAST FISCAL YEAR
On January 15, 2020, the Board of Directors and majority stockholders of Bio Lab Naturals, Inc. approved the 2020 Bio Lab Naturals, Inc. Stock Option and Award Incentive Plan (“the 2020 Plan.”) There are 2,000,000 shares of our common stock reserved under the 2020 Plan.
The number of options, exercise price and expiration date of these options are as follows:
| Stock Option | Share | Expire |
| Granted | Price | Date |
| None |
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth certain information concerning outstanding equity awards held by our appointed executive officers as of December 31, 2019 (the “Named Executive Officers”):
| Option Awards | Stock awards | |||||||||||||||||||||||||||||||||||
| Name |
Number of securities underlying unexercised options (#) exercisable |
Number of securities underlying unexercised options (#) unexercisable |
Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) |
Option exercise price ($) |
Option expira-tion date |
Number of shares or units of stock that have not vested (#) |
Market value of shares of units of stock that have not vested ($) |
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: Market or payout value of unearned shares, units or others rights that have not vested ($) | |||||||||||||||||||||||||||
| W. Edward Nichols, CEO and Chairman | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Darrell Avey, CFO and Vice President | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
DIRECTOR COMPENSATION
Director Independence
For a director to be considered “independent,” the Board must affirmatively determine that the director has no material relationship with the Company (directly or as a partner, stockholder or officer of an organization that has a relationship with the Company). In each case, the Board considers all relevant facts and circumstances. We currently have no independent directors.
All of our officers and/or directors will continue to be active in other companies. All officers and directors have retained the right to conduct their own independent business interests.
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The following table sets forth certain information concerning compensation paid to our directors during the period July 1, 2019 (Inception) through December 31, 2019:
| Name | Fees earned or paid in cash ($) |
Stock awards ($) |
Option awards ($) |
Non-equity incentive plan compensation ($) | Non-qualified deferred compensation earnings ($) |
All other compensation ($) |
Total ($) | |||||||||||||||||||||
| W. Edward Nichols | — | — | — | — | — | — | — | |||||||||||||||||||||
| Darrell Avey | — | — | — | — | — | — | — | |||||||||||||||||||||
| Jeremy Ostler | — | — | — | — | — | — | — | |||||||||||||||||||||
| Calvin D. Smiley, Sr. | — | — | — | — | — | — | — |
The term of office for each Director is until March 1, 2022, or until their successor is duly elected or appointed. The term of office for each of our Officers is at the pleasure of the Board of Directors.
The Board of Directors has no nominating, auditing committee or a compensation committee. Therefore, the selection of person or election to the Board of Directors was neither independently made nor negotiated at arm’s length.
At this time, our Director does not receive cash compensation for serving as a member of our Board of Directors.
Limitation on Liability and Indemnification
We are a Delaware corporation. The Delaware General Corporation Laws (DGCL) provides that the articles of incorporation of a Delaware corporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or our stockholders for monetary damages for breach of fiduciary duty as a director, except that any such provision may not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to the corporation or our stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) acts specified in Section 78 (concerning unlawful distributions), or (iv) any transaction from which a director directly or indirectly derived an improper personal benefit. Our articles of incorporation contain a provision eliminating the personal liability of directors to our Company’ or our stockholders for monetary damages to the fullest extent provided by the DGCL.
The DGCL provides that a Delaware corporation must indemnify a person who was wholly successful, on the merits or otherwise, in defense of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal (a “Proceeding”), in which he or she was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the Proceeding, unless such indemnity is limited by the corporation’s articles of incorporation. Our articles of incorporation do not contain any such limitation.
The DGCL provides that a Delaware corporation may indemnify a person made a party to a Proceeding because the person is or was a director against any obligation incurred with respect to a Proceeding to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan) or reasonable expenses incurred in the Proceeding if the person conducted himself or herself in good faith and the person reasonably believed, in the case of conduct in an official capacity with the corporation, that the person’s conduct was in the corporation’s best interests and, in all other cases, his or her conduct was at least not opposed to the corporation’s best interests and, with respect to any criminal proceedings, the person had no reasonable cause to believe that his or her conduct was unlawful. Our articles of incorporation and bylaws allow for such indemnification. A corporation may not indemnify a director in connection with any Proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation or, in connection with any other Proceeding charging that the director derived an improper personal benefit, whether or not involving actions in an official capacity, in which Proceeding the director was judged liable on the basis that he or she derived an improper personal benefit. Any indemnification permitted in connection with a Proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with such Proceeding.
The DGCL, unless otherwise provided in the articles of incorporation, a Delaware corporation may indemnify an officer, employee, fiduciary, or agent of the corporation to the same extent as a director and may indemnify such a person who is not a director to a greater extent, if not inconsistent with public policy and if provided for by our bylaws, general or specific action of our board of directors or stockholders, or contract. Our articles of incorporation provide for indemnification of our directors, officers, employees, fiduciaries and agents to the full extent permitted by Delaware law.
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Our articles of incorporation also provide that we may purchase and maintain insurance on behalf of any person who is or was a director or officer of our Company or who is or was serving at our request as a director, officer or agent of another enterprise against any liability asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not we would have the power to indemnify him or her against such liability.
Employment Agreements with Officers and Directors of Bio Lab Naturals, Inc.
We do not have employment/consultant agreements with our officers. We use month to month consulting.
m. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AS OF JULY 2, 2020
The following table sets forth information with respect to the beneficial ownership of our outstanding common stock by:
| · | each person who is known by us to be the beneficial owner of five percent (5%) or more of our common stock; |
| · | our executive officers, and each director as identified in the “Management — Executive Compensation” section; and |
| · | all of our directors and executive officers as a group. |
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock and options, warrants and convertible securities that are currently exercisable or convertible within 60 days of the date of this document into shares of our common stock are deemed to be outstanding and to be beneficially owned by the person holding the options, warrants or convertible securities for the purpose of computing the percentage ownership of the person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
(REMAINDER OF PAGE LEFT BLANK INTENTIONALLY)
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The information below is based on the number of shares of our common stock that we believe was beneficially owned by each person or entity as of July 2, 2020.
OFFICERS AND DIRECTORS
| Title of Class | Name of Beneficial Owner (1) | Amount and Nature of Beneficial Owner | Percent of Class Outstanding before offering (2) | Percent of Class Outstanding after offering (3) | ||||||||||
| Common Stock | W. Edward Nichols, Chief Executive Officer and Director | 200,000 | 1.85 | % | 0 | % | ||||||||
| Class A Preferred Convertible Stock | 250,000 | 50.00 | % | 50.00 | % | |||||||||
| Common Stock | Darrell Avey, Chief Financial Officer, Vice President and Director | 270,000 | 2.49 | % | 0 | % | ||||||||
| Class A Preferred Convertible Stock | 0 | 0.00 | % | 0 | % | |||||||||
| Common Stock | Jeremy Ostler, Director | 80,000 | .74 | % | 0 | % | ||||||||
| Class A Preferred Convertible Stock | 0 | 0.00 | % | 0 | % | |||||||||
| Common Stock | Calvin D. Smiley, Sr., Director | 50,000 | .46 | % | 0 | % | ||||||||
| Class A Preferred Convertible Stock | 0 | 0.00 | % | 0 | % | |||||||||
| Common Stock | All Directors and Executive Officers as a Group (4 persons) | 600,000 | 5.54 | % | 0 | % | ||||||||
| Class A Preferred Convertible Stock | All Directors and Executive Officers as a Group (1 person) | 250,000 | 50.00 | % | 50.00 | % | ||||||||
|
(1) |
The address of each person listed above, unless otherwise indicated, is c/o Bio Lab Naturals, Inc., 201 Columbine St., 3rd Floor, Suite 11, Denver, CO 80206. | |
| (2) | Based upon 10,833,504 common shares issued and outstanding on a fully diluted basis. (Does not include conversion of 500,000 shares held of Class A Preferred Convertible Stock). | |
| (3) | Assumes maximum sale of all registered shares and 10,833,504 shares issued and outstanding after resales. |
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GREATER THAN 5% STOCKHOLDERS
| Title of Class | Name of Beneficial Owner (1) | Amount and Nature of Beneficial Owner | Percent of Class Outstanding before offering (2) | Percent of Class Outstanding after offering (3) | ||||||||||
| Common Stock | William Bossung | 1,805,000 | 16.68 | % | 0 | % | ||||||||
| Common Stock | High Speed Aggregate, Inc. (4) | 960,000 | 8.86 | % | 0 | % | ||||||||
| Common Stock | Timothy J. Brasel and Janet M. Brasel (6) | 545,000 | 5.03 | % | 0 | % | ||||||||
| Common Stock | Susan A. Brasel (7) | 1,450,000 | 13.38 | % | 0 | % | ||||||||
| Class A Preferred Convertible Stock | W. Edward Nichols, CEO and Director | 250,000 | 50.00 | % | 50.00% (5) | |||||||||
| Class A Preferred Convertible Stock | Michael A. Littman Atty Defined Benefit Plan | 250,000 | 50.00 | % | 50,00% (5) | |||||||||
| (1) | The address of each person listed above, unless otherwise indicated, is c/o Bio Lab Naturals, Inc., 201 Columbine St., 3rd Floor, Suite 11, Denver, CO 80206. |
| (2) | Based upon 10,833,504 shares of common stock issued and outstanding on a fully diluted basis. (Does not include conversion of 500,000 shares held of Class A Preferred Convertible Stock). | |
| (3) | Assumes maximum sale of all registered shares and 10,833,504 shares of common stock issued and outstanding after resales. | |
| (4) | Jeffrey Ploen has indirect beneficial ownership of 800,000 common shares of High Speed Aggregate, Inc. Mr. Ploen also has direct beneficial ownership of 160,000 common shares. | |
| (5) | Class A Preferred Convertible Stock together votes 60% of common stock at all votes of shareholders until conversion. | |
| (6) | Timothy J. Brasel and Janet M. Brasel are married. They have indirect beneficial ownership of 205,000 common shares of Bleu Ridge Consultants, Inc., 50,000 common shares of La Mirage Trust and 100,000 common shares of the Charitable Remainder Trust of Susan Anne Brasel. Janet M. Brasel also has direct beneficial ownership of 190,000 common shares. | |
| (7) | Susan A. Brasel has indirect beneficial ownership of 500,000 common shares of M.J. Brasel, LLC, 300,000 common shares of Causeway, LLC and 600,000 common shares of Brasel Family Holdings Trust. |
Rule 13d-3 under the Securities Exchange Act of 1934 governs the determination of beneficial ownership of securities. That rule provides that a beneficial owner of a security includes any person who directly or indirectly has or shares voting power and/or investment power with respect to such security. Rule 13d-3 also provides that a beneficial owner of a security includes any person who has the right to acquire beneficial ownership of such security within sixty days, including through the exercise of any option, warrant or conversion of a security. Any securities not outstanding which are subject to such options, warrants or conversion privileges are deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class owned by such person. Those securities are not deemed to be outstanding for the purpose of computing the percentage of the class owned by any other person. Included in this table are only those derivative securities with exercise prices that we believe have a reasonable likelihood of being “in the money” within the next sixty days.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
We adopted a Stock Option and Award Plan on January 15, 2020. We have authorized 2,000,000 shares of common stock to be available for the Plan. We have granted no options exercisable for shares of our common stock under the Plan.
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n. CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS, PROMOTERS AND CONTROL PERSONS
Other than the transactions discussed below, we have not entered into any transaction in past two years, nor are there any proposed transactions in which any of the founders, directors, executive officers, shareholders or any members of the immediate family of any of the foregoing had or is to have a direct or indirect material interest:
Darrell Avey and Jeremy Ostler, two of our officers and directors, were principals in Prime Time Live, Inc. (“PTL”) which entered into a merger agreement in which 5,500,000 shares of the Company’s common stock were distributed to PTL shareholders effective December 31, 2019. Mr. Avey received 250,000 common shares and Jeremy Ostler received 30,000 common shares in the exchange.
W. Edward Nichols (Officer and Director) and Michael A. Littman (through Atty Defined Benefit Plan) received Class A Preferred shares (250,000 each) for services valued in the amount of $300,000 ($150,000 each). Such shares together vote equivalent of 60% of common at all times and convert to common on a two for one basis.
Michael A. Littman received 400,000 common shares for services valued in the amount of $120,000 during the period July 1, 2019 (Inception) through December 31, 2019 (owned by his Atty Defined Benefit Plan).
Timothy J. Brasel and Janet M. Brasel, husband and wife, personally and through various entities received beneficially a total of 545,000 common shares of the Company as part of the PTL merger.
William Bossung personally received a totally of 1,725,000 common shares of the Company as part of the PTL merger.
None.
ITEM 12. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act of 1933 with respect to the securities offered by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information pertaining to us and our common stock, you should refer to the registration statement and the exhibits filed with the registration statement. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document.
Upon effectiveness of our S-1 Registration Statement, we will be subject to the informational requirements of the Securities Exchange Act of 1934 and will file reports and other information with the SEC. You can read our SEC filings, including the registration statement, over the internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC at its Public Reference Room at 100 F Street N.E., Washington, D.C. 20549. Additionally, you can obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of its Public Reference Room.
EXPERTS
The financial statements of the Company for the period from July 1, 2019 (Inception) through December 31, 2019 appearing elsewhere in this Offering Circular have been included herein in reliance upon the report of BF Borgers CPA PC, an independent registered public accounting firm, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, and upon the authority of BF Borgers CPA PC as experts in accounting and auditing.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate by reference” into this prospectus information we have filed with it. The information incorporated by reference is an important part of this prospectus and is considered to be part of this prospectus. We incorporate by reference the documents listed as exhibits to the document in Item 16.
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ITEM 12A. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Delaware General Corporation Law requires us to indemnify officers and directors for any expenses incurred by any officer or director in connection with any actions or proceedings, whether civil, criminal, administrative, or investigative, brought against such officer or director because of his or her status as an officer or director, to the extent that the director or officer has been successful on the merits or otherwise in defense of the action or proceeding. The Delaware General Corporation Law permits a corporation to indemnify an officer or director, even in the absence of an agreement to do so, for expenses incurred in connection with any action or proceeding if such officer or director acted in good faith and in a manner in which he or she reasonably believed to be in or not opposed to the best interests of us and such indemnification is authorized by the stockholders, by a quorum of disinterested directors, by independent legal counsel in a written opinion authorized by a majority vote of a quorum of directors consisting of disinterested directors, or by independent legal counsel in a written opinion if a quorum of disinterested directors cannot be obtained.
The Delaware General Corporation Law prohibits indemnification of a director or officer if a final adjudication establishes that the officer’s or director’s acts or omissions involved intentional misconduct, fraud, or a knowing violation of the law and were material to the cause of action. Despite the foregoing limitations on indemnification, the Florida Statutes may permit an officer or director to apply to the court for approval of indemnification even if the officer or director is adjudged to have committed intentional misconduct, fraud, or a knowing violation of the law.
The Delaware General Corporation Law also provides that indemnification of directors is not permitted for the unlawful payment of distributions, except for those directors registering their dissent to the payment of the distribution.
According to our bylaws, we are authorized to indemnify our directors to the fullest extent authorized under Delaware General Corporation Law subject to certain specified limitations.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to directors, officers and persons controlling us pursuant to the foregoing provisions or otherwise, we are advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
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[OUTSIDE BACK COVER PAGE OF PROSPECTUS]
Dealer Prospectus Delivery Requirements
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We have expended, or will expend fees in relation to this registration statement as detailed below:
| Expenditure Item | Amount | |||
| Attorney Fees | $ | 25,000 | ||
| Audit Fees | $ | 50,000 | ||
| Transfer Agent Fees | $ | 2,000 | ||
| SEC Registration and Blue Sky Registration fees (estimated) | $ | 5,000 | ||
| Printing Costs and Miscellaneous Expenses (estimated) | $ | 18,000 | ||
| Total | $ | 100,000 | ||
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Delaware General Corporation Laws and the bylaws.
Under the Delaware General Corporation Laws, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company’s Articles of Incorporation. Our Articles of Incorporation do not specifically limit the directors’ immunity. Excepted from that immunity are: (a) a willful failure to deal fairly with us or our shareholders in connection with a matter in which the director has a material conflict of interest; (b) a violation of criminal law, unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; (c) a transaction from which the director derived an improper personal profit; and (d) willful misconduct.
Our bylaws provide that it will indemnify the directors to the fullest extent not prohibited by Delaware law; provided, however, that we may modify the extent of such indemnification by individual contracts with the directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding, or part thereof, initiated by such person unless such indemnification: (a) is expressly required to be made by law, (b) the proceeding was authorized by the board of directors, (c) is provided by us, in sole discretion, pursuant to the powers vested under Delaware law or (d) is required to be made pursuant to the bylaws.
Our bylaws provide that it will advance to 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, by reason of the fact that he is or was a director or officer of us, or is or was serving at the request of us as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under the bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer except by reason of the fact that such officer is or was our director in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of us.
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ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
| Common | ||||
| Persons and/or Entities | Shares | Date | Nature | Consideration |
| Kenneth Helfer | 350,000 | 12/31/2019 | Shares per Merger | $ 105,000 |
| Darrell Avey | 250,000 | 12/31/2019 | Shares per Merger | $ 75,000 |
| NextWave Development Group LLC | 315,000 | 12/31/2019 | Shares per Merger | $ 94,500 |
| NextWave Development Group LLC | 80,000 | 6/12/2020 | Conversion of Debt | $ 10,000 |
| Bleu Ridge Consultants, Inc. | 205,000 | 12/31/2019 | Shares per Merger | $ 61,500 |
| Dave Crowley | 30,000 | 12/31/2019 | Shares per Merger | $ 9,000 |
| Chad Stephens | 25,000 | 12/31/2019 | Shares per Merger | $ 7,500 |
| Gunslinger Capital Group, LLC | 50,000 | 12/31/2019 | Shares per Merger | $ 15,000 |
| Joe McShane Jr. | 40,000 | 12/31/2019 | Shares per Merger | $ 12,000 |
| Village Partners, LLC | 100,000 | 12/31/2019 | Shares per Merger | $ 30,000 |
| Tyler J. Brasel | 50,000 | 12/31/2019 | Shares per Merger | $ 15,000 |
| MJ Brasel, LLC | 500,000 | 12/31/2019 | Shares per Merger | $ 150,000 |
| Brasel Family Holdings Trust | 650,000 | 12/31/2019 | Shares per Merger | $ 195,000 |
| Scott Owen | 55,000 | 12/31/2019 | Shares per Merger | $ 16,500 |
| Joe Logsdon | 100,000 | 12/31/2019 | Shares per Merger | $ 30,000 |
| Joe Bruno | 40,000 | 12/31/2019 | Shares per Merger | $ 12,000 |
| Michael B. Owens | 200,000 | 12/31/2019 | Shares per Merger | $ 60,000 |
| Paul Dragul or Paulette Dragul | 50,000 | 12/31/2019 | Shares per Merger | $ 15,000 |
| William Bossung | 1,725,000 | 12/31/2019 | Shares per Merger | $ 517,500 |
| David Graham | 50,000 | 12/31/2019 | Shares per Merger | $ 15,000 |
| David Graham | 40,000 | 6/7/2020 | Cash | $ 5,000 |
| Maurice W. Hansen Trust | 50,000 | 12/31/2019 | Shares per Merger | $ 15,000 |
| Jay Decker | 100,000 | 12/31/2019 | Shares per Merger | $ 30,000 |
| Logan Decker | 100,000 | 12/31/2019 | Shares per Merger | $ 30,000 |
| James Jenkens | 15,000 | 12/31/2019 | Shares per Merger | $ 4,500 |
| Kyle Israel | 200,000 | 12/31/2019 | Conversion of Debt | $ 25,897 |
| Shelton Decker | 100,000 | 12/31/2019 | Shares per Merger | $ 30,000 |
| Jeremy Ostler | 30,000 | 12/31/2019 | Shares per Merger | $ 9,000 |
| Jeremy Ostler | 50,000 | 6/15/2020 | Services | $ 6,250 |
| David L. Hayes | 50,000 | 12/31/2019 | Shares per Merger | $ 15,000 |
| Calvin D. Smiley Sr. | 50,000 | 6/15/2020 | Services | $ 6,250 |
| Ben Coates | 100,000 | 12/31/2019 | Shares per Merger | $ 30,000 |
| Mike & Susan McShane | 50,000 | 12/31/2019 | Shares per Merger | $ 15,000 |
| Mike & Susan McShane | 40,000 | 4/21/2020 | Cash | $ 5,000 |
| John & Loretta McShane | 100,000 | 12/31/2019 | Shares per Merger | $ 30,000 |
| John & Loretta McShane | 40,000 | 4/21/2020 | Cash | $ 5,000 |
| Jeffrey P. Ploen | 160,000 | 5/20/2020 | Cash | $ 20,000 |
| Theodore Block | 20,000 | 12/31/2019 | Shares per Merger | $ 6,000 |
| M. A. Littman | 400,000 | 12/31/2019 | Services | $ 120,000 |
| High Speed Aggregate, Inc. | 800,000 | 6/22/2020 | Cash | $ 100,000 |
| Zhuge Liang, LLC | 116,000 | 6/24/2020 | Cash | $ 14,500 |
| San Gabriel Fund, LLC | 160,000 | 6/24/2020 | Cash | $ 20,000 |
| JMW Fund, LLC | 320,000 | 6/24/2020 | Cash | $ 40,000 |
| Richland Fund, LLC | 320,000 | 6/24/2020 | Cash | $ 40,000 |
| Justin Yorke | 33,333 | 6/24/2020 | Cash | $ 4,167 |
| JPG Investments | 33,333 | 6/24/2020 | Cash | $ 4,167 |
| Christopher Bragg | 33,333 | 6/24/2020 | Cash | $ 4,167 |
| TOTAL | 8,375,999 | |||
| Series A | ||||
| Persons and/or Entities | Preferred Shares | Date | Nature | Consideration |
| W. Edward Nichols | 250,000 | 12/31/2019 | Services | $ 75,000 |
| Michael A. Littman Defined Benefit Plan | 250,000 | 12/31/2019 | Services | $ 75,000 |
| 500,000 |
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Exemption From Registration Claimed
All of the above sales by us of our unregistered securities were made by us in reliance upon Rule 506 of Regulation D or Section 4(a)2 of the Securities Act of 1933, as amended (the "1933 Act"). All of the individuals and/or entities that purchased the unregistered securities were known to us and our management, through pre-existing business relationships, or long-standing business associates or were shareholders of Prime Time Live, Inc. who received exchange shares for Prime Time Live, Inc. assets. All purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and were afforded access to our management in connection with their purchases. All purchasers of the unregistered securities acquired such securities for investment and not with a view toward distribution, acknowledging such intent to us. All certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer of the certificates or agreements representing such securities, without such securities either being first registered or otherwise exempt from registration in any further resale or disposition.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| Exhibit Number | Description | |
| 3(i).1 | Certificate of Merger to Delaware -8.20.10 | Filed Herewith |
| 3(i).2 | Certificate of Incorporation – Vyta Corp. – Delaware -6.3.2010 | Filed Herewith |
| 3(i).3 | Certificate of Amendment of Certificate of Incorporation – Vyta Corp. - DE – 8.26.10 | Filed Herewith |
| 3(i).4 | Certificate of Incorporation – Bio Lab Naturals, Inc. – DE – 8.26.10 | Filed Herewith |
| 3(i).5 | Certificate of Incorporation – 10 Vyta, Inc. DE – 8.26.10 | Filed Herewith |
| 3(i).6 | Certificate of Amendment of Certificate of Incorporation – Bio Lab Naturals, Inc. – DE – 10.1.10 | Filed Herewith |
| 3(i).7 | Certificate of Amendment of Certificate of Incorporation – Name Change to Vyta Corp. – DE – 4.18.13 | Filed Herewith |
| 3(i).8 | Certificate of Correction – Voiding Name Change – DE – 3.27.15 | Filed Herewith |
| 3(i).9 | Certificate of Amendment of Certificate of Incorporation - Name change to Set Net Global, Inc. – DE – 4.1.15 | Filed Herewith |
| 3(i).10 | Certificate of Amendment of Certificate of Incorporation - Name change back to Bio Lab Naturals, Inc. – DE – 7.16.19 | Filed Herewith |
| 3(i).11 | Articles of Amendment - HPI Equipment Corp. Name Change to PTL Acquisition Sub, Inc. - 1.28.20 | Filed Herewith |
| 3(i).12 | Certification of Amendment of Certificate of Incorporation (Article 4) – 2/3/20 | Filed Herewith |
| 3(i).13 | Articles of Incorporation - PrimeTime Live | Filed Herewith |
| 3(i).14 | Statement of Correction – Prime Time Live | Filed Herewith |
| 3(i).15 | Articles of Amendment to Articles of Incorporation – Name Change Prime Time Live, Inc. | Filed Herewith |
| 3(ii).16 | Bylaws of Bio Lab Naturals, Inc. | Filed Herewith |
| 3(ii).17 | Bylaws of PTL Acquisition Sub, Inc. | Filed Herewith |
| 4.1 | 2020 Stock Option and Award Plan | Filed Herewith |
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| 4.2 | Series A Preferred Certification of Designation – Bio Lab Naturals, Inc. DE – 8.31.10 | Filed Herewith |
| 4.3 | Class A Super Majority Convertible Preferred Shares Designation – Bio Lab Naturals, Inc. – DE – 2.5.20 | Filed Herewith |
| 4.4 | Class B Convertible Preferred Shares Designation | Filed Herewith |
| 4.5 | Certificate of Designation of Series AA Preferred Stock – Bio Lab Naturals, Inc. – DE – 5.3.12 | Filed Herewith |
| 10.1 | Agreement and Plan of Reorganization with Prime Time Live, Inc. | Filed Herewith |
| 21.1 | List of Subsidiaries | Filed Herewith |
| 23.1 | Legal Opinion of Christen Lambert, Attorney at Law | Filed Herewith |
| 23.2 | Consent of Independent Certified Public Accountants | Filed Herewith |
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We hereby undertake the following:
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
| a. | To include any prospectus required by Section 10(a) (3) of the Securities Act of 1933; |
| b. | To reflect in the prospectus any facts or events arising after the effective date of this registration statement, or most recent post-effective amendment, which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement; and |
| c. | To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in the registration statement. |
That, for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
To remove from registration by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of the Offering.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to the directors, officers and controlling persons pursuant to the provisions above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of the directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of the directors, officers, or controlling persons in connection with the securities being registered, we will unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act, and we will be governed by the final adjudication of such issue.
For determining liability under the Securities Act, to treat the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant under Rule 424(b) (1) or (4) or 497(h) under the Securities Act as part of this Registration Statement as of the time the Commission declared it effective.
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In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and authorized this Registration Statement to be signed on our behalf by the undersigned, thereunto duly authorized, in the City of Denver, State of Colorado, on July 2, 2020.
BIO LAB NATURALS, INC.
| /s/ W. Edward Nichols | July 2, 2020 | |
| W. Edward Nichols | ||
| (Chief Executive Officer and Principal Executive Officer) | ||
| /s/Darrell Avey | July 2, 2020 | |
| Darrell Avey | ||
| (Chief Financial Officer and Principal Accounting Officer) | ||
In accordance with the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates stated.
| /s/ W. Edward Nichols | July 2, 2020 | |
| W. Edward Nichols, Director | ||
| /s/ Darrell Avey | July 2, 2020 | |
| Darrell Avey, Director | ||
| /s/ Jeremy Ostler | July 2, 2020 | |
| Jeremy Ostler, Director | ||
| /s/Calvin D. Smiley, Sr. | ||
| Calvin D. Smiley, Sr., Director | July 2, 2020 | |
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EXHIBIT 3(ii).16
BYLAWS
OF
BIO LAB NATURALS, INC.
Article I
SHAREHOLDERS
1. ANNUAL SHAREHOLDERS' MEETING. The annual shareholders' meeting shall be held on the date and at the time and place fixed from time to time by the Board of Directors.
2. SPECIAL SHAREHOLDERS' MEETING. A special shareholders' meeting for any purpose or purposes, may be called by the Board of Directors or the president. The Corporation shall also hold a special shareholders' meeting in the event it receives, in the manner specified in Article VII, Section 3, one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by the holders of shares representing not less than one-tenth of all of the votes entitled to be cast on any issue at the meeting. Special meetings shall be held at the principal office of the Corporation or at such other place as the Board of Directors or the president may determine.
3. RECORD DATE FOR DETERMINATION OF SHAREHOLDERS.
(a) In order to make a determination of shareholders (1) entitled to notice of or to vote at any shareholders' meeting or at any adjournment of a shareholders' meeting, (2) entitled to demand a special shareholders' meeting, (3) entitled to take any other action, (4) entitled to receive payment of a share dividend or a distribution, or (5) for any other purpose; the Board of Directors may fix a future date as the record date for such determination of shareholders provided that the record date may be fixed not more than seventy days before the date of the proposed action.
(b) Unless otherwise specified when the record date is fixed, the time of day for determination of shareholders shall be as of the Corporation's close of business on the record date.
(c) A determination of shareholders entitled to be given notice of or to vote at a shareholders' meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date, which the Board shall do if the meeting is adjourned to a date more than one hundred twenty days after the date fixed for the original meeting.
(d) If no record date is otherwise fixed, the record date for determining shareholders entitled to be given notice of and to vote at an annual or special shareholders' meeting is the day before the first notice is given to shareholders.
(e) The record date for determining shareholders entitled to take action without a meeting pursuant to Article I, Section 10 is the date a written notice upon which the action is taken is first received by the Corporation.
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4. VOTING LIST.
(a) After a record date is fixed for a shareholders' meeting, the secretary shall prepare a list of the names of all its shareholders who are entitled to be given notice of the meeting. The list shall be arranged by voting groups and within each voting group by class or series of shares, shall be alphabetical within each class or series, and shall show the address of, and the number of shares of each such class and series that are held by, each shareholder.
(b) The shareholders' list shall be available for inspection by any shareholder, beginning the earlier of ten days before the meeting for which the list was prepared or two business days after notice of the meeting is given and continuing through the meeting, and any adjournment thereof, at the Corporation's principal office or at a place identified in the notice of the meeting in the city where the meeting will be held.
(c) The secretary shall make the shareholders' list available at the meeting, and any shareholder or agent or attorney of a shareholder is entitled to inspect the list at any time during the meeting or any adjournment.
5. NOTICE TO SHAREHOLDERS.
(a) The secretary shall give notice to shareholders of the date, time, and place of each annual and special shareholders' meeting no fewer than ten nor more than sixty days before the date of the meeting; except that, if the articles of incorporation are to be amended to increase the number of authorized shares, at least thirty days' notice shall be given. Except as otherwise required by the Delaware General Corporation Law, the secretary shall be required to give such notice only to shareholders entitled to vote at the meeting.
(b) Notice of an annual shareholders' meeting need not include a description of the purpose or purposes for which the meeting is called unless a purpose of the meeting is to consider an amendment to the articles of incorporation, a restatement of the articles of incorporation, a plan of merger or share exchange, disposition of substantially all of the property of the Corporation, consent by the Corporation to the disposition of property by another entity, or dissolution of the Corporation.
(c) Notice of a special shareholders' meeting shall include a description of the purpose or purposes for which the meeting is called.
(d) Notice of a shareholders' meeting shall be in writing and shall be given
(1) by deposit in the United States mail, properly addressed to the shareholder's address shown in the Corporation's current record of shareholders,
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first class postage prepaid, and, if so given, shall be effective when mailed; or
(2) by telegraph, teletype, electronically transmitted facsimile, electronic mail, mail, or private carrier or by personal delivery to the shareholder, and, if so given, shall be effective when actually received by the shareholder.
(e) If an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment; provided, however, that, if a new record date for the adjourned meeting is fixed pursuant to Article I, Section 3(c), notice of the adjourned meeting shall be given to persons who are shareholders as of the new record date.
(f) If three successive notices are given by the Corporation, whether with respect to a shareholders' meeting or otherwise, to a shareholder and are returned as undeliverable, no further notices to such shareholder shall be necessary until another address for the shareholder is made known to the Corporation.
6. QUORUM. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. One-third of the votes entitled to be cast on the matter by the voting group shall constitute a quorum of that voting group for action on the matter. If a quorum does not exist with respect to any voting group, the president or any shareholder or proxy that is present at the meeting, whether or not a member of that voting group, may adjourn the meeting to a different date, time, or place, and (subject to the next sentence) notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed pursuant to Article I, Section 3(c), notice of the adjourned meeting shall be given pursuant to Article I, Section 5 to persons who are shareholders as of the new record date. At any adjourned meeting at which a quorum exists, any matter may be acted upon that could have been acted upon at the meeting originally called; provided, however, that, if new notice is given of the adjourned meeting, then such notice shall state the purpose or purposes of the adjourned meeting sufficiently to permit action on such matters. Once a share is represented for any purpose at a meeting, including the purpose of determining that a quorum exists, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or shall be set for that adjourned meeting.
7. VOTING ENTITLEMENT OF SHARES. Except as stated in the articles of incorporation, , except as otherwise specified in Designations of Rights and Privileges for Series of Preferred Stock, each outstanding share, regardless of class, is entitled to one vote, and each fractional share is entitled to a corresponding fractional vote, on each matter voted on at a shareholders' meeting.
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8. PROXIES; ACCEPTANCE OF VOTES AND CONSENTS.
(a) A shareholder may vote either in person or by proxy.
(b) An appointment of a proxy is not effective against the Corporation until the appointment is received by the Corporation. An appointment is valid for eleven months unless a different period is expressly provided in the appointment form.
(c) The Corporation may accept or reject any appointment of a proxy, revocation of appointment of a proxy, vote, consent, waiver, or other writing purportedly signed by or for a shareholder, if such acceptance or rejection is in accordance with the provisions of the Delaware General Corporation Law.
9. WAIVER OF NOTICE.
(a) A shareholder may waive any notice required by the Delaware General Corporation Law, the articles of incorporation or these bylaws, whether before or after the date or time stated in the notice as the date or time when any action will occur or has occurred. The waiver shall be in writing, be signed by the shareholder entitled to the notice, and be delivered to the Corporation for inclusion in the minutes or filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver.
(b) A shareholder's attendance at a meeting waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice, and waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.
10. ACTION BY SHAREHOLDERS WITHOUT A MEETING. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with corporate action, by any provisions of the Delaware General Corporation Law or the Certificate of Incorporation, the meeting and vote of stockholders may be dispensed with, if a majority of the stockholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken, as allowed. Action taken pursuant to this section shall be effective when the Corporation has received writings that describe and consent to the action, signed by a majority of the shareholders entitled to vote thereon. Action taken pursuant to this section shall be effective as of the date the last writing necessary to effect the action is received by the Corporation, unless all of the writings necessary to effect the action specify another date, which may be before or after the date the writings are received by the Corporation. Such action shall have the same effect as action taken at a meeting of shareholders and may be described as such in any document. Any shareholder who has signed a writing describing and consenting to action taken pursuant to this section may revoke such
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consent by a writing signed by the shareholder describing the action and stating that the shareholder's prior consent thereto is revoked, if such writing is received by the Corporation before the effectiveness of the action.
11. MEETINGS BY TELECOMMUNICATIONS. To the extent provided by resolution of the Board of Directors or in the notice of the meeting, any or all of the shareholders may participate in an annual or special shareholders' meeting by, or the meeting may be conducted through the use of, any means of communication by which all persons participating in the meeting may hear each other during the meeting. A shareholder participating in a meeting by this means is deemed to be present in person at the meeting.
Article II
DIRECTORS
1. AUTHORITY OF THE BOARD OF DIRECTORS. The corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, a Board of Directors.
2. NUMBER. Subject to the provisions of the Articles of Incorporation, the number of directors shall be fixed by resolution of the Board of Directors from time to time and may be increased or decreased by resolution adopted by the Board of Directors from time to time, but no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. The number of directors shall be no less than three directors in order to carry out any business other than appointment of a replacement director to fill a vacancy on the Board.
3. QUALIFICATION. Directors shall be natural persons at least eighteen years old but need not be residents of the State of Delaware or shareholders of the Corporation.
4. ELECTION. The Board of Directors shall be elected at the annual meeting of the shareholders or at a special meeting called for that purpose.
5. TERM. Each director shall be elected to hold office until the next annual meeting of shareholders and until the director's successor is elected and qualified unless the directors are appointed to staggered terms as provided in the Articles of Incorporation. In such case, the terms of the directors shall expire as set forth in the Articles of Incorporation
6. RESIGNATION. A director may resign at any time by giving written notice of his or her resignation to any other director or (if the director is not also the secretary) to the secretary. The resignation shall be effective when it is received by the other director or secretary, as the case may be, unless the notice of resignation specifies a later effective date. Acceptance of such resignation shall not be necessary to make it effective unless the notice so provides.
7. REMOVAL. Any director may be removed by the shareholders of the voting group that elected the director, with or without cause, at a meeting called, Notice of which includesthat
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purpose. The notice of the meeting shall state that the purpose, or one of the purposes, of the meeting is removal of the director. A director may be removed only if the number of votes cast in favor of removal exceeds the number of votes cast against removal.
8. VACANCIES.
(a) If a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors:
(1) The shareholders may fill the vacancy at the next annual meeting or at a special meeting called for that purpose; or
(2) The Board of Directors may fill the vacancy; or
(3) If the directors remaining in office constitute fewer than a quorum of the Board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.
(b) Notwithstanding Article II, Section 8(a), if the vacant office was held by a director elected by a voting group of shareholders, then, if one or more of the remaining directors were elected by the same voting group, only such directors are entitled to vote to fill the vacancy if it is filled by directors, and they may do so by the affirmative vote of a majority of such directors remaining in office; and only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders.
(c) A vacancy that will occur at a specific later date, by reason of a resignation that will become effective at a later date under Article II, Section 6 or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.
9. MEETINGS. The Board of Directors may hold regular or special meetings in or out of Delaware. A regular meeting shall be held in the principal office of the Corporation or at such other place, on such date or dates, and at such time as may be established by resolution of the Board of Directors. If the Board shall establish a date and time for a regular meeting of the Board, such meeting may be held without notice of the date, time, place, or purpose of the meeting The Board of Directors may, by resolution, establish other dates, times and places for additional regular meetings, which may thereafter be held without further notice. Special meetings may be called by the president or by any two directors and shall be held at the principal office of the Corporation unless another place is consented to by every director. At any time when the Board consists of a single director, that director may act at any time, date, or place without notice.
10. NOTICE OF SPECIAL MEETING. Notice of a special meeting shall be given to every director at least twenty-four hours before the time of the meeting, stating the date, time,
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and place of the meeting. The notice need not describe the purpose of the meeting. Notice may be given orally to the director, personally or by telephone or other wire or wireless communication. Notice may also be given in writing by telegraph, teletype, electronically transmitted facsimile, electronic mail, mail, or private carrier. Notice shall be effective at the earliest of the time it is received; five days after it is deposited in the United States mail, properly addressed to the last address for the director shown on the records of the Corporation, first class postage prepaid; or the date shown on the return receipt if mailed by registered or certified mail, return receipt requested, postage prepaid, in the United States mail and if the return receipt is signed by the director to which the notice is addressed.
11. QUORUM. Except as provided in Article II, Section 8, a majority of the number of directors fixed in accordance with these Bylaws shall constitute a quorum for the transaction of business at all meetings of the Board of Directors. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, except as otherwise specifically required by law.
12. WAIVER OF NOTICE.
(a) A director may waive any notice of a meeting before or after the time and date of the meeting stated in the notice. Except as provided by Article II, Section 12(b), the waiver shall be in writing and shall be signed by the director. Such waiver shall be delivered to the secretary for filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver.
(b) A director's attendance at or participation in a meeting waives any required notice to him or her of the meeting unless, at the beginning of the meeting or promptly upon his or her later arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice and does not thereafter vote for or assent to action taken at the meeting.
13. ATTENDANCE BY TELEPHONE. One or more directors may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.
14. DEEMED ASSENT TO ACTION. A director who is present at a meeting of the Board of Directors when corporate action is taken shall be deemed to have assented to all action taken at the meeting unless:
(1) The director objects at the beginning of the meeting, or promptly upon his or her arrival, to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to any action taken at the meeting;
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(2) The director contemporaneously requests that his or her dissent or abstention as to any specific action taken be entered in the minutes of the meeting; or
(3) The director causes written notice of his or her dissent or abstention as to any specific action to be received by the presiding officer of the meeting before adjournment of the meeting or by the secretary (or, if the director is the secretary, by another director) promptly after adjournment of the meeting. The right of dissent or abstention pursuant to this Article II, Section 14 as to a specific action is not available to a director who votes in favor of the action taken.
15. ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or permitted by law to be taken at a Board of Directors' meeting may be taken without a meeting if all members of the Board consent to such action in writing. Action shall be deemed to have been so taken by the Board at the time the last director signs a written consent the action taken, unless, before such time, any director has revoked his or her consent by a written notice of revocation by the director and received by the secretary or any other person authorized by the bylaws or the Board of Directors to receive such a revocation. Such action shall be effective at the time and date it is so taken unless the directors establish a different effective time or date. Such action has the same effect as action taken at a meeting of directors and may be described as such in any document.
16. NOMINATIONS OF DIRECTORS.
(a) The Board of Directors may nominate persons to stand for election to the Board of Directors at any time prior to a meeting of shareholders at which directors are to be elected.
(b) Any shareholder may nominate a person to stand for election to the Board of Directors provided such shareholder provides written notification of the intention to nominate such persons at the next shareholder meeting not less than 90 days in advance of such meeting, and provided further such notice is accompanied by information regarding the proposed nominee meeting the requirements of part III of SEC Regulation SB or Regulation SK and information regarding all direct and indirect business or personal relationships between the shareholder and the proposed nominee.
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Article III
COMMITTEES OF THE BOARD OF DIRECTORS
1. COMMITTEES OF THE BOARD OF DIRECTORS.
(a) Subject to the provisions of the Delaware General Corporation Law, the Board of Directors may create one or more committees and appoint one or more members of the Board of Directors to serve on them. The creation of a committee and appointment of members to it shall require the approval of a majority of all the directors in office when the action is taken, whether or not those directors constitute a quorum of the Board.
(b) The provisions of these bylaws governing meetings, action without meeting, notice, waiver of notice, and quorum and voting requirements of the Board of Directors apply to committees and their members as well.
(c) To the extent specified by resolution adopted from time to time by a majority of all the directors in office when the resolution is adopted, whether or not those directors constitute a quorum of the Board, each committee shall exercise the authority of the Board of Directors with respect to the corporate powers and the management of the business and affairs of the Corporation; except that a committee shall not:
(1) Authorize distributions;
(2) Approve or propose to shareholders action that the Delaware General Corporation Law requires to be approved by shareholders;
(3) Fill vacancies on the Board of Directors or on any of its committees;
(4) Amend the articles of incorporation pursuant to the Delaware General Corporation Law;
(5) Adopt, amend, or repeal bylaws;
(6) Approve a plan of merger not requiring shareholder approval;
(7) Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; or
(8) Authorize or approve the issuance or sale of shares, or a contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares; except that the Board of Directors may authorize a committee or an officer to do so within limits specifically prescribed by the Board of Directors.
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(d) The creation of, delegation of authority to, or action by, a committee does not alone constitute compliance by a director with applicable standards of conduct.
Article IV
OFFICERS
1. GENERAL.
(a) The Corporation shall have as officers a president and a secretary, each of whom who shall be appointed by the Board of Directors. The Board of Directors may appoint as additional officers a chairman and other officers of the Board.
(b) The Board of Directors, the president, and such other subordinate officers as the Board of Directors may authorize from time to time, acting singly, may appoint as additional officers one or more vice presidents, assistant secretaries, assistant treasurers, and such other subordinate officers as the Board of Directors, the president, or such other appointing officers deem necessary or appropriate.
(c) The officers of the Corporation shall hold their offices for such terms and shall exercise such authority and perform such duties as shall be determined from time to time by these Bylaws, the Board of Directors, or (with respect to officers whom are appointed by the president or other appointing officers) the persons appointing them; provided, however, that the Board of Directors may change the term of offices and the authority of any officer appointed by the president or other appointing officers.
(d) Any two or more offices may be held by the same person. The officers of the Corporation shall be natural persons at least eighteen years old.
2. TERM. Each officer shall hold office from the time of appointment until the time of removal or resignation pursuant to Article IV, Section 3 or until the officer's death.
3. REMOVAL AND RESIGNATION. Any officer appointed by the Board of Directors may be removed at any time by the Board of Directors. Any officer appointed by the president or other appointing officer may be removed at any time by the Board of Directors or by the person appointing the officer. Any officer may resign at any time by giving written notice of resignation to any director (or to any director other than the resigning officer if the officer is also a director), to the president, to the secretary, or to the officer who appointed the officer. Acceptance of such resignation shall not be necessary to make it effective, unless the notice so provides.
4. PRESIDENT. The president shall preside at all meetings of shareholders, and shall also preside at all meetings of the Board of Directors unless the Board of Directors has appointed a chairman, vice chairman, or other officer of the Board and has authorized such person to preside at meetings of the Board of Directors instead of the president. Subject to the direction
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and control of the Board of Directors, the president of the Corporation shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The president may negotiate, enter into, and execute contracts, deeds, and other instruments on behalf of the Corporation as are necessary and appropriate to the conduct to the business and affairs of the Corporation or as are approved by the Board of Directors. The president shall have such additional authority and duties as are appropriate and customary for the office of president, except as the same may be expanded or limited by the Board of Directors from time to time.
5. VICE PRESIDENT. The vice president, if any, or, if there are more than one, the vice presidents in the order determined by the Board of Directors or the president (or, if no such determination is made, in the order of their appointment), shall be the officer or officers next in seniority after the president. Each vice president shall have such authority and duties as are prescribed by the Board of Directors or president. Upon the death, absence, or disability of the president, the vice president, if any, or, if there are more than one, the vice presidents in the order determined by the Board of Directors or the president, shall have the authority and duties of the president.
6. SECRETARY. The secretary shall be responsible for the preparation and maintenance of minutes of the meetings of the Board of Directors and of the shareholders and of the other records and information required to be kept by the Corporation under the Delaware General Corporation Law and for authenticating records of the corporation. The secretary shall also give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, keep the minutes of such meetings, have charge of the corporate seal, if any, and have authority to affix the corporate seal to any instrument requiring it (and, when so affixed, it may be attested by the secretary's signature), be responsible for the maintenance of all other corporate records and files and for the preparation and filing of reports to governmental agencies (other than tax returns), and have such other authority and duties as are appropriate and customary for the office of secretary, except as the same may be expanded or limited by the Board of Directors from time to time.
7. ASSISTANT SECRETARY. The assistant secretary, if any, or, if there are more than one, the assistant secretaries in the order determined by the Board of Directors or the secretary (or, if no such determination is made, in the order of their appointment) shall, under the supervision of the secretary, perform such duties and have such authority as may be prescribed from time to time by the Board of Directors or the secretary. Upon the death, absence, or disability of the secretary, the assistant secretary, if any, or, if there are more than one, the assistant secretaries in the order designated by the Board of Directors or the secretary (or, if no such determination is made, in the order of their appointment), shall have the authority and duties of the secretary.
8. TREASURER. The treasurer, if any, shall have control of the funds and the care and custody of all stocks, bonds, and other securities owned by the Corporation, and shall be responsible for the preparation and filing of tax returns. The treasurer shall receive all moneys
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paid to the Corporation and, subject to any limits imposed by the Board of Directors, shall have authority to give receipts and vouchers, to sign and endorse checks and warrants in the Corporation's name and on the Corporation's behalf, and give full discharge for the same. The treasurer shall also have charge of disbursement of funds of the Corporation, shall keep full and accurate records of the receipts and disbursements, and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as shall be designated by the Board of Directors. The treasurer shall have such additional authority and duties as are appropriate and customary for the office of treasurer, except as the same may be expanded or limited by the Board of Directors from time to time.
9. COMPENSATION. Officers shall receive such compensation for their services as may be authorized or ratified by the Board of Directors. Election or appointment of an officer shall not of itself create a contractual right to compensation for services performed as such officer.
Article V
INDEMNIFICATION
1. DEFINITIONS. As used in this article:
(a) "Corporation" includes any domestic or foreign entity that is a predecessor of the Corporation by reason of a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction.
(b) "Director" means an individual who is or was a director of the Corporation or an individual who, while a director of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or of an employee benefit plan. A director is considered to be serving an employee benefit plan at the Corporation's request if his or her duties to the Corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director.
(c) "Expenses" includes counsel fees.
(d) "Liability" means the obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses.
(e) "Official capacity" means, when used with respect to a director, the office of director in the Corporation and, when used with respect to a person other than a director as contemplated in Article V, Section 2(a), the office in the Corporation held by the officer or the employment, fiduciary, or agency relationship undertaken by the employee, fiduciary, or agent on behalf of the Corporation. "Official capacity" does not include
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service for any other domestic or foreign corporation or other person or employee benefit plan.
(f) "Party" includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal.
2. AUTHORITY TO INDEMNIFY DIRECTORS.
(a) Except as provided in Article V, Section 2(d), the Corporation may indemnify a person made a party to a proceeding because the person is or was a director against liability incurred in the proceeding if:
(1) The person conducted himself or herself in good faith; and
(2) The person reasonably believed:
(A) In the case of conduct in an official capacity with the Corporation, that his or her conduct was in the Corporation's best interests; and
(B) In all other cases, that his or her conduct was at least not opposed to the Corporation's best interests; and
(3) In the case of any criminal proceeding, the person had no reasonable cause to believe his or her conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirement of Article V, Section 2(a)(2)(B). A director's conduct with respect to an employee benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirements of Article V, Section 2(a)(1).
(c) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this Article V, Section 2.
(d) The Corporation may not indemnify a director under this Article V, Section 2:
(1) In connection with a proceeding by or in the right of the Corporation in
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which the director was adjudged liable to the Corporation; or
(2) In connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that he or she derived an improper personal benefit.
(e) Indemnification permitted under this Article V, Section 2 in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding.
3. MANDATORY INDEMNIFICATION OF DIRECTORS. The Corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the proceeding.
4. ADVANCE OF EXPENSES TO DIRECTORS.
(a) The Corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:
(1) The director furnishes to the Corporation a written affirmation of the director's good faith belief that he or she has met the standard of conduct described in Article V, Section 2.
(2) The director furnishes to the Corporation a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that he or she did not meet the standard of conduct; and
(3) A determination is made that the facts then known to those making the determination would not preclude indemnification under this article.
(b) The undertaking required by Article V, Section 4(a)(2) shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this Article V, Section 4 shall be made in the manner specified in Article V, Section 6.
5. COURT-ORDERED INDEMNIFICATION OF DIRECTORS. A director who is or was a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court, after giving any notice the court considers necessary, may order indemnification in the following manner:
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(1) If it determines that the director is entitled to mandatory indemnification under Article V, Section 3, the court shall order indemnification, in which case the court shall also order the Corporation to pay the director's reasonable expenses incurred to obtain court-ordered indemnification.
(2) If it determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in Article V, Section 2(a) or was adjudged liable in the circumstances described in Article V, Section 2(d), the court may order such indemnification as the court deems proper; except that the indemnification with respect to any proceeding in which liability shall have been adjudged in the circumstances described in Article V, Section 2(d) is limited to reasonable expenses incurred in connection with the proceeding and reasonable expenses incurred to obtain court-ordered indemnification.
6. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION OF DIRECTORS.
(a) The Corporation may not indemnify a director under Article V, Section 2 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in Article V, Section 2. The Corporation shall not advance expenses to a director under Article V, Section 4 unless authorized in the specific case after the written affirmation and undertaking required by Article V, Section 4(a)(1) and 4(a)(2) are received and the determination required by Article V, Section 4(a)(3) has been made.
(b) The determinations required by Article V, Section 6(a) shall be made:
(1) By the Board of Directors by a majority vote of those present at a meeting at which a quorum is present, and only those directors not parties to the proceeding shall be counted in satisfying the quorum; or
(2) If a quorum cannot be obtained, by a majority vote of a committee of the Board of Directors designated by the Board of Directors, which committee shall consist of two or more directors not parties to the proceeding; except that directors who are parties to the proceeding may participate in the designation of directors for the committee.
(c) If a quorum cannot be obtained as contemplated in Article V, Section 6(b)(1), and a committee cannot be established under Article V, Section 6(b)(2) if a quorum is obtained or a committee is designated, if a majority of the directors constituting such
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quorum or such committee so directs, the determination required to be made by Article V, Section 6(a) shall be made:
(1) By independent legal counsel selected by a vote of the Board of Directors or the committee in the manner specified in Article V, Section 6(b)(1) or 6(b)(2), or, if a quorum of the full Board cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full Board of Directors; or
(2) By the shareholders.
(d) Authorization of indemnification and advance of expenses shall be made in the same manner as the determination that indemnification or advance of expenses is permissible; except that, if the determination that indemnification or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance of expenses shall be made by the body that selected such counsel.
7. INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS.
(a) An officer is entitled to mandatory indemnification under Article V, Section 3 and is entitled to apply for court-ordered indemnification under Article V, Section 5, in each case to the same extent as a director;
(b) The Corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the Corporation to the same extent as to a director; and
(c) The Corporation may also indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent than is provided in these bylaws, if not inconsistent with public policy, and if provided for by general or specific action of its Board of Directors or shareholders or by contract.
8. INSURANCE. The Corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the Corporation, or who, while a director, officer, employee, fiduciary, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from his or her status as a director, officer, employee, fiduciary, or agent, whether or not the Corporation would have power to indemnify the person against the same liability under Article V, Sections 2, 3, or 7. Any such insurance may be procured from any insurance company designated by the Board of Directors, whether such insurance company is formed under the laws of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in which the Corporation has an equity or any other interest through stock ownership or otherwise.
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9. NOTICE TO SHAREHOLDERS OF INDEMNIFICATION OF DIRECTOR. If the Corporation indemnifies or advances expenses to a director under this article in connection with a proceeding by or in the right of the Corporation, the Corporation shall give written notice of the indemnification or advance to the shareholders with or before the notice of the next shareholders' meeting. If the next shareholder action is taken without a meeting at the instigation of the Board of Directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action.
Article VI
SHARES
1. CERTIFICATES. Certificates representing shares of the capital stock of the Corporation shall be in such form as is approved by the Board of Directors and shall be signed by the chairman or vice chairman of the Board of Directors (if any), or the president and by the secretary or an assistant secretary or the treasurer or an assistant treasurer. All certificates shall be consecutively numbered, and the names of the owners, the number of shares, and the date of issue shall be entered on the books of the Corporation. Each certificate representing shares shall state upon its face
(a) That the Corporation is organized under the laws of the State of Delaware;
(b) The name of the person to whom issued;
(c) The number and class of the shares and the designation of the series, if any, that the certificate represents;
(d) The par value, if any, of each share represented by the certificate;
(e) Any restrictions imposed by the Corporation upon the transfer of the shares represented by the certificate; and
(f) Other matters required to be stated on the certificates by the Delaware General Corporation Law, ss. 7-106-206 and other applicable sections.
2. FACSIMILE SIGNATURES. Where a certificate is signed
(a) By a transfer agent other than the Corporation or its employee, or
(b) By a registrar other than the Corporation or its employee, any or all of the officers' signatures on the certificate required by Article VI, Section 1 may be a facsimile. If any officer, transfer agent or registrar who has signed, or whose facsimile signature or signatures have been placed upon, any certificate, shall cease to be such officer, transfer agent, or registrar, whether because of death, resignation, or otherwise, before the
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certificate is issued by the Corporation, it may nevertheless be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
3. TRANSFERS OF SHARES. Transfers of shares shall be made on the books of the Corporation only upon presentation of the certificate or certificates representing such shares properly endorsed by the person or persons appearing upon the face of such certificate to be the owner, or accompanied by a proper transfer or assignment separate from the certificate, except as may otherwise be expressly provided by the statutes of the State of Delaware or by order of a court of competent jurisdiction. The officers or transfer agents of the Corporation may, in their discretion, require a signature guaranty before making any transfer. The Corporation shall be entitled to treat the person in whose name any shares are registered on its books as the owner of those shares for all purposes and shall not be bound to recognize any equitable or other claim or interest in the shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interest.
4. SHARES HELD FOR ACCOUNT OF ANOTHER. The Board of Directors may adopt by resolution a procedure whereby a shareholder of the Corporation may certify in writing to the Corporation that all or a portion of the shares registered in the name of such shareholder are held for the account of a specified person or persons. The resolution shall set forth
(a) The classification of shareholders who may certify;
(b) The purpose or purposes for which the certification may be made;
(c) The form of certification and information to be contained herein;
(d) If the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or the closing of the stock transfer books within which the certification must be received by the Corporation; and
(e) Such other provisions with respect to the procedure as are deemed necessary or desirable. Upon receipt by the Corporation of a certification complying with the procedure, the persons specified in the certification shall be deemed, for the purpose or purposes set forth in the certification, to be the holders of record of the number of shares specified in place of the shareholder making the certification.
Article VII
MISCELLANEOUS
1. CORPORATE SEAL. The Board of Directors may adopt a seal, circular in form and bearing the name of the Corporation and the words "SEAL" and "DELAWARE," which, when adopted, shall constitute the seal of the Corporation. The seal may be used by causing it or a facsimile of it to be impressed, affixed, manually reproduced, or rubber stamped with indelible
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ink. Even if the Corporation has adopted a corporate seal, properly authorized actions of the Corporation are effective whether or not any writing evidencing such action is sealed.
2. FISCAL YEAR. The Board of Directors may, by resolution, adopt a fiscal year for the Corporation.
3. RECEIPT OF NOTICES BY THE CORPORATION. Notices, shareholder writings consenting to action, and other documents or writings shall be deemed to have been received by the Corporation when they are received
(a) At the registered office of the Corporation in the State of Delaware;
(b) At the principal office of the Corporation (as that office is designated in the most recent document filed by the Corporation with the Secretary of State for the State of Delaware designating a principal office) addressed to the attention of the secretary of the Corporation;
(c) By the secretary of the corporation wherever the secretary may be found; or
(d) By any other person authorized from time to time by the Board of Directors, the president, or the secretary to receive such writings, wherever such person is found.
4. FACSIMILE SIGNATURE. Where, under these Bylaws or under the Delaware General Corporation Law, as amended, a signature of a director, officer or shareholder of the Corporation is required, such signature may be presented either in original form or by a facsimile copy thereof, to the extent permitted by law.
5. AMENDMENT OF BYLAWS. These Bylaws may at any time and from time to time be amended, supplemented, or repealed by the Board of Directors.
Duly adopted January 10, 2020
By: /s/ W. Edward Nichols
_____________________________
W. Edward Nichols, Chief Executive Officer and Director
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EXHIBIT 3(ii).17
BYLAWS
OF
PTL ACQUISITION SUB, INC.
Article I
SHAREHOLDERS
1. ANNUAL SHAREHOLDERS' MEETING. The annual shareholders' meeting shall be held on the date and at the time and place fixed from time to time by the Board of Directors.
2. SPECIAL SHAREHOLDERS' MEETING. A special shareholders' meeting for any purpose or purposes, may be called by the Board of Directors or the president. The Corporation shall also hold a special shareholders' meeting in the event it receives, in the manner specified in Article VII, Section 3, one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by the holders of shares representing not less than one-tenth of all of the votes entitled to be cast on any issue at the meeting. Special meetings shall be held at the principal office of the Corporation or at such other place as the Board of Directors or the president may determine.
3. RECORD DATE FOR DETERMINATION OF SHAREHOLDERS.
(a) In order to make a determination of shareholders (1) entitled to notice of or to vote at any shareholders' meeting or at any adjournment of a shareholders' meeting, (2) entitled to demand a special shareholders' meeting, (3) entitled to take any other action, (4) entitled to receive payment of a share dividend or a distribution, or (5) for any other purpose; the Board of Directors may fix a future date as the record date for such determination of shareholders provided that the record date may be fixed not more than seventy days before the date of the proposed action.
(b) Unless otherwise specified when the record date is fixed, the time of day for determination of shareholders shall be as of the Corporation's close of business on the record date.
(c) A determination of shareholders entitled to be given notice of or to vote at a shareholders' meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date, which the Board shall do if the meeting is adjourned to a date more than one hundred twenty days after the date fixed for the original meeting.
(d) If no record date is otherwise fixed, the record date for determining shareholders entitled to be given notice of and to vote at an annual or special shareholders' meeting is the day before the first notice is given to shareholders.
(e) The record date for determining shareholders entitled to take action without a meeting pursuant to Article I, Section 10 is the date a written notice upon which the
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action is taken is first received by the Corporation.
4. VOTING LIST.
(a) After a record date is fixed for a shareholders' meeting, the secretary shall prepare a list of the names of all its shareholders who are entitled to be given notice of the meeting. The list shall be arranged by voting groups and within each voting group by class or series of shares, shall be alphabetical within each class or series, and shall show the address of, and the number of shares of each such class and series that are held by, each shareholder.
(b) The shareholders' list shall be available for inspection by any shareholder, beginning the earlier of ten days before the meeting for which the list was prepared or two business days after notice of the meeting is given and continuing through the meeting, and any adjournment thereof, at the Corporation's principal office or at a place identified in the notice of the meeting in the city where the meeting will be held.
(c) The secretary shall make the shareholders' list available at the meeting, and any shareholder or agent or attorney of a shareholder is entitled to inspect the list at any time during the meeting or any adjournment.
5. NOTICE TO SHAREHOLDERS.
(a) The secretary shall give notice to shareholders of the date, time, and place of each annual and special shareholders' meeting no fewer than ten nor more than sixty days before the date of the meeting; except that, if the articles of incorporation are to be amended to increase the number of authorized shares, at least thirty days' notice shall be given. Except as otherwise required by the Colorado Revised Statues, the secretary shall be required to give such notice only to shareholders entitled to vote at the meeting.
(b) Notice of an annual shareholders' meeting need not include a description of the purpose or purposes for which the meeting is called unless a purpose of the meeting is to consider an amendment to the articles of incorporation, a restatement of the articles of incorporation, a plan of merger or share exchange, disposition of substantially all of the property of the Corporation, consent by the Corporation to the disposition of property by another entity, or dissolution of the Corporation.
(c) Notice of a special shareholders' meeting shall include a description of the purpose or purposes for which the meeting is called.
(d) Notice of a shareholders' meeting shall be in writing and shall be given
(1) by deposit in the United States mail, properly addressed to the shareholder's address shown in the Corporation's current record of shareholders,
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first class postage prepaid, and, if so given, shall be effective when mailed; or
(2) by telegraph, teletype, electronically transmitted facsimile, electronic mail, mail, or private carrier or by personal delivery to the shareholder, and, if so given, shall be effective when actually received by the shareholder.
(e) If an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment; provided, however, that, if a new record date for the adjourned meeting is fixed pursuant to Article I, Section 3(c), notice of the adjourned meeting shall be given to persons who are shareholders as of the new record date.
(f) If three successive notices are given by the Corporation, whether with respect to a shareholders' meeting or otherwise, to a shareholder and are returned as undeliverable, no further notices to such shareholder shall be necessary until another address for the shareholder is made known to the Corporation.
6. QUORUM. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. One-third of the votes entitled to be cast on the matter by the voting group shall constitute a quorum of that voting group for action on the matter. If a quorum does not exist with respect to any voting group, the president or any shareholder or proxy that is present at the meeting, whether or not a member of that voting group, may adjourn the meeting to a different date, time, or place, and (subject to the next sentence) notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed pursuant to Article I, Section 3(c), notice of the adjourned meeting shall be given pursuant to Article I, Section 5 to persons who are shareholders as of the new record date. At any adjourned meeting at which a quorum exists, any matter may be acted upon that could have been acted upon at the meeting originally called; provided, however, that, if new notice is given of the adjourned meeting, then such notice shall state the purpose or purposes of the adjourned meeting sufficiently to permit action on such matters. Once a share is represented for any purpose at a meeting, including the purpose of determining that a quorum exists, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or shall be set for that adjourned meeting.
7. VOTING ENTITLEMENT OF SHARES. Except as stated in the articles of incorporation, each outstanding share, regardless of class, is entitled to one vote, and each fractional share is entitled to a corresponding fractional vote, on each matter voted on at a shareholders' meeting.
8. PROXIES; ACCEPTANCE OF VOTES AND CONSENTS.
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(a) A shareholder may vote either in person or by proxy.
(b) An appointment of a proxy is not effective against the Corporation until the appointment is received by the Corporation. An appointment is valid for eleven months unless a different period is expressly provided in the appointment form.
(c) The Corporation may accept or reject any appointment of a proxy, revocation of appointment of a proxy, vote, consent, waiver, or other writing purportedly signed by or for a shareholder, if such acceptance or rejection is in accordance with the provisions of the Colorado Revised Statutes.
9. WAIVER OF NOTICE.
(a) A shareholder may waive any notice required by the Colorado Revised Statutes, the articles of incorporation or these bylaws, whether before or after the date or time stated in the notice as the date or time when any action will occur or has occurred. The waiver shall be in writing, be signed by the shareholder entitled to the notice, and be delivered to the Corporation for inclusion in the minutes or filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver.
(b) A shareholder's attendance at a meeting waives objection to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice, and waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.
10. ACTION BY SHAREHOLDERS WITHOUT A MEETING. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with corporate action, by any provisions of the Colorado Revised Statutes or the Certificate of Incorporation, the meeting and vote of stockholders may be dispensed with, if a majority of the stockholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken, as allowed. Action taken pursuant to this section shall be effective when the Corporation has received writings that describe and consent to the action, signed by a majority of the shareholders entitled to vote thereon. Action taken pursuant to this section shall be effective as of the date the last writing necessary to effect the action is received by the Corporation, unless all of the writings necessary to effect the action specify another date, which may be before or after the date the writings are received by the Corporation. Such action shall have the same effect as action taken at a meeting of shareholders and may be described as such in any document. Any shareholder who has signed a writing describing and consenting to action taken pursuant to this section may revoke such consent by a writing signed by the shareholder describing the action and stating that the shareholder's prior consent thereto is revoked, if such writing is received by the Corporation before the effectiveness
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of the action.
11. MEETINGS BY TELECOMMUNICATIONS. To the extent provided by resolution of the Board of Directors or in the notice of the meeting, any or all of the shareholders may participate in an annual or special shareholders' meeting by, or the meeting may be conducted through the use of, any means of communication by which all persons participating in the meeting may hear each other during the meeting. A shareholder participating in a meeting by this means is deemed to be present in person at the meeting.
Article II
DIRECTORS
1. AUTHORITY OF THE BOARD OF DIRECTORS. The corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, a Board of Directors.
2. NUMBER. Subject to the provisions of the Articles of Incorporation, the number of directors shall be fixed by resolution of the Board of Directors from time to time and may be increased or decreased by resolution adopted by the Board of Directors from time to time, but no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. The number of directors shall be no less than three directors in order to carry out any business other than appointment of a replacement director to fill a vacancy on the Board.
3. QUALIFICATION. Directors shall be natural persons at least eighteen years old but need not be residents of the State of Colorado or shareholders of the Corporation.
4. ELECTION. The Board of Directors shall be elected at the annual meeting of the shareholders or at a special meeting called for that purpose.
5. TERM. Each director shall be elected to hold office until the next annual meeting of shareholders and until the director's successor is elected and qualified unless the directors are appointed to staggered terms as provided in the Articles of Incorporation. In such case, the terms of the directors shall expire as set forth in the Articles of Incorporation
6. RESIGNATION. A director may resign at any time by giving written notice of his or her resignation to any other director or (if the director is not also the secretary) to the secretary. The resignation shall be effective when it is received by the other director or secretary, as the case may be, unless the notice of resignation specifies a later effective date. Acceptance of such resignation shall not be necessary to make it effective unless the notice so provides.
7. REMOVAL. Any director may be removed by the shareholders of the voting group that elected the director, with or without cause, at a meeting called, Notice of which includesthat purpose. The notice of the meeting shall state that the purpose, or one of the purposes, of the meeting is removal of the director. A director may be removed only if the number of votes cast
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in favor of removal exceeds the number of votes cast against removal.
8. VACANCIES.
(a) If a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of directors:
(1) The shareholders may fill the vacancy at the next annual meeting or at a special meeting called for that purpose; or
(2) The Board of Directors may fill the vacancy; or
(3) If the directors remaining in office constitute fewer than a quorum of the Board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.
(b) Notwithstanding Article II, Section 8(a), if the vacant office was held by a director elected by a voting group of shareholders, then, if one or more of the remaining directors were elected by the same voting group, only such directors are entitled to vote to fill the vacancy if it is filled by directors, and they may do so by the affirmative vote of a majority of such directors remaining in office; and only the holders of shares of that voting group are entitled to vote to fill the vacancy if it is filled by the shareholders.
(c) A vacancy that will occur at a specific later date, by reason of a resignation that will become effective at a later date under Article II, Section 6 or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.
9. MEETINGS. The Board of Directors may hold regular or special meetings in or out of Colorado. A regular meeting shall be held in the principal office of the Corporation or at such other place, on such date or dates, and at such time as may be established by resolution of the Board of Directors. If the Board shall establish a date and time for a regular meeting of the Board, such meeting may be held without notice of the date, time, place, or purpose of the meeting The Board of Directors may, by resolution, establish other dates, times and places for additional regular meetings, which may thereafter be held without further notice. Special meetings may be called by the president or by any two directors and shall be held at the principal office of the Corporation unless another place is consented to by every director. At any time when the Board consists of a single director, that director may act at any time, date, or place without notice.
10. NOTICE OF SPECIAL MEETING. Notice of a special meeting shall be given to every director at least twenty four hours before the time of the meeting, stating the date, time, and place of the meeting. The notice need not describe the purpose of the meeting. Notice may be given orally to the director, personally or by telephone or other wire or wireless
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communication. Notice may also be given in writing by telegraph, teletype, electronically transmitted facsimile, electronic mail, mail, or private carrier. Notice shall be effective at the earliest of the time it is received; five days after it is deposited in the United States mail, properly addressed to the last address for the director shown on the records of the Corporation, first class postage prepaid; or the date shown on the return receipt if mailed by registered or certified mail, return receipt requested, postage prepaid, in the United States mail and if the return receipt is signed by the director to which the notice is addressed.
11. QUORUM. Except as provided in Article II, Section 8, a majority of the number of directors fixed in accordance with these Bylaws shall constitute a quorum for the transaction of business at all meetings of the Board of Directors. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, except as otherwise specifically required by law.
12. WAIVER OF NOTICE.
(a) A director may waive any notice of a meeting before or after the time and date of the meeting stated in the notice. Except as provided by Article II, Section 12(b), the waiver shall be in writing and shall be signed by the director. Such waiver shall be delivered to the secretary for filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver.
(b) A director's attendance at or participation in a meeting waives any required notice to him or her of the meeting unless, at the beginning of the meeting or promptly upon his or her later arrival, the director objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice and does not thereafter vote for or assent to action taken at the meeting.
13. ATTENDANCE BY TELEPHONE. One or more directors may participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.
14. DEEMED ASSENT TO ACTION. A director who is present at a meeting of the Board of Directors when corporate action is taken shall be deemed to have assented to all action taken at the meeting unless:
(1) The director objects at the beginning of the meeting, or promptly upon his or her arrival, to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to any action taken at the meeting;
(2) The director contemporaneously requests that his or her dissent or abstention as to any specific action taken be entered in the minutes of the meeting; or
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(3) The director causes written notice of his or her dissent or abstention as to any specific action to be received by the presiding officer of the meeting before adjournment of the meeting or by the secretary (or, if the director is the secretary, by another director) promptly after adjournment of the meeting. The right of dissent or abstention pursuant to this Article II, Section 14 as to a specific action is not available to a director who votes in favor of the action taken.
15. ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or permitted by law to be taken at a Board of Directors' meeting may be taken without a meeting if all members of the Board consent to such action in writing. Action shall be deemed to have been so taken by the Board at the time the last director signs a written consent the action taken, unless, before such time, any director has revoked his or her consent by a written notice of revocation by the director and received by the secretary or any other person authorized by the bylaws or the Board of Directors to receive such a revocation. Such action shall be effective at the time and date it is so taken unless the directors establish a different effective time or date. Such action has the same effect as action taken at a meeting of directors and may be described as such in any document.
16. NOMINATIONS OF DIRECTORS.
(a) The Board of Directors may nominate persons to stand for election to the Board of Directors at any time prior to a meeting of shareholders at which directors are to be elected.
(b) Any shareholder may nominate a person to stand for election to the Board of Directors provided such shareholder provides written notification of the intention to nominate such persons at the next shareholder meeting not less than 90 days in advance of such meeting, and provided further such notice is accompanied by information regarding the proposed nominee meeting the requirements of part III of SEC Regulation SB or Regulation SK and information regarding all direct and indirect business or personal relationships between the shareholder and the proposed nominee.
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Article III
COMMITTEES OF THE BOARD OF DIRECTORS
1. COMMITTEES OF THE BOARD OF DIRECTORS.
(a) Subject to the provisions of the Colorado Revised Statutes, the Board of Directors may create one or more committees and appoint one or more members of the Board of Directors to serve on them. The creation of a committee and appointment of members to it shall require the approval of a majority of all the directors in office when the action is taken, whether or not those directors constitute a quorum of the Board.
(b) The provisions of these bylaws governing meetings, action without meeting, notice, waiver of notice, and quorum and voting requirements of the Board of Directors apply to committees and their members as well.
(c) To the extent specified by resolution adopted from time to time by a majority of all the directors in office when the resolution is adopted, whether or not those directors constitute a quorum of the Board, each committee shall exercise the authority of the Board of Directors with respect to the corporate powers and the management of the business and affairs of the Corporation; except that a committee shall not:
(1) Authorize distributions;
(2) Approve or propose to shareholders action that the Colorado Revised Statutes requires to be approved by shareholders;
(3) Fill vacancies on the Board of Directors or on any of its committees;
(4) Amend the articles of incorporation pursuant to the Colorado Revised Statutes;
(5) Adopt, amend, or repeal bylaws;
(6) Approve a plan of merger not requiring shareholder approval;
(7) Authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors; or
(8) Authorize or approve the issuance or sale of shares, or a contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares; except that the Board of Directors may authorize a committee or an officer to do so within limits specifically prescribed by the Board of Directors.
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(d) The creation of, delegation of authority to, or action by, a committee does not alone constitute compliance by a director with applicable standards of conduct.
Article IV
OFFICERS
1. GENERAL.
(a) The Corporation shall have as officers a president and a secretary, each of whom who shall be appointed by the Board of Directors. The Board of Directors may appoint as additional officers a chairman and other officers of the Board.
(b) The Board of Directors, the president, and such other subordinate officers as the Board of Directors may authorize from time to time, acting singly, may appoint as additional officers one or more vice presidents, assistant secretaries, assistant treasurers, and such other subordinate officers as the Board of Directors, the president, or such other appointing officers deem necessary or appropriate.
(c) The officers of the Corporation shall hold their offices for such terms and shall exercise such authority and perform such duties as shall be determined from time to time by these Bylaws, the Board of Directors, or (with respect to officers whom are appointed by the president or other appointing officers) the persons appointing them; provided, however, that the Board of Directors may change the term of offices and the authority of any officer appointed by the president or other appointing officers.
(d) Any two or more offices may be held by the same person. The officers of the Corporation shall be natural persons at least eighteen years old.
2. TERM. Each officer shall hold office from the time of appointment until the time of removal or resignation pursuant to Article IV, Section 3 or until the officer's death.
3. REMOVAL AND RESIGNATION. Any officer appointed by the Board of Directors may be removed at any time by the Board of Directors. Any officer appointed by the president or other appointing officer may be removed at any time by the Board of Directors or by the person appointing the officer. Any officer may resign at any time by giving written notice of resignation to any director (or to any director other than the resigning officer if the officer is also a director), to the president, to the secretary, or to the officer who appointed the officer. Acceptance of such resignation shall not be necessary to make it effective, unless the notice so provides.
4. PRESIDENT. The president shall preside at all meetings of shareholders, and shall also preside at all meetings of the Board of Directors unless the Board of Directors has appointed a chairman, vice chairman, or other officer of the Board and has authorized such person to
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preside at meetings of the Board of Directors instead of the president. Subject to the direction and control of the Board of Directors, the president of the Corporation shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The president may negotiate, enter into, and execute contracts, deeds, and other instruments on behalf of the Corporation as are necessary and appropriate to the conduct to the business and affairs of the Corporation or as are approved by the Board of Directors. The president shall have such additional authority and duties as are appropriate and customary for the office of president, except as the same may be expanded or limited by the Board of Directors from time to time.
5. VICE PRESIDENT. The vice president, if any, or, if there are more than one, the vice presidents in the order determined by the Board of Directors or the president (or, if no such determination is made, in the order of their appointment), shall be the officer or officers next in seniority after the president. Each vice president shall have such authority and duties as are prescribed by the Board of Directors or president. Upon the death, absence, or disability of the president, the vice president, if any, or, if there are more than one, the vice presidents in the order determined by the Board of Directors or the president, shall have the authority and duties of the president.
6. SECRETARY. The secretary shall be responsible for the preparation and maintenance of minutes of the meetings of the Board of Directors and of the shareholders and of the other records and information required to be kept by the Corporation under the Colorado Revised Statutes and for authenticating records of the corporation. The secretary shall also give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, keep the minutes of such meetings, have charge of the corporate seal, if any, and have authority to affix the corporate seal to any instrument requiring it (and, when so affixed, it may be attested by the secretary's signature), be responsible for the maintenance of all other corporate records and files and for the preparation and filing of reports to governmental agencies (other than tax returns), and have such other authority and duties as are appropriate and customary for the office of secretary, except as the same may be expanded or limited by the Board of Directors from time to time.
7. ASSISTANT SECRETARY. The assistant secretary, if any, or, if there are more than one, the assistant secretaries in the order determined by the Board of Directors or the secretary (or, if no such determination is made, in the order of their appointment) shall, under the supervision of the secretary, perform such duties and have such authority as may be prescribed from time to time by the Board of Directors or the secretary. Upon the death, absence, or disability of the secretary, the assistant secretary, if any, or, if there are more than one, the assistant secretaries in the order designated by the Board of Directors or the secretary (or, if no such determination is made, in the order of their appointment), shall have the authority and duties of the secretary.
8. TREASURER. The treasurer, if any, shall have control of the funds and the care and custody of all stocks, bonds, and other securities owned by the Corporation, and shall be
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responsible for the preparation and filing of tax returns. The treasurer shall receive all moneys paid to the Corporation and, subject to any limits imposed by the Board of Directors, shall have authority to give receipts and vouchers, to sign and endorse checks and warrants in the Corporation's name and on the Corporation's behalf, and give full discharge for the same. The treasurer shall also have charge of disbursement of funds of the Corporation, shall keep full and accurate records of the receipts and disbursements, and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as shall be designated by the Board of Directors. The treasurer shall have such additional authority and duties as are appropriate and customary for the office of treasurer, except as the same may be expanded or limited by the Board of Directors from time to time.
9. COMPENSATION. Officers shall receive such compensation for their services as may be authorized or ratified by the Board of Directors. Election or appointment of an officer shall not of itself create a contractual right to compensation for services performed as such officer.
Article V
INDEMNIFICATION
1. DEFINITIONS. As used in this article:
(a) "Corporation" includes any domestic or foreign entity that is a predecessor of the Corporation by reason of a merger or other transaction in which the predecessor's existence ceased upon consummation of the transaction.
(b) "Director" means an individual who is or was a director of the Corporation or an individual who, while a director of the Corporation, is or was serving at the Corporation's request as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or of an employee benefit plan. A director is considered to be serving an employee benefit plan at the Corporation's request if his or her duties to the Corporation also impose duties on, or otherwise involve services by, the director to the plan or to participants in or beneficiaries of the plan. "Director" includes, unless the context requires otherwise, the estate or personal representative of a director.
(c) "Expenses" includes counsel fees.
(d) "Liability" means the obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, fine, including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses.
(e) "Official capacity" means, when used with respect to a director, the office of director in the Corporation and, when used with respect to a person other than a director as contemplated in Article V, Section 2(a), the office in the Corporation held by the officer or the employment, fiduciary, or agency relationship undertaken by the employee,
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fiduciary, or agent on behalf of the Corporation. "Official capacity" does not include service for any other domestic or foreign corporation or other person or employee benefit plan.
(f) "Party" includes a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal.
2. AUTHORITY TO INDEMNIFY DIRECTORS.
(a) Except as provided in Article V, Section 2(d), the Corporation may indemnify a person made a party to a proceeding because the person is or was a director against liability incurred in the proceeding if:
(1) The person conducted himself or herself in good faith; and
(2) The person reasonably believed:
(A) In the case of conduct in an official capacity with the Corporation, that his or her conduct was in the Corporation's best interests; and
(B) In all other cases, that his or her conduct was at least not opposed to the Corporation's best interests; and
(3) In the case of any criminal proceeding, the person had no reasonable cause to believe his or her conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in or beneficiaries of the plan is conduct that satisfies the requirement of Article V, Section 2(a)(2)(B). A director's conduct with respect to an employee benefit plan for a purpose that the director did not reasonably believe to be in the interests of the participants in or beneficiaries of the plan shall be deemed not to satisfy the requirements of Article V, Section 2(a)(1).
(c) The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the director did not meet the standard of conduct described in this Article V, Section 2.
(d) The Corporation may not indemnify a director under this Article V, Section 2:
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(1) In connection with a proceeding by or in the right of the Corporation in which the director was adjudged liable to the Corporation; or
(2) In connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving action in an official capacity, in which proceeding the director was adjudged liable on the basis that he or she derived an improper personal benefit.
(e) Indemnification permitted under this Article V, Section 2 in connection with a proceeding by or in the right of the Corporation is limited to reasonable expenses incurred in connection with the proceeding.
3. MANDATORY INDEMNIFICATION OF DIRECTORS. The Corporation shall indemnify a person who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the proceeding.
4. ADVANCE OF EXPENSES TO DIRECTORS.
(a) The Corporation may pay for or reimburse the reasonable expenses incurred by a director who is a party to a proceeding in advance of final disposition of the proceeding if:
(1) The director furnishes to the Corporation a written affirmation of the director's good faith belief that he or she has met the standard of conduct described in Article V, Section 2.
(2) The director furnishes to the Corporation a written undertaking, executed personally or on the director's behalf, to repay the advance if it is ultimately determined that he or she did not meet the standard of conduct; and
(3) A determination is made that the facts then known to those making the determination would not preclude indemnification under this article.
(b) The undertaking required by Article V, Section 4(a)(2) shall be an unlimited general obligation of the director but need not be secured and may be accepted without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this Article V, Section 4 shall be made in the manner specified in Article V, Section 6.
5. COURT-ORDERED INDEMNIFICATION OF DIRECTORS. A director who is or was a party to a proceeding may apply for indemnification to the court conducting the proceeding or to another court of competent jurisdiction. On receipt of an application, the court,
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after giving any notice the court considers necessary, may order indemnification in the following manner:
(1) If it determines that the director is entitled to mandatory indemnification under Article V, Section 3, the court shall order indemnification, in which case the court shall also order the Corporation to pay the director's reasonable expenses incurred to obtain court-ordered indemnification.
(2) If it determines that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not the director met the standard of conduct set forth in Article V, Section 2(a) or was adjudged liable in the circumstances described in Article V, Section 2(d), the court may order such indemnification as the court deems proper; except that the indemnification with respect to any proceeding in which liability shall have been adjudged in the circumstances described in Article V, Section 2(d) is limited to reasonable expenses incurred in connection with the proceeding and reasonable expenses incurred to obtain court-ordered indemnification.
6. DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION OF DIRECTORS.
(a) The Corporation may not indemnify a director under Article V, Section 2 unless authorized in the specific case after a determination has been made that indemnification of the director is permissible in the circumstances because the director has met the standard of conduct set forth in Article V, Section 2. The Corporation shall not advance expenses to a director under Article V, Section 4 unless authorized in the specific case after the written affirmation and undertaking required by Article V, Section 4(a)(1) and 4(a)(2) are received and the determination required by Article V, Section 4(a)(3) has been made.
(b) The determinations required by Article V, Section 6(a) shall be made:
(1) By the Board of Directors by a majority vote of those present at a meeting at which a quorum is present, and only those directors not parties to the proceeding shall be counted in satisfying the quorum; or
(2) If a quorum cannot be obtained, by a majority vote of a committee of the Board of Directors designated by the Board of Directors, which committee shall consist of two or more directors not parties to the proceeding; except that directors who are parties to the proceeding may participate in the designation of directors for the committee.
(c) If a quorum cannot be obtained as contemplated in Article V, Section 6(b)(1), and a committee cannot be established under Article V, Section 6(b)(2) if a quorum is
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obtained or a committee is designated, if a majority of the directors constituting such quorum or such committee so directs, the determination required to be made by Article V, Section 6(a) shall be made:
(1) By independent legal counsel selected by a vote of the Board of Directors or the committee in the manner specified in Article V, Section 6(b)(1) or 6(b)(2), or, if a quorum of the full Board cannot be obtained and a committee cannot be established, by independent legal counsel selected by a majority vote of the full Board of Directors; or
(2) By the shareholders.
(d) Authorization of indemnification and advance of expenses shall be made in the same manner as the determination that indemnification or advance of expenses is permissible; except that, if the determination that indemnification or advance of expenses is permissible is made by independent legal counsel, authorization of indemnification and advance of expenses shall be made by the body that selected such counsel.
7. INDEMNIFICATION OF OFFICERS, EMPLOYEES, FIDUCIARIES, AND AGENTS.
(a) An officer is entitled to mandatory indemnification under Article V, Section 3 and is entitled to apply for court-ordered indemnification under Article V, Section 5, in each case to the same extent as a director;
(b) The Corporation may indemnify and advance expenses to an officer, employee, fiduciary, or agent of the Corporation to the same extent as to a director; and
(c) The Corporation may also indemnify and advance expenses to an officer, employee, fiduciary, or agent who is not a director to a greater extent than is provided in these bylaws, if not inconsistent with public policy, and if provided for by general or specific action of its Board of Directors or shareholders or by contract.
8. INSURANCE. The Corporation may purchase and maintain insurance on behalf of a person who is or was a director, officer, employee, fiduciary, or agent of the Corporation, or who, while a director, officer, employee, fiduciary, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, fiduciary, or agent of another domestic or foreign corporation or other person or of an employee benefit plan, against liability asserted against or incurred by the person in that capacity or arising from his or her status as a director, officer, employee, fiduciary, or agent, whether or not the Corporation would have power to indemnify the person against the same liability under Article V, Sections 2, 3, or 7. Any such insurance may be procured from any insurance company designated by the Board of Directors, whether such insurance company is formed under the laws of this state or any other jurisdiction of the United States or elsewhere, including any insurance company in
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which the Corporation has an equity or any other interest through stock ownership or otherwise.
9. NOTICE TO SHAREHOLDERS OF INDEMNIFICATION OF DIRECTOR. If the Corporation indemnifies or advances expenses to a director under this article in connection with a proceeding by or in the right of the Corporation, the Corporation shall give written notice of the indemnification or advance to the shareholders with or before the notice of the next shareholders' meeting. If the next shareholder action is taken without a meeting at the instigation of the Board of Directors, such notice shall be given to the shareholders at or before the time the first shareholder signs a writing consenting to such action.
Article VI
SHARES
1. CERTIFICATES. Certificates representing shares of the capital stock of the Corporation shall be in such form as is approved by the Board of Directors and shall be signed by the chairman or vice chairman of the Board of Directors (if any), or the president and by the secretary or an assistant secretary or the treasurer or an assistant treasurer. All certificates shall be consecutively numbered, and the names of the owners, the number of shares, and the date of issue shall be entered on the books of the Corporation. Each certificate representing shares shall state upon its face
(a) That the Corporation is organized under the laws of the State of Colorado;
(b) The name of the person to whom issued;
(c) The number and class of the shares and the designation of the series, if any, that the certificate represents;
(d) The par value, if any, of each share represented by the certificate;
(e) Any restrictions imposed by the Corporation upon the transfer of the shares represented by the certificate; and
(f) Other matters required to be stated on the certificates by the Colorado Revised Statutes, ss. 7-106-206 and other applicable sections.
2. FACSIMILE SIGNATURES. Where a certificate is signed
(a) By a transfer agent other than the Corporation or its employee, or
(b) By a registrar other than the Corporation or its employee, any or all of the officers' signatures on the certificate required by Article VI, Section 1 may be a facsimile. If any officer, transfer agent or registrar who has signed, or whose facsimile signature or signatures have been placed upon, any certificate, shall cease to be such officer, transfer
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agent, or registrar, whether because of death, resignation, or otherwise, before the certificate is issued by the Corporation, it may nevertheless be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
3. TRANSFERS OF SHARES. Transfers of shares shall be made on the books of the Corporation only upon presentation of the certificate or certificates representing such shares properly endorsed by the person or persons appearing upon the face of such certificate to be the owner, or accompanied by a proper transfer or assignment separate from the certificate, except as may otherwise be expressly provided by the statutes of the State of Colorado or by order of a court of competent jurisdiction. The officers or transfer agents of the Corporation may, in their discretion, require a signature guaranty before making any transfer. The Corporation shall be entitled to treat the person in whose name any shares are registered on its books as the owner of those shares for all purposes and shall not be bound to recognize any equitable or other claim or interest in the shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interest.
4. SHARES HELD FOR ACCOUNT OF ANOTHER. The Board of Directors may adopt by resolution a procedure whereby a shareholder of the Corporation may certify in writing to the Corporation that all or a portion of the shares registered in the name of such shareholder are held for the account of a specified person or persons. The resolution shall set forth
(a) The classification of shareholders who may certify;
(b) The purpose or purposes for which the certification may be made;
(c) The form of certification and information to be contained herein;
(d) If the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or the closing of the stock transfer books within which the certification must be received by the Corporation; and
(e) Such other provisions with respect to the procedure as are deemed necessary or desirable. Upon receipt by the Corporation of a certification complying with the procedure, the persons specified in the certification shall be deemed, for the purpose or purposes set forth in the certification, to be the holders of record of the number of shares specified in place of the shareholder making the certification.
Article VII
MISCELLANEOUS
1. CORPORATE SEAL. The Board of Directors may adopt a seal, circular in form and bearing the name of the Corporation and the words "SEAL" and "COLORADO," which, when adopted, shall constitute the seal of the Corporation. The seal may be used by causing it or a
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facsimile of it to be impressed, affixed, manually reproduced, or rubber stamped with indelible ink. Even if the Corporation has adopted a corporate seal, properly authorized actions of the Corporation are effective whether or not any writing evidencing such action is sealed.
2. FISCAL YEAR. The Board of Directors may, by resolution, adopt a fiscal year for the Corporation.
3. RECEIPT OF NOTICES BY THE CORPORATION. Notices, shareholder writings consenting to action, and other documents or writings shall be deemed to have been received by the Corporation when they are received
(a) At the registered office of the Corporation in the State of Colorado;
(b) At the principal office of the Corporation (as that office is designated in the most recent document filed by the Corporation with the Secretary of State for the State of Colorado designating a principal office) addressed to the attention of the secretary of the Corporation;
(c) By the secretary of the corporation wherever the secretary may be found; or
(d) By any other person authorized from time to time by the Board of Directors, the president, or the secretary to receive such writings, wherever such person is found.
4. FACSIMILE SIGNATURE. Where, under these Bylaws or under the Colorado Revised Statutes, as amended, a signature of a director, officer or shareholder of the Corporation is required, such signature may be presented either in original form or by a facsimile copy thereof, to the extent permitted by law.
5. AMENDMENT OF BYLAWS. These Bylaws may at any time and from time to time be amended, supplemented, or repealed by the Board of Directors.
Duly adopted June 30, 2019
By: /s/ W. Edward Nichols
_____________________________
Ed Nichols, President and Director
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EXHIBIT 4.1
2020 BIO LAB NATURALS, INC.
STOCK OPTION AND AWARD INCENTIVE PLAN
SECTION 1: GENERAL PURPOSE OF PLAN
The name of this plan is the BIO LAB NATURALS, INC. STOCK OPTION AND AWARD INCENTIVE PLAN (the "Plan"). The purpose of the Plan is to enable BIO LAB NATURALS, INC., a Delaware corporation (the "Company"), and any Parent or any Subsidiary to obtain and retain the services of the types of Employees, Consultants and Directors who will contribute to the Company's long range success and to provide incentives which are linked directly to increases in share value which will inure to the benefit of all stockholders of the Company.
SECTION 2: DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set forth below:
"Administrator" shall have the meaning as set forth in Section 3, hereof.
"Board" means the Board of Directors of the Company.
"Cause" means (i) failure by an Eligible Person to substantially perform his or her duties and obligations to the Company (other than any such failure resulting from his or her incapacity due to physical or mental illness); (ii) engaging in misconduct or a fiduciary breach which is or potentially is materially injurious to the Company or its stockholders; (iii) commission of a felony; (iv) the commission of a crime against the Company which is or potentially is materially injurious to the Company; or (v) as otherwise provided in the Stock Option Agreement or Stock Purchase Agreement. For purposes of this Plan, the existence of Cause shall be determined by the Administrator in its sole discretion.
"Change in Control" shall mean:
The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if more than 50% of the combined voting power (which voting power shall be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time) into shares entitled to vote, but not assuming the exercise of any warrant or right to subscribe to or purchase those shares) of the continuing or Surviving Entity's securities outstanding immediately after such merger, consolidation or other reorganization is owned, directly or indirectly, by persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization; provided, however, that in making the determination of ownership by the stockholders of the Company, immediately after the reorganization, equity securities which persons own immediately before the reorganization as stockholders of another party to the transaction shall be disregarded; or
The sale, transfer or other disposition of all or substantially all of the Company's assets.
A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company's securities immediately before such transaction.
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"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Committee" means a committee of the Board designated by the Board to administer the Plan.
"Company" means BIO LAB NATURALS, INC., a corporation organized under the laws of the State of Delaware (or any successor corporation).
"Consultant" means a consultant or advisor who is a natural person or a legal entity and who provides bona fide services to the Company, a Parent or a Subsidiary; provided such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities.
"Date of Grant" means the date on which the Administrator adopts a resolution expressly granting a Right to a Participant or, if a different date is set forth in such resolution as the Date of Grant, then such date as is set forth in such resolution.
"Director" means a member of the Board.
"Disability" means that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment; provided, however, for purposes of determining the term of an ISO pursuant to Section 6.6 hereof, the term Disability shall have the meaning ascribed to it under Code Section 22(e)(3). The determination of whether an individual has a Disability shall be determined under procedures established by the Plan Administrator.
"Eligible Person" means an Employee, Consultant or Director of the Company, any Parent or any Subsidiary.
"Employee" shall mean any individual who is a common-law employee (including officers) of the Company, a Parent or a Subsidiary.
"Exercise Price" shall have the meaning set forth in Section 6.3 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the fair market value of a Share, determined as follows: (i) if the Stock is listed on any established stock exchange or a national market system, including without limitation, the NASDAQ National Market, the Fair Market Value of a share of Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in the Stock) on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Administrator deems reliable; (ii) if the Stock is quoted on the NASDAQ System (but not on the NASDAQ National Market) or any similar system whereby the stock is regularly quoted by a recognized securities dealer but closing sale prices are not reported, the Fair Market Value of a share of Stock shall be the mean between the bid and asked prices for the Stock on the last market trading day prior to the day of determination, as reported in the Wall Street Journal or such other source as the Administrator deems reliable; or (iii) in the absence of an established market for the Stock, the Fair Market Value shall be determined in good faith by the Administrator and such determination shall be conclusive and binding on all persons.
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"First Refusal Right" shall have the meaning set forth in Section 8.7 hereof.
"ISO" means a Stock Option intended to qualify as an "incentive stock option" as that term is defined in Section 422(b) of the Code.
"Non-Employee Director" means a member of the Board who is not an Employee of the Company, a Parent or Subsidiary, who satisfies the requirements of such term as defined in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission.
"Non-Qualified Stock Option" means a Stock Option not described in Section 422(b) of the Code.
"Offeree" means a Participant who is granted a Purchase Right pursuant to the Plan.
"Optionee" means a Participant who is granted a Stock Option pursuant to the Plan.
"Outside Director" means a member of the Board who is not an Employee of the Company, a Parent or Subsidiary, who satisfies the requirements of such term as defined in Treasury Regulations (26 Code of Federal Regulation Section 1.162-27(e)(3)).
"Parent" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.
"Participant" means any Eligible Person selected by the Administrator, pursuant to the Administrator's authority in Section 3, to receive grants of Rights.
"Plan" means this BIO LAB NATURALS, INC. STOCK OPTION AND AWARD INCENTIVE PLAN, as the same may be amended or supplemented from time to time.
"Purchase Price" shall have the meaning set forth in Section 7.3.
"Purchase Right" means the right to purchase Stock granted pursuant to Section 7.
"Rights" means Stock Options and Purchase Rights.
"Repurchase Right" shall have the meaning set forth in Section 8.8 of the Plan.
"Service" shall mean service as an Employee, Director or Consultant.
"Stock" means Common Stock of the Company.
"Stock Option" or "Option" means an option to purchase shares of Stock granted pursuant to Section 6.
"Stock Option Agreement" shall have the meaning set forth in Section 6.1.
"Stock Purchase Agreement" shall have the meaning set forth in Section 7.1.
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“Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.
"Surviving Entity" means the Company if immediately following any merger, consolidation or similar transaction, the holders of outstanding voting securities of the Company immediately prior to the merger or consolidation own equity securities possessing more than 50% of the voting power of the corporation existing following the merger, consolidation or similar transaction. In all other cases, the other entity to the transaction and not the Company shall be the Surviving Entity. In making the determination of ownership by the stockholders of an entity immediately after the merger, consolidation or similar transaction, equity securities which the stockholders owned immediately before the merger, consolidation or similar transaction as stockholders of another party to the transaction shall be disregarded. Further, outstanding voting securities of an entity shall be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time) into shares entitled to vote.
"Ten Percent Stockholder" means a person who on the Date of Grant owns, either directly or through attribution as provided in Section 424 of the Code, Stock constituting more than 10% of the total combined voting power of all classes of stock of his or her employer corporation or of any Parent or Subsidiary.
SECTION 3: ADMINISTRATION
3.1 Administrator. The Plan shall be administered by either (i) the Board, or (ii) a Committee appointed by the Board (the group that administers the Plan is referred to as the "Administrator").
3.2 Powers in General. The Administrator shall have the power and authority to grant to Eligible Persons, pursuant to the terms of the Plan, (i) Stock Options, (ii) Purchase Rights or (iii) any combination of the foregoing.
3.3 Specific Powers. In particular, the Administrator shall have the authority: (i) to construe and interpret the Plan and apply its provisions; (ii) to promulgate, amend and rescind rules and regulations relating to the administration of the Plan; (iii) to authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan; (iv) to determine when Rights are to be granted under the Plan; (v) from time to time to select, subject to the limitations set forth in this Plan, those Eligible Persons to whom Rights shall be granted; (vi) to determine the number of shares of Stock to be made subject to each Right; (vii) to determine whether each Stock Option is to be an ISO or a Non-Qualified Stock Option; (viii) to prescribe the terms and conditions of each Stock Option and Purchase Right, including, without limitation, the Purchase Price and medium of payment, vesting provisions and repurchase provisions, and to specify the provisions of the Stock Option Agreement or Stock Purchase Agreement relating to such grant or sale; (ix) to amend any outstanding Rights for the purpose of modifying the time or manner of vesting, the Purchase Price or Exercise Price, as the case may be, subject to applicable legal restrictions and to the consent of the other party to such agreement; (x) to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting termination of their employment for purposes of the Plan; (xi) to make decisions with respect to outstanding Stock Options that may become necessary upon a
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change in corporate control or an event that triggers anti-dilution adjustments; and (xii) to make any and all other determinations which it determines to be necessary or advisable for administration of the Plan.
3.4 Decisions Final. All decisions made by the Administrator pursuant to the provisions of the Plan shall be final and binding on the Company and the Participants.
3.5 The Committee. The Board may, in its sole and absolute discretion, from time to time, and at any period of time during which the Company's Stock is registered pursuant to Section 12 of the Exchange Act, delegate any or all of its duties and authority with respect to the Plan to the Committee whose members are to be appointed by and to serve at the pleasure of the Board. From time to time, the Board may increase or decrease the size of the Committee, add additional members to, remove members (with or without cause) from, appoint new members in substitution therefor, and fill vacancies, however caused, in the Committee. The Committee shall act pursuant to a vote of the majority of its members or, in the case of a committee comprised of only two members, the unanimous consent of its members, whether present or not, or by the unanimous written consent of the majority of its members and minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board. Subject to the limitations prescribed by the Plan and the Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may determine to be advisable. During any period of time during which the Company's Stock is registered pursuant to Section 12 of the Exchange Act, all members of the Committee shall be Non-Employee Directors and Outside Directors.
3.6 Indemnification. In addition to such other rights of indemnification as they may have as Directors or members of the Committee, and to the extent allowed by applicable law, the Administrator and each of the Administrator's consultants shall be indemnified by the Company against the reasonable expenses, including attorney's fees, actually incurred in connection with any action, suit or proceeding or in connection with any appeal therein, to which the Administrator or any of its consultants may be party by reason of any action taken or failure to act under or in connection with the Plan or any option granted under the Plan, and against all amounts paid by the Administrator or any of its consultants in settlement thereof (provided that the settlement has been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Administrator or any of its consultants in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Administrator or any of its consultants did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, or was grossly negligent, and in the case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that within 60 days after institution of any such action, suit or proceeding, such Administrator or any of its consultants shall, in writing, offer the Company the opportunity at its own expense to handle and defend such action, suit or proceeding.
SECTION 4: STOCK SUBJECT TO THE PLAN
4.1 Stock Subject to the Plan. Subject to adjustment as provided in Section 9, Two Million (2,000,000) shares of Common Stock shall be reserved and available for issuance under the Plan. Stock reserved hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares.
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4.2 Basic Limitation. The number of shares that are subject to Rights under the Plan shall not exceed the number of shares that then remain available for issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and keep available a sufficient number of shares to satisfy the requirements of the Plan.
4.3 Additional Shares. In the event that any outstanding Option or other right for any reason expires or is canceled or otherwise terminated, the shares allocable to the unexercised portion of such Option or other right shall again be available for the purposes of the Plan. In the event that shares issued under the Plan are reacquired by the Company pursuant to the terms of any forfeiture provision, right of repurchase or right of first refusal, such shares shall again be available for the purposes of the Plan.
SECTION 5: ELIGIBILITY
Eligible Persons who are selected by the Administrator shall be eligible to be granted Rights hereunder subject to limitations set forth in this Plan; provided, however, that only Employees shall be eligible to be granted ISOs hereunder.
SECTION 6: TERMS AND CONDITIONS OF OPTIONS.
6.1 Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Administrator deems appropriate for inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical.
6.2 Number of Shares. Each Stock Option Agreement shall specify the number of shares of Stock that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 9, hereof. The Stock Option Agreement shall also specify whether the Option is an ISO or a Non-Qualified Stock Option.
6.3 Exercise Price.
6.3.1 In General. Each Stock Option Agreement shall state the price at which shares subject to the Stock Option may be purchased (the "Exercise Price"), which shall, with respect to Incentive Stock Options, be not less than 100% of the Fair Market Value of the Stock on the Date of Grant. In the case of Non-Qualified Stock Options, the Exercise Price shall be determined in the sole discretion of the Administrator.
6.3.2 Payment. The Exercise Price shall be payable in a form described in Section 8 hereof.
6.4 Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Board may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise or with the disposition of shares acquired by exercising an Option.
6.5 Exercisability. Each Stock Option Agreement shall specify the date when all or any installment of the Option becomes exercisable. In the case of an Optionee who is not an officer of the Company, a Director or a Consultant, an Option shall become exercisable at a rate of no more
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than 25% per year over a four-year period commencing on January 1 following the Date of Grant and 25% each year thereafter on January 1. Subject to the preceding sentence, the exercise provisions of any Stock Option Agreement shall be determined by the Administrator, in its sole discretion.
6.6 Term. The Stock Option Agreement shall specify the term of the Option. No Option shall be exercised after the expiration of ten years after the date the Option is granted. Unless otherwise provided in the Stock Option Agreement, no Option may be exercised (i) three months after the date the Optionee's Service with the Company, its Parent or its Subsidiaries terminates if such termination is for any reason other than death, Disability or Cause, (ii) one year after the date the Optionee's Service with the Company, its Parent or its subsidiaries terminates if such termination is a result of death or Disability, and (iii) if the Optionee's Service with the Company, its Parent, or its Subsidiaries terminates for Cause, all outstanding Options granted to such Optionee shall expire as of the commencement of business on the date of such termination. The Administrator may, in its sole discretion, waive the accelerated expiration provided for in (i) or (ii). Outstanding Options that are not exercisable at the time of termination of employment for any reason shall expire at the close of business on the date of such termination.
6.7 Leaves of Absence. For purposes of Section 6.6 above, to the extent required by applicable law, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence. To the extent applicable law does not require such a leave to be deemed to continue while the Optionee is on a bona fide leave of absence, such leave shall be deemed to continue if, and only if, expressly provided in writing by the Administrator or a duly authorized officer of the Company, Parent, or Subsidiary for whom Optionee provides his or her services.
6.8 Modification, Extension and Assumption of Options. Within the limitations of the Plan, the Administrator may modify, extend or assume outstanding Options (whether granted by the Company or another issuer) or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the same or a different number of shares and at the same or a different Exercise Price. Without limiting the foregoing, the Administrator may amend a previously granted Option to fully accelerate the exercise schedule of such Option and provide that upon the exercise of such Option, the Optionee shall receive shares of Restricted Stock that are subject to repurchase by the Company at the Exercise Price paid for the Option in accordance with Section 8.8.1 with such Company's right to repurchase at such price lapsing at the same rate as the exercise provisions set forth in Optionee's Stock Option Agreement. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the Optionee's rights or increase the Optionee's obligations under such Option. However, a termination of the Option in which the Optionee receives a cash payment equal to the difference between the Fair Market Value and the Exercise Price for all shares subject to exercise under any outstanding Option shall not be deemed to impair any rights of the Optionee or increase the Optionee's obligations under such Option.
SECTION 7: TERMS AND CONDITIONS OF AWARDS OR SALES
7.1 Stock Purchase Agreement. Each award or sale of shares under the Plan (other than upon exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Board deems appropriate for inclusion in a Stock Purchase Agreement. The provisions of the various Stock Purchase Agreements entered into under the Plan need not be identical.
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7.2 Duration of Offers. Unless otherwise provided in the Stock Purchase Agreement, any right to acquire shares under the Plan (other than an Option) shall automatically expire if not exercised by the Purchaser within 15 days after the grant of such right was communicated to the Purchaser by the Company.
7.3 Purchase Price.
7.3.1 In General. Each Stock Purchase Agreement shall state the price at which the Stock subject to such Stock Purchase Agreement may be purchased (the "Purchase Price"), which, with respect to Stock Purchase Rights, shall be determined in the sole discretion of the Administrator.
7.3.2 Payment of Purchase Price. The Purchase Price shall be payable in a form described in Section 8.
7.4 Withholding Taxes. As a condition to the purchase of shares, the Purchaser shall make such arrangements as the Board may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such purchase.
SECTION 8: PAYMENT; RESTRICTIONS
8.1 General Rule. The entire Purchase Price or Exercise Price of shares issued under the Plan shall be payable in full by, as applicable, cash or certified check for an amount equal to the aggregate Purchase Price or Exercise Price for the number of shares being purchased, or in the discretion of the Administrator, upon such terms as the Administrator shall approve, (i) in the case of an Option and provided the Company's stock is publicly traded, by a copy of instructions to a broker directing such broker to sell the Stock for which such Option is exercised, and to remit to the Company the aggregate Exercise Price of such Options (a "cashless exercise"), (ii) in the case of an Option or a sale of Stock, by paying all or a portion of the Exercise Price or Purchase Price for the number of shares being purchased by tendering Stock owned by the Optionee, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the aggregate Purchase Price of the Stock with respect to which such Option or portion thereof is thereby exercised or Stock acquired (a "stock-for-stock exercise") or (iii) by a stock-for-stock exercise by means of attestation whereby the Optionee identifies for delivery specific shares of Stock already owned by Optionee and receives a number of shares of Stock equal to the difference between the Option shares thereby exercised and the identified attestation shares of Stock (an "attestation exercise").
8.2 Withholding Payment. The Purchase Price or Exercise Price shall include payment of the amount of all federal, state, local or other income, excise or employment taxes subject to withholding (if any) by the Company or any parent or subsidiary corporation as a result of the exercise of a Stock Option. The Optionee may pay all or a portion of the tax withholding by cash or check payable to the Company, or, at the discretion of the Administrator, upon such terms as the Administrator shall approve, by (i) cashless exercise or attestation exercise; (ii) stock-for-stock exercise; (iii) in the case of an Option, by paying all or a portion of the tax withholding for the number of shares being purchased by withholding shares from any transfer or payment to the Optionee ("Stock withholding"); or (iv) a combination of one or more of the foregoing payment methods. Any shares issued pursuant to the exercise of an Option and transferred by the Optionee to the Company for the purpose of satisfying any withholding obligation shall not again be available for purposes of the Plan. The Fair Market Value of the number of shares subject to
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Stock withholding shall not exceed an amount equal to the applicable minimum required tax withholding rates.
8.3 Services Rendered. At the discretion of the Administrator, shares may be awarded under the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to the award.
8.4 Promissory Note. To the extent that a Stock Option Agreement or Stock Purchase Agreement so provides, in the discretion of the Administrator, upon such terms as the Administrator shall approve, all or a portion of the Exercise Price or Purchase Price (as the case may be) of shares issued under the Plan may be paid with a full-recourse promissory note. However, in the event there is a stated par value of the shares and applicable law requires, the par value of the shares, if newly issued, shall be paid in cash or cash equivalents. The shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon, and held in the possession of the Company until said amounts are repaid in full. The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Administrator (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note. Unless the Administrator determines otherwise, shares of Stock having a Fair Market Value at least equal to the principal amount of the loan shall be pledged by the holder to the Company as security for payment of the unpaid balance of the loan and such pledge shall be evidenced by a pledge agreement, the terms of which shall be determined by the Administrator, in its discretion; provided, however, that each loan shall comply with all applicable laws, regulations and rules of the Board of Governors of the Federal Reserve System and any other governmental agency having jurisdiction.
8.5 Exercise/Pledge. To the extent that a Stock Option Agreement or Stock Purchase Agreement so allows and if Stock is publicly traded, in the discretion of the Administrator, upon such terms as the Administrator shall approve, payment may be made all or in part by the delivery (on a form prescribed by the Administrator) of an irrevocable direction to pledge shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.
8.6 Written Notice. The purchaser shall deliver a written notice to the Administrator requesting that the Company direct the transfer agent to issue to the purchaser (or to his designee) a certificate for the number of shares of Common Stock being exercised or purchased or, in the case of a cashless exercise or share withholding exercise, for any shares that were not sold in the cashless exercise or withheld.
8.7 First Refusal Right. Each Stock Option Agreement and Stock Purchase Agreement may provide that the Company shall have the right of first refusal (the "First Refusal Right"), exercisable in connection with any proposed sale, hypothecation or other disposition of the Stock purchased by the Optionee or Offeree pursuant to a Stock Option Agreement or Stock Purchase Agreement; and in the event the holder of such Stock desires to accept a bona fide third-party offer for any or all of such Stock, the Stock shall first be offered to the Company upon the same terms and conditions as are set forth in the bona fide offer.
8.8 Repurchase Rights. Following a termination of the Participant's Service, the Company may repurchase the Participant's Rights as provided in this Section 8.8 (the "Repurchase Right").
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8.8.1 Repurchase Price. Following a termination of the Participant's Service the Repurchase Right shall be exercisable at a price equal to (i) the Fair Market Value of vested Stock or, in the case of exercisable options, the Fair Market Value of the Stock underlying such unexercised options less the Exercise Price, or (ii) the Purchase Price or Exercise Price, as the case may be, of unvested Stock; provided, however, the right to repurchase unvested stock as described in Section 8.8.1(ii) shall lapse at a rate of at least 33.33% per year over three years from the date the Right is granted.
8.8.2 Exercise of Repurchase Right. A Repurchase Right may be exercised only within 90 days after the termination of the Participant's Service (or in the case of Stock issued upon exercise of an Option or after the date of termination or the purchase of Stock under a Stock Purchase Agreement after the date of termination, within 90 days after the date of the exercise or Stock purchase, whichever is applicable) for cash or for cancellation of indebtedness incurred in purchasing the shares.
8.9 Termination of Repurchase and First Refusal Rights. Each Stock Option Agreement and Stock Purchase Agreement shall provide that the Repurchase Rights and First Refusal Rights shall have no effect with respect to, or shall lapse and cease to have effect when the issuer's securities become publicly traded or a determination is made by counsel for the Company that such Repurchase Rights and First Refusal Rights are not permitted under applicable federal or state securities laws.
8.10 No Transferability. Except as provided herein, a Participant may not assign, sell or transfer Rights, in whole or in part, other than by testament or by operation of the laws of descent and distribution.
8.10.1 Permitted Transfer of Non-Qualified Option. The Administrator, in its sole discretion may permit the transfer of a Non-Qualified Option (but not an ISO or Stock Purchase Right) as follows: (i) by gift to a member of the Participant's immediate family, or (ii) by transfer by instrument to a trust providing that the Option is to be passed to beneficiaries upon death of the Settlor (either or both (i) or (ii) referred to as a "Permitted Transferee"). For purposes of this Section 8.10.1, "immediate family" shall mean the Optionee's spouse (including a former spouse subject to terms of a domestic relations order); child, stepchild, grandchild, child-in-law; parent, stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and shall include adoptive relationships.
8.10.2 Conditions of Permitted Transfer. A transfer permitted under this Section 8.10 hereof may be made only upon written notice to and approval thereof by Administrator. A Permitted Transferee may not further assign, sell or transfer the transferred Option, in whole or in part, other than by testament or by operation of the laws of descent and distribution. A Permitted Transferee shall agree in writing to be bound by the provisions of this Plan, which a copy of said agreement shall be provided to the Administrator for approval prior to the transfer.
SECTION 9: ADJUSTMENTS; MARKET STAND-OFF
9.1 Effect of Certain Changes.
9.1.1 Stock Dividends, Splits, Etc. If there is any change in the number of outstanding shares of Stock by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification, then (i) the number of shares of Stock
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available for Rights, (ii) the number of shares of Stock covered by outstanding Rights, and (iii) the Exercise Price or Purchase Price of any Stock Option or Purchase Right, in effect prior to such change, shall be proportionately adjusted by the Administrator to reflect any increase or decrease in the number of issued shares of Stock; provided, however, that any fractional shares resulting from the adjustment shall be eliminated.
9.1.2 Liquidation, Dissolution, Merger or Consolidation. In the event of a dissolution or liquidation of the Company, or any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off, or a sale of substantially all of the assets of the Company; a merger or consolidation in which the Company is not the Surviving Entity; or a reverse merger in which the Company is the Surviving Entity, but the shares of Company stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then, the Company, to the extent permitted by applicable law, but otherwise in its sole discretion may provide for: (i) the continuation of outstanding Rights by the Company (if the Company is the Surviving Entity); (ii) the assumption of the Plan and such outstanding Rights by the Surviving Entity or its parent; (iii) the substitution by the Surviving Entity or its parent of Rights with substantially the same terms for such outstanding Rights; or (iv) the cancellation of such outstanding Rights without payment of any consideration, provided that if such Rights would be canceled in accordance with the foregoing, the Participant shall have the right, exercisable during the later of the ten-day period ending on the fifth day prior to such merger or consolidation or ten days after the Administrator provides the Rights holder a notice of cancellation, to exercise such Rights in whole or in part without regard to any installment exercise provisions in the Rights agreement.
9.1.3 Par Value Changes. In the event of a change in the Stock of the Company as presently constituted which is limited to a change of all of its authorized shares with par value, into the same number of shares without par value, or a change in the par value, the shares resulting from any such change shall be "Stock" within the meaning of the Plan.
9.2 Decision of Administrator Final. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive; provided, however, that each ISO granted pursuant to the Plan shall not be adjusted in a manner that causes such Stock Option to fail to continue to qualify as an ISO without the prior consent of the Optionee thereof.
9.3 No Other Rights. Except as hereinbefore expressly provided in this Section 9, no Participant shall have any rights by reason of any subdivision or consolidation of shares of Company stock or the payment of any dividend or any other increase or decrease in the number of shares of Company stock of any class or by reason of any of the events described in Section 9.1, above, or any other issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class; and, except as provided in this Section 9, none of the foregoing events shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Stock subject to Rights. The grant of a Right pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structures or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or part of its business or assets.
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9.4 Market Stand-Off. Each Stock Option Agreement and Stock Purchase Agreement shall provide that, in connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, including the Company's initial public offering, the Participant shall agree not to sell, make any short sale of, loan, hypothecate, pledge, grant any option for the repurchase of, or otherwise dispose or transfer for value or otherwise agree to engage in any of the foregoing transactions with respect to any Stock without the prior written consent of the Company or its underwriters, for such period of time from and after the effective date of such registration statement as may be requested by the Company or such underwriters (the "Market Stand-Off").
SECTION 10: AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the Plan at any time and for any reason. At the time of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent on stockholder approval.
SECTION 11: GENERAL PROVISIONS
11.1 General Restrictions.
11.1.1 No View to Distribute. The Administrator may require each person acquiring shares of Stock pursuant to the Plan to represent to and agree with the Company in writing that such person is acquiring the shares without a view towards distribution thereof. The certificates for such shares may include any legend that the Administrator deems appropriate to reflect any restrictions on transfer.
11.1.2 Legends. All certificates for shares of Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Administrator may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Stock is then listed and any applicable federal or state securities laws, and the Administrator may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
11.1.3 No Rights as Stockholder. Except as specifically provided in this Plan, a Participant or a transferee of a Right shall have no rights as a stockholder with respect to any shares covered by the Rights until the date of the issuance of a Stock certificate to him or her for such shares, and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the date such Stock certificate is issued, except as provided in Section 9.1, hereof.
11.2 Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
11.3 Disqualifying Dispositions. Any Participant who shall make a "disposition" (as defined in Section 424 of the Code) of all or any portion of an ISO within two years from the date of grant of such ISO or within one year after the issuance of the shares of Stock acquired upon
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exercise of such ISO shall be required to immediately advise the Company in writing as to the occurrence of the sale and the price realized upon the sale of such shares of Stock.
11.4 Regulatory Matters. Each Stock Option Agreement and Stock Purchase Agreement shall provide that no shares shall be purchased or sold thereunder unless and until (i) any then applicable requirements of state or federal laws and regulatory agencies shall have been fully complied with to the satisfaction of the Company and its counsel and (ii) if required to do so by the Company, the Optionee or Offeree shall have executed and delivered to the Company a letter of investment intent in such form and containing such provisions as the Board or Committee may require.
11.5 Recapitalizations. Each Stock Option Agreement and Stock Purchase Agreement shall contain provisions required to reflect the provisions of Section 9.
11.6 Delivery. Upon exercise of a Right granted under this Plan, the Company shall issue Stock or pay any amounts due within a reasonable period of time thereafter. Subject to any statutory obligations the Company may otherwise have, for purposes of this Plan, thirty days shall be considered a reasonable period of time.
11.7 Other Provisions. The Stock Option Agreements and Stock Purchase Agreements authorized under the Plan may contain such other provisions not inconsistent with this Plan, including, without limitation, restrictions upon the exercise of the Rights, as the Administrator may deem advisable.
SECTION 12: INFORMATION TO PARTICIPANTS
To the extent necessary to comply with Delaware law, the Company each year shall furnish to Participants its balance sheet and income statement unless such Participants are limited to key Employees whose duties with the Company assure them access to equivalent information.
SECTION 13: STOCKHOLDERS AGREEMENT
As a condition to the transfer of Stock pursuant to a Right granted under this Plan, the Administrator, in its sole and absolute discretion, may require the Participant to execute and become a party to any agreement by and among the Company and any of its stockholders which exists on or after the Date of Grant (the "Stockholders Agreement"). If the Participant becomes a party to a Stockholders Agreement, in addition to the terms of this Plan and the Stock Option Agreement or Stock Purchase Agreement (whichever is applicable) pursuant to which the Stock is transferred, the terms and conditions of the Stockholders Agreement shall govern Participant's rights in and to the Stock; and if there is any conflict between the provisions of the Stockholders Agreement and this Plan or any conflict between the provisions of the Stockholders Agreement and the Stock Option Agreement or Stock Purchase Agreement (whichever is applicable) pursuant to which the Stock is transferred, the provisions of the Stockholders Agreement shall be controlling. Notwithstanding anything to the contrary in this Section 13, if the Stockholders Agreement contains any provisions which would violate the Delaware Corporations Code if applied to the Participant, the terms of this Plan and the Stock Option Agreement or Stock Purchase Agreement (whichever is applicable) pursuant to which the Stock is transferred shall govern the Participant's rights with respect to such provisions.
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SECTION 14: EFFECTIVE DATE OF PLAN
The effective date of this Plan is January 15, 2020. The adoption of the Plan is subject to approval by the Company's stockholders, which approval must be obtained within 12 months from the date the Plan is adopted by the Board. In the event that the stockholders fail to approve the Plan within 12 months after its adoption by the Board, any grants of Options or sales or awards of shares that have already occurred shall be rescinded, and no additional grants, sales or awards shall be made thereafter under the Plan.
SECTION 15: TERM OF PLAN
The Plan shall terminate automatically on January 15, 2030, but no later than the tenth (10th) anniversary of the effective date. No Right shall be granted pursuant to the Plan after such date, but Rights theretofore granted may extend beyond that date. The Plan may be terminated on any earlier date pursuant to Section 10 hereof.
SECTION 16: EXECUTION
To record the adoption of the Plan by the Board, the Company has caused its authorized officer to execute the same as of January 15, 2020.
BIO LAB NATURALS, INC.
By: /s/ W. Edward Nichols
__________________________________________
W. Edward Nichols, Chief Executive Officer
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STOCK OPTION AGREEMENT
BIO LAB NATURALS, INC.
STOCK OPTION AND INCENTIVE AWARD PLAN
Notice Of Stock Option Grant
You have been granted the following option to purchase Common Stock of BIO LAB NATURALS, INC. (the "Company"):
Name of Optionee:
Total Number of Shares Granted:
Type of Option:
Exercise Price Per Share:
Date of Grant:
Vesting Commencement Date:
Vesting Schedule:
Expiration Date:
By your signature and the signature of the Company's authorized representative below, you and the Company agree that this option is granted under and governed by the terms and conditions of the BIO LAB NATURALS, INC. STOCK OPTION AND AWARD INCENTIVE PLAN and the STOCK OPTION AGREEMENT, both of which are attached hereto and are incorporated herein by reference. Optionee hereby represents that both the option and any shares acquired upon exercise of the option have been or will be acquired for investment for his own account and not with a view to or for sale in connection with any distribution or resale of the security.
| Optionee: | BIO LAB NATURALS, INC. |
| By: | By: |
| Name: | W. EDWARD NICHOLS |
| CEO |
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ANNEX I
THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
BIO LAB NATURALS, INC.
STOCK OPTION AND AWARD INCENTIVE PLAN:
STOCK OPTION AGREEMENT
SECTION 1: GRANT OF OPTION
1.1 Option. On the terms and conditions set forth in the notice of stock option grant to which this agreement (the "Agreement") is attached (the "Notice of Stock Option Grant") and this agreement, the Company grants to the individual named in the Notice of Stock Option Grant (the "Optionee") the option to purchase at the exercise price specified in the Notice of Stock Option Grant (the "Exercise Price") the number of Shares set forth in the Notice of Stock Option Grant. This option is intended to be either an ISO or a Non-Qualified Stock Option, as provided in the Notice of Stock Option Grant.
1.2 Stock Plan and Defined Terms. This option is granted pursuant to and subject to the terms of the BIO LAB NATURALS, INC. STOCK OPTION AND AWARD INCENTIVE PLAN, as in effect on the date specified in the Notice of Stock Option Grant (which date shall be the later of (i) the date on which the Board resolved to grant this option, or (ii) the first day of the Optionee's Service) and as amended from time to time (the "Plan"), a copy of which is attached hereto and which the Optionee acknowledges having received. Capitalized terms not otherwise defined in this Agreement have the definitions ascribed to them in the Plan.
SECTION 2: RIGHT TO EXERCISE
2.1 Exercisability. Subject to Sections 2.2 and 2.3 below and the other conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the Notice of Stock Option Grant. Shares purchased by exercising this option may be subject to the Right of Repurchase under Section 7. In addition, all of the remaining unexercised options shall become vested and fully exercisable if (i) a Change in Control occurs before the Optionee's Service terminates, and (ii) the option is not assumed or an equivalent option is not substituted by the successor entity that employs the Optionee immediately after the Change in Control or by its parent or subsidiary.
2.2 Limitation. If this option is designated as an ISO in the Notice of Stock Option Grant, then to the extent (and only to the extent) the Optionee's right to exercise this option causes this option (in whole or in part) to not be treated as an ISO by reason of the $100,000 annual limitation under Section 422(d) of the Code, such options shall be treated as Non-Qualified Stock
Options, but shall be exercisable by their terms. The determination of options to be treated as Non-Qualified Stock Options shall be made by taking options into account in the order in which they are granted. If the terms of this option cause the $100,000 annual limitation under Section
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422(d) of the Code to be exceeded, a pro rata portion of each exercise shall be treated as the exercise of a Non-Qualified Stock Option.
2.3 Stockholder Approval. Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time prior to the approval of the Plan by the Company's stockholders.
SECTION 3: NO TRANSFER OR ASSIGNMENT OF OPTION
Except as provided herein, an Optionee may not assign, sell or transfer the option, in whole or in part, other than by testament or by operation of the laws of descent and distribution. The Administrator, in its sole discretion may permit the transfer of a Non-Qualified Option (but not an ISO) as follows: (i) by gift to a member of the Participant's immediate family, or (ii) by transfer by instrument to a trust providing that the Option is to be passed to beneficiaries upon death of the Settlor (either or both (i) or (ii) referred to as a "Permitted Transferee"). For purposes of this Section 3, "immediate family" shall mean the Optionee's spouse (including a former spouse subject to terms of a domestic relations order); child, stepchild, grandchild, child-in-law; parent, stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and shall include adoptive relationships. A transfer permitted under this Section 3 hereof may be made only upon written notice to and approval thereof by Administrator. A Permitted Transferee may not further assign, sell or transfer the transferred option, in whole or in part, other than by testament or by operation of the laws of descent and distribution. A Permitted Transferee shall agree in writing to be bound by the provisions of this Plan, which agreement shall be submitted to and approved by the Administrator before the transfer.
SECTION 4: EXERCISE PROCEDURES
4.1 Notice of Exercise. The Optionee or the Optionee's representative may exercise this option by delivering a written notice in the form of Exhibit A attached hereto ("Notice of Exercise") to the Company in the manner specified pursuant to Section 14.4 hereof. Such Notice of Exercise shall specify the election to exercise this option, the number of Shares for which it is being exercised and the form of payment, which must comply with Section 5. The Notice of Exercise shall be signed by the person who is entitled to exercise this option. In the event that this option is to be exercised by the Optionee's representative, the notice shall be accompanied by proof (satisfactory to the Company) of the representative's right to exercise this option.
4.2 Issuance of Shares. After receiving a proper Notice of Exercise, the Company shall cause to be issued a certificate or certificates for the Shares as to which this option has been exercised, registered in the name of the person exercising this option (or in the names of such person and his or her spouse as community property or as joint tenants with right of survivorship). The Company shall cause such certificate or certificates to be deposited in escrow or delivered to or upon the order of the person exercising this option.
4.3 Withholding Taxes. In the event that the Company determines that it is required to withhold any tax as a result of the exercise of this option, the Optionee, as a condition to the exercise of this option, shall make arrangements satisfactory to the Company to enable it to satisfy all withholding requirements. The Optionee shall also make arrangements satisfactory to the Company to enable it to satisfy any withholding requirements that may arise in connection with the vesting or disposition of Shares purchased by exercising this option, and shall provide to the Company his/her/its social security number or employment identification number.
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SECTION 5: PAYMENT FOR STOCK
5.1 General Rule. The entire Exercise Price of Shares issued under the Plan shall be payable in full by cash or cashier's check for an amount equal to the aggregate Exercise Price for the number of shares being purchased. Alternatively, in the sole discretion of the Plan Administrator and upon such terms as the Plan Administrator shall approve, the Exercise Price may be paid by:
5.1.1 Cashless Exercise. Provided the Company's Common Stock is publicly traded, a copy of instructions to a broker directing such broker to sell the Shares for which this option is exercised, and to remit to the Company the aggregate Exercise Price of such option ("Cashless Exercise");
5.1.2 Stock-For-Stock Exercise. Paying all or a portion of the Exercise Price for the number of Shares being purchased by tendering Shares owned by the Optionee, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised (the "Purchase Price") or the aggregate Purchase Price of the shares with respect to which this option or portion hereof is exercised ("Stock-for-Stock Exercise"); or
5.1.3 Attestation Exercise. By a stock for stock exercise by means of attestation whereby the Optionee identifies for delivery specific Shares already owned by Optionee and receives a number of Shares equal to the difference between the Option Shares thereby exercised and the identified attestation Shares ("Attestation Exercise").
5.2 Withholding Payment. The Exercise Price shall include payment of the amount of all federal, state, local or other income, excise or employment taxes subject to withholding (if any) by the Company or any parent or subsidiary corporation as a result of the exercise of a Stock Option. The Optionee may pay all or a portion of the tax withholding by cash or check payable to the Company, or, at the discretion of the Administrator, upon such terms as the Administrator shall approve, by (i) Cashless Exercise or Attestation Exercise; (ii) Stock-for-Stock Exercise; (iii) in the case of an Option, by paying all or a portion of the tax withholding for the number of shares being purchased by withholding shares from any transfer or payment to the Optionee ("Stock withholding"); or (iv) a combination of one or more of the foregoing payment methods. Any shares issued pursuant to the exercise of an Option and transferred by the Optionee to the Company for the purpose of satisfying any withholding obligation shall not again be available for purposes of the Plan. The fair market value of the number of shares subject to Stock withholding shall not exceed an amount equal to the applicable minimum required tax withholding rates.
5.3 Promissory Note. The Plan Administrator, in its sole discretion, upon such terms as the Plan Administrator shall approve, may permit all or a portion of the Exercise Price of Shares issued under the Plan to be paid with a full-recourse promissory note. However, in the event there is a stated par value of the shares and applicable law requires, the par value of the shares, if newly issued, shall be paid in cash or cash equivalents. The Shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon, and shall be held in the possession of the Company until the promissory note is repaid in full. Subject to the foregoing, the Plan Administrator (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note.
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5.4 Exercise/Pledge. In the discretion of the Plan Administrator, upon such terms as the Plan Administrator shall approve, payment may be made all or in part by the delivery (on a form prescribed by the Plan Administrator) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes.
SECTION 6: TERM AND EXPIRATION
6.1 Basic Term. This option shall expire and shall not be exercisable after the expiration of the earliest of (i) the Expiration Date specified in the Notice of Stock Option Grant, (ii) three months after the date the Optionee's Service with the Company and its Subsidiaries terminates if such termination is for any reason other than death, Disability or Cause, (iii) one year after the date the Optionee's Service with the Company and its Subsidiaries terminates if such termination is a result of death or Disability, and (iv) if the Optionee's Service with the Company and its Subsidiaries terminates for Cause, all outstanding Options granted to such Optionee shall expire as of the commencement of business on the date of such termination. Outstanding Options that are not exercisable at the time of termination of employment for any reason shall expire at the close of business on the date of such termination. The Plan Administrator shall have the sole discretion to determine when this option is to expire. For any purpose under this Agreement, Service shall be deemed to continue while the Optionee is on a bona fide leave of absence, if such leave to the extent required by applicable law. To the extent applicable law does not require such a leave to be deemed to continue while the Optionee is on a bona fide leave of absence, such leave shall be deemed to continue if, and only if, expressly provided in writing by the Administrator or a duly authorized officer of the Company, Parent or Subsidiary for whom Optionee provides his or her services.
6.2 Exercise After Death. All or part of this option may be exercised at any time before its expiration under Section 6.1 above by the executors or administrators of the Optionee's estate or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become exercisable before the Optionee's death. When the Optionee dies, this option shall expire immediately with respect to the number of Shares for which this option is not yet exercisable and with respect to any Share that is subject to the Right of Repurchase (as such term is defined in below) (the "Restricted Stock").
6.3 Notice Concerning ISO Treatment. If this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax treatment as an ISO to the extent it is exercised (i) more than three months after the date the Optionee ceases to be an Employee for any reason other than death or permanent and total disability (as defined in Section 22(e)(3) of the Code), (ii) more than 12 months after the date the Optionee ceases to be an Employee by reason of such permanent and total disability, or (iii) after the Optionee has been on a leave of absence for more than 90 days, unless the Optionee's reemployment rights are guaranteed by statute or by contract.
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SECTION 7: RIGHT OF REPURCHASE
7.1 Option Repurchase Right. Following a termination of the Optionee's Service, the Company shall have the option to repurchase the Optionee's vested and exercisable options at a price equal to the Fair Market Value of the Stock underlying such options, less the Exercise Price (the "Option Repurchase Right").
7.2 Stock Repurchase Right. Unless they have become vested in accordance with the Notice of Stock Option Grant and Section 7.4 below, the stock acquired under this Agreement initially shall be Restricted Stock and shall be subject to a right (but not an obligation) of repurchase by the Company, which shall be exercisable at a price equal to the Exercise Price paid for the Restricted Stock (the "Stock Repurchase Right"). Vested stock acquired under this Agreement shall be subject to a right (but not an obligation) of repurchase by the Company, which shall be exercisable at a price equal to the Fair Market Value of the vested Stock.
7.3 Condition Precedent to Exercise. The Option Repurchase Right and Stock Repurchase Rights (collectively, the "Right of Repurchase") shall be exercisable over Restricted Stock only during the 90-day period next following the later of:
7.3.1 The date when the Optionee's Service terminates for any reason, with or without Cause, including (without limitation) death or disability; or
7.3.2 The date when this option was exercised by the Optionee, the executors or administrators of the Optionee's estate, or any person who has acquired this option directly from the Optionee by bequest, inheritance or beneficiary designation.
7.4 Lapse of Right of Repurchase. The Right of Repurchase shall lapse with respect to the Shares subject to this option in accordance with the vesting schedule set forth in the Notice of Stock Option Grant. In addition, the Right of Repurchase shall lapse and all of the remaining Restricted Stock shall become vested if (i) a Change in Control occurs before the Optionee's Service terminates, and (ii) the Right of Repurchase is not assigned to the entity that employs the Optionee immediately after the Change in Control or to its parent or subsidiary. The Right of Repurchase shall lapse with respect to (i) Shares that are registered under a then currently effective registration statement under applicable federal securities laws and the issuer is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or becomes an investment company registered or required to be registered under the Investment Company Act of 1940, or (ii) Shares for which a determination is made by counsel for the Company that such Exercise Price restrictions are not required in the circumstances under applicable federal or state securities laws.
7.5 Exercise of Right of Repurchase. The Company shall exercise the Right of Repurchase by written notice delivered to the Optionee prior to the expiration of the 90-day period specified in Section 7.3 above. The notice shall set forth the date on which the repurchase is to be effected, which must occur within 31 days of the notice. The certificate(s) representing the Restricted Stock to be repurchased shall, prior to the close of business on the date specified for the repurchase, be delivered to the Company properly endorsed for transfer. The Company shall, concurrently with the receipt of such certificate(s), pay to the Optionee the Purchase Price determined according to this Section 7. Payment shall be made in cash or cash equivalents or by canceling indebtedness to the Company incurred by the Optionee in the purchase of the Restricted Stock. The Right of Repurchase shall terminate with respect to any Restricted Stock for which it has not been timely exercised pursuant to this Section 7.5.
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7.6 Rights of Repurchase Adjustments. If there is any change in the number of outstanding shares of Stock by reason of a stock split, reverse stock split, stock dividend, an extraordinary dividend payable in a form other than stock, recapitalization, combination or reclassification, or a similar transaction affecting the Company's outstanding securities without receipt of consideration, then (i) any new, substituted or additional securities or other property (including money paid other than as an ordinary cash dividend) distributed with respect to any Restricted Stock (or into which such Restricted Stock thereby become convertible) shall immediately be subject to the Right of Repurchase; and (ii) appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of the Restricted Stock and to the price per share to be paid upon the exercise of the Right of Repurchase; provided, however, that the aggregate Purchase Price payable for the Restricted Stock shall remain the same.
7.7 Termination of Rights as Stockholder. If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Restricted Stock to be repurchased in accordance with this Section 7, then after such time the person from whom such Restricted Stock is to be repurchased shall no longer have any rights as a holder of such Restricted Stock (other than the right to receive payment of such consideration in accordance with this Agreement). Such Restricted Stock shall be deemed to have been repurchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefore have been delivered as required by this Agreement.
7.8 Escrow. Upon issuance, the certificates for Restricted Stock shall be deposited in escrow with the Company to be held in accordance with the provisions of this Agreement. Any new, substituted or additional securities or other property described in Section 7.6 above shall immediately be delivered to the Company to be held in escrow, but only to the extent the Shares are at the time Restricted Stock. All regular cash dividends on Restricted Stock (or other securities at the time held in escrow) shall be paid directly to the Optionee and shall not be held in escrow. Restricted Stock, together with any other assets or securities held in escrow hereunder, shall be (i) surrendered to the Company for repurchase and cancellation upon the Company's exercise of its Right of Repurchase or Right of First Refusal or (ii) released to the Optionee upon the Optionee's request to the extent the Shares are no longer Restricted Stock (but not more frequently than once every six months). In any event, all Shares which have vested (and any other vested assets and securities attributable thereto) shall be released within 60 days after the earlier of (i) the Optionee's cessation of Service or (ii) the lapse of the Right of First Refusal.
SECTION 8: RIGHT OF FIRST REFUSAL
8.1 Right of First Refusal. In the event that the Company's stock is not readily tradable on an established securities market and the Optionee proposes to sell, pledge or otherwise transfer to a third party any Shares acquired under this Agreement, or any interest in such Shares, to any person, entity or organization (the "Transferee") the Company shall have the Right of First Refusal with respect to all (and not less than all) of such Shares (the "Right of First Refusal"). If the Optionee desires to transfer Shares acquired under this Agreement, the Optionee shall give a written transfer notice ("Transfer Notice") to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal or state securities laws. The Transfer Notice shall be signed both by the Optionee and by the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the Shares. The Company shall have the right to purchase all, and not less than all, of the Shares on the terms of the proposal described in
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the Transfer Notice by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company. The Company's rights under this Section 8.1 shall be freely assignable, in whole or in part.
8.2 Additional Shares or Substituted Securities. In the event of the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company's outstanding securities without receipt of consideration, any new, substituted or additional securities or other property (including money paid other than as an ordinary cash dividend) which are by reason of such transaction distributed with respect to any Shares subject to this Section 8 or into which such Shares thereby become convertible shall immediately be subject to this Section 8. Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 8.
8.3 Termination of Right of First Refusal. Any other provision of this Section 8 notwithstanding, in the event that the Stock is readily tradable on an established securities market when the Optionee desires to transfer Shares, the Company shall have no Right of First Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by this Section 8.
8.4 Permitted Transfers. This Section 8 shall not apply to a transfer (i) by gift to a member of the Participant's immediate family or (ii) by transfer by instrument to a trust providing that the Option is to be passed to beneficiaries upon death of the Settlor. For purposes of this Section 8.4, "immediate family" shall mean the Optionee's spouse (including a former spouse subject to terms of a domestic relations order); child, stepchild, grandchild, child-in-law; parent, stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and shall include adoptive relationships.
8.5 Termination of Rights as Stockholder. If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 8, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefore have been delivered as required by this Agreement.
SECTION 9: OBLIGATION TO SELL.
Notwithstanding anything herein to the contrary, if at any time following Optionee's acquisition of Shares hereunder, stockholders of the Company owning 51% or more of the shares of the Company (on a fully diluted basis) (the "Control Sellers") enter into an agreement (including any agreement in principal) to transfer all of their shares to any person or group of persons who are not affiliated with the Control Sellers, such Control Sellers may require each stockholder who is not a Control Seller (a "Non-Control Seller") to sell all of their shares to such person or group of persons at a price and on terms and conditions the same as those on which such Control Sellers have agreed to sell their shares, other than terms and conditions relating to the performance or non-performance of services. For the purposes of the preceding sentence, an affiliate of a Control Seller is a person who controls, which is controlled by, or which is under common control with, the Control Seller.
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SECTION 10: STOCKHOLDERS AGREEMENT
As a condition to the transfer of Stock pursuant to this Stock Option Agreement, the Administrator, in its sole and absolute discretion, may require the Participant to execute and become a party to any agreement by and among the Company and any of its stockholders which exists on or after the Date of Grant (the "Stockholders Agreement"). If the Participant becomes a party to a Stockholders Agreement, in addition to the terms of the Plan and this Stock Option Agreement, the terms and conditions of Stockholders Agreement shall govern Participant's rights in and to the Stock; and if there is any conflict between the provisions of the Stockholders Agreement and the Plan or any conflict between the provisions of the Stockholders Agreement and this Stock Option Agreement, the provisions of the Stockholders Agreement shall be controlling. Notwithstanding anything to the contrary in this Section 10, if the Stockholders Agreement contains any provisions which would violate Delaware corporate law if applied to the Participant, the terms of the Plan and this Stock Option Agreement shall govern the Participant's rights with respect to such provisions.
SECTION 11: LEGALITY OF INITIAL ISSUANCE
No Shares shall be issued upon the exercise of this option unless and until the Company has determined that:
11.1 It and the Optionee have taken any actions required to register the Shares, provided the Stock is publicly traded, under the Securities Act of 1933, as amended (the "Securities Act"), or to perfect an exemption from the registration requirements thereof;
11.2 Any applicable listing requirement of any stock exchange on which Stock is listed has been satisfied; and
11.3 Any other applicable provision of state or federal law has been satisfied.
SECTION 12: NO REGISTRATION RIGHTS
The Company may, but shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other applicable law. The Company shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Agreement to comply with any law.
SECTION 13: RESTRICTIONS ON TRANSFER
13.1 Securities Law Restrictions. Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities Act or have been registered or qualified under the securities laws of any state, the Company, at its discretion, may impose restrictions upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable in order to achieve compliance with the Securities Act, the securities laws of any state or any other law.
13.2 Market Stand-Off. In the event of an underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Act, including the Company's initial public offering (a "Public Offering"), the Optionee shall not transfer for value any shares of Stock without the prior written consent of the Company or its
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underwriters, for such period of time from and after the effective date of such registration statement as may be requested by the Company or such underwriters (the "Market Stand-Off"). The Market Stand-off shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriters. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company's outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period.
13.3 Investment Intent at Grant. The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired for investment, and not with a view to the sale or distribution thereof.
13.4 Investment Intent at Exercise. In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption is available which requires an investment representation or other representation, the Optionee shall represent and agree at the time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company and its counsel.
13.5 Legends. All certificates evidencing Shares purchased under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are required or deemed advisable under the provisions of any applicable law):
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
13.6 Removal of Legends. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares sold under this Agreement no longer is required, the holder of such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Shares but without such legend.
13.7 Administration. Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 13 shall be conclusive and binding on the Optionee and all other persons.
SECTION 14: MISCELLANEOUS PROVISIONS
14.1 Rights as a Stockholder. Neither the Optionee nor the Optionee's representative shall have any rights as a stockholder with respect to any Shares subject to this option until the Optionee or the Optionee's representative becomes entitled to receive such Shares by filing a notice of exercise and paying the Exercise Price pursuant to Section 4 and Section 5 hereof.
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14.2 Adjustments. If there is any change in the number of outstanding shares of Stock by reason of a stock split, reverse stock split, stock dividend, recapitalization, combination or reclassification, then (i) the number of shares subject to this option and (ii) the Exercise Price of this option, in effect prior to such change, shall be proportionately adjusted to reflect any increase or decrease in the number of issued shares of Stock; provided, however, that any fractional shares resulting from the adjustment shall be eliminated.
14.3 No Retention Rights. Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without Cause.
14.4 Notice. Any notice required by the terms of this Agreement shall be given in writing and shall be deemed effective upon personal delivery or upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid. Notice shall be addressed the Optionee at the address set forth in the records of the Company. Notice shall be addressed to the Company at:
BIO LAB NATURALS, INC.
Attn: W. Edward Nichols, CEO
201 Columbine St., 3rd Floor, Suite 11
Denver, CO 80206
14.5 Entire Agreement. The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter hereof.
14.6 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS CHOICE OF LAWS PROVISIONS, AS DELAWARE LAWS ARE APPLIED TO CONTRACTS ENTERED INTO AND PERFORMED IN SUCH STATE.
14.7 Attorneys' Fees. In the event that any action, suit or proceeding is instituted upon any breach of this Agreement, the prevailing party shall be paid by the other party thereto an amount equal to all of the prevailing party's costs and expenses, including attorneys' fees incurred in each and every such action, suit or proceeding (including any and all appeals or petitions therefrom). As used in this Agreement, "attorneys' fees" shall mean the full and actual cost of any legal services actually performed in connection with the matter involved calculated on the basis of the usual fee charged by the attorney performing such services and shall not be limited to "reasonable attorneys' fees" as defined in any statute or rule of court.
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EXHIBIT A
TO
BIO LAB NATURALS, INC.
STOCK OPTION AND AWARD INCENTIVE PLAN:
STOCK OPTION AGREEMENT
ANNEX I
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
BIO LAB NATURALS, INC.
Attn: W. Edward Nichols, CEO
201 Columbine St., 3rd Floor, Suite 11
Denver, CO 80206
The undersigned, the holder of the enclosed Stock Option Agreement, hereby irrevocably elects to exercise the purchase rights represented by the Option and to purchase thereunder __________* shares of Common Stock of BIO LAB NATURALS, INC. (the "Company"), and herewith encloses payment of $_______ and/or _________ shares of the Company's common stock in full payment of the purchase price of such shares being purchased.
Dated:
------------------------------
NOTICE: YOUR STOCK MAY BE SUBJECT TO RESTRICTIONS AND FORFEITABLE UNDER THE NOTICE OF STOCK OPTION GRANT AND STOCK OPTION AGREEMENT
(Signature must conform in all respects to name of holder as specified on the face of the Option)
--------------------------------------------------------------
--------------------------------------------------------------
(Please Print Name)
--------------------------------------------------------------
--------------------------------------------------------------
(Address)
* Insert here the number of shares called for on the face of the Option, or, in the case of a partial exercise, the number of shares being exercised, in either case without making any adjustment for additional Common Stock of the Company, other securities or property that, pursuant to the adjustment provisions of the Option, may be deliverable upon exercise.
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FORM OF RESOLUTIONS FOR OPTION GRANTS
RESOLUTIONS ADOPTED BY UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
BIO LAB NATURALS, INC.
As of ______________, 20__
The undersigned directors, constituting the entire board of directors (the "Board") of BIO LAB NATURALS, INC., a Delaware Corporation (the "Company"), hereby take the following actions, adopt the following resolutions, and transact the following business, by written consent without a meeting, as of the date above written, pursuant to the applicable corporate laws of the State of Delaware and the Company's Bylaws.
WHEREAS, the Company previously adopted the BIO LAB NATURALS, INC. STOCK OPTION AND AWARD INCENTIVE PLAN (the "Plan"), and has delegated the responsibility to administer the Plan to the Board;
WHEREAS, Two Million (2,000,000) shares of Common Stock of the Company were originally reserved for issuance under the Plan;
WHEREAS, as of the date hereof, _____________ shares remain available for issuance under the Plan; and
WHEREAS, the Board has determined that it is in the best interests of this Company and its stockholders to provide, under the Plan, equity incentives to those employees, directors and/or consultants of the Company identified below.
NOW, THEREFORE, BE IT RESOLVED, that the persons listed on the Exhibit A, which is attached hereto and incorporated herein by reference, which exhibit was reviewed by the Board and shall be included with this Consent, are hereby granted, as of the date hereof, an option (the "Option") to purchase the number of shares with the vesting schedule and exercise price as set forth in Exhibit A;
RESOLVED FURTHER, that each of the Options shall be either a Non-Qualified Stock Option or an ISO (as such terms are defined in the Plan) as specified in Exhibit A;
RESOLVED FURTHER, that the Options shall be evidenced by stock option agreements and be subject to the restrictions (including transfer and/or repurchase rights), if any, set forth in such stock option agreements;
RESOLVED FURTHER, that the Options shall be granted pursuant to the exemptions provided under Section 701 of the Securities Act Rules and Delaware Securities Laws;
RESOLVED FURTHER, that there is hereby reserved and set aside under the Plan the number of shares adequate to cover the shares underlying the Options granted herein; and
RESOLVED FURTHER, that the officers of this Company, and each of them, be, and they hereby are, authorized, directed and empowered for and on behalf of the Company to do or cause to be done all such acts and things and to sign, deliver and/or file all such documents and notices
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as any of such officers may deem necessary or advisable in order to carry out and perform the foregoing resolutions and the intention thereof.
The Secretary of the Corporation is directed to file the original executed copy of this Consent with the minutes of proceedings of the Board.
IN WITNESS WHEREOF, each of the undersigned has executed this consent as of the date first written above.
DIRECTORS:
| W. Edward Nichols, Director | Darrell Avey, Director | |
| Jeremy Ostler, Director | Calvin D. Smiley, Sr., Director |
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EXHIBIT A
TO
FORM OF RESOLUTIONS FOR OPTION GRANTS
Stock Option Grant Information
| Name | No. Shares | ISO or NQSO | Exercise Price* | Vesting Schedule |
* In the case of an ISO, the per share exercise price must be at least 100% of the Fair Market Value (as such term is defined in the Plan) of the underlying share as of the date of grant. In the case of a NQSO, the per share exercise price must be at least 85% of the Fair Market Value of the underlying share as of the date of grant.
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STOCK PURCHASE AGREEMENT
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STOCK PURCHASE CERTIFICATE
THIS IS TO CERTIFY that BIO LAB NATURALS, INC., a Delaware corporation (the "Company"), has offered you (the "Purchaser") the right to purchase Common Stock (the "Stock" or "Shares") of the Company under its BIO LAB NATURALS, INC. STOCK OPTION AND AWARD INCENTIVE PLAN (the "Plan"), as follows:
| Name of Purchaser: | |
| Address of Purchaser: | |
| Number of Shares: | |
| Purchase Price: | $ |
| Offer Grant Date: | |
| Offer Expiration Date: | 15 days after the Offer Grant Date |
| Vesting Commencement Date: | |
| Vesting Schedule: | |
By your signature and the signature of the Company's representative below, you and the Company agree to be bound by all of the terms and conditions of the Stock Purchase Agreement, which is attached hereto as Annex I and the Plan (both incorporated herein by this reference as if set forth in full in this document). By executing this Agreement, Purchaser hereby irrevocably elects to exercise the purchase rights granted pursuant to the Stock Purchase Agreement and to purchase ________ shares of Stock of BIO LAB NATURALS, INC., and herewith encloses payment of $____________ in payment of the purchase price of the shares being purchased.
PURCHASER: BIO LAB NATURALS, INC.
By:_________________________________ By:______________________
W. Edward Nichols
Print Name:_________________________ Its: CEO
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ANNEX I
to
STOCK PURCHASE AGREEMENT
THE STOCK GRANTED PURSUANT TO THIS AGREEMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
BIO LAB NATURALS, INC.
STOCK OPTION AND AWARD INCENTIVE PLAN:
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is made and entered into on the execution date of the Stock Purchase Certificate to which it is attached (the "Certificate"), by and between BIO LAB NATURALS, INC., a Delaware corporation (the "Company"), and the Director, Employee or Consultant ("Purchaser") named in the Certificate.
Pursuant to the BIO LAB NATURALS, INC. STOCK OPTION AND AWARD INCENTIVE PLAN (the "Plan"), the Administrator of the Plan has authorized the grant to Purchaser of the right to purchase shares of the Company's Common Stock, upon the terms and subject to the conditions set forth in this Agreement and in the Plan. Capitalized terms not otherwise defied herein shall have the meanings ascribed to them in the Plan.
SECTION 1: THE OFFER.
1.1 Offer of the Stock. The Company hereby offers to sell to purchaser the number of shares of stock set forth in the certificate at the price and subject to the restrictions set forth in this Agreement (the shares of stock which you purchase under this agreement are referred to as the "Stock" or "Shares").
1.2 Purchase Price. The Purchase Price for the Stock is set forth in the Certificate.
1.3 Payment For The Stock. Purchaser may pay for the stock by delivering to the company the purchase price in the form of either (i) cash or cashier's check or (ii) your promissory note, in the form of the Promissory Note attached to this agreement as Exhibit A. If Purchaser pays for the stock by delivery of the Promissory Note, Purchaser must also deliver to the company at the same time one executed copy of both the Security Agreement attached as Exhibit B and the Stock Assignment attached as Exhibit C.
1.4 Expiration of Offer. This offer expires at 5:00 o'clock p.m. on the date set forth in the certificate.
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SECTION 2: ACCEPTANCE OF THE OFFER.
There is no obligation to exercise the rights granted to you under this Agreement, in whole or in part. Purchaser may purchase fewer shares than the number offered to Purchaser in this Agreement. If Purchaser decides to accept the offer and purchase any shares offered, Purchaser must do the following:
2.1 Complete Documents. Complete, sign and date one copy of the Certificate, and, if Purchaser is paying by delivery of a promissory note, one copy each of the attached Promissory Note, Security Agreement and Stock Assignment;
2.2 Spousal Consent. If Purchaser is married, Purchaser must have his or her spouse sign and date one copy of the attached Spousal Consent; and
2.3 Deliver to Company. Deliver to the Company on or before the time the offer expires, the signed copy of this Agreement, the Spousal Consent, and payment for the Stock, in cash, by cashier's check or by the Promissory Note. If Purchaser is paying for the stock by the Promissory Note, Purchaser must also deliver to the Company the executed original Promissory Note, Security Agreement and Stock Assignment.
Purchaser should retain a copy of all of the signed documents for his or her files, and if Purchaser does so, Purchaser should mark the retained copy of the Promissory Note "COPY." THE SIGNED PROMISSORY NOTE IS A NEGOTIABLE INSTRUMENT AND IS ENFORCEABLE AGAINST PURCHASER BY ANY HOLDER OF THE PROMISSORY NOTE, AND ANY ADDITIONAL SIGNED COPIES WHICH ARE NOT MARKED "COPY" MAY ALSO BE NEGOTIABLE INSTRUMENTS WHICH ARE ENFORCEABLE AGAINST PURCHASER BY THEIR HOLDER.
SECTION 3: RESTRICTIONS ON THE STOCK.
3.1 Restrictions on Transfer of Shares. Purchaser shall not sell, make any short sale of, loan, hypothecate, pledge, grant any option for the repurchase of, or otherwise dispose or transfer for value (each a "Transfer") or otherwise agree to engage in any of the foregoing transactions with respect to any shares of Stock. The Company shall not be required to register any such Transfer and the Company may instruct its transfer agent not to register any such Transfer, unless and until all of the following events shall have occurred:
3.1.1 The Company has declined to exercise the right of first refusal provided for in Section 5 hereof;
3.1.2 The Shares are Transferred pursuant to and in conformity with: (i) (x) an effective registration statement filed with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act of 1933, as amended (the "Act") or (y) an exemption from registration under the Act; and (ii) the securities laws of any state of the United States; and
3.1.3 Purchaser has, prior to the Transfer of such Shares, and if requested by the Company, provided all relevant information to the Company's counsel so that upon the Company's request, the Company's counsel is able to deliver, and actually prepares and delivers to the Company a written opinion that the proposed Transfer is: (i) (x) pursuant to a registration statement which has been filed with the Commission and is then effective
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or (y) exempt from registration under the Act as then in effect, and the Rules and Regulations of the Commission thereunder; and (ii) is either qualified or registered under any applicable state securities laws, or exempt from such qualification or registration. The Company shall bear all reasonable costs of preparing such opinion.
3.2 Additional Restrictions on Transfer of Non-Vested Shares. Purchaser agrees, for himself or herself and for his or her heirs, successors and assigns, that Purchaser shall have no right or power under any circumstance to Transfer any interest in shares of the Stock which are "Non-Vested Shares," as determined by the schedule set forth in the Certificate, except to the Company. As used in this Agreement, "Vested Shares" means all shares of the Stock which Purchaser has the right to Transfer at a specified point in time and "Non-Vested Shares" means all shares of the Stock which Purchaser does not have the right to Transfer at a specified point in time. The Certificate sets forth the vesting schedule.
3.3 Company's Repurchase Right.
3.3.1 Scope of Repurchase Right. Unless they have become vested, the Shares acquired under this Agreement initially shall be "Restricted Stock" and shall be subject to a right (but not an obligation) of repurchase by the Company (the "Repurchase Right"). The Purchaser shall not transfer, assign, encumber or otherwise dispose of any Restricted Stock, except as provided in the following sentence. The Purchaser may transfer Restricted Stock:
3.3.1.1 By testament or intestate succession or by transfer by instrument to a trust providing that the Restricted Stock is to be passed to one or more beneficiaries upon death of the Settlor; or
3.3.1.2 To the Purchaser's "immediate family," as that term is defined in the Plan (together, "Transferee").
Provided, however, in either case the Transferee must agree in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Purchaser transfers any Restricted Stock, then this Section 3 will apply to the Transferee to the same extent as to the Purchaser.
3.3.2 Exercise Period. The Repurchase Right shall be exercisable only during the 90-day period following the later of the date when the Purchaser's service as an Employee, outside Director or Consultant ("Service") terminates for any reason, with or without cause, including (without limitation) death or disability.
3.3.3 Non Applicability and Lapse of Repurchase Right. The Repurchase Right shall lapse with respect to the Shares in accordance with the vesting schedule set forth in the Certificate. In addition, the Repurchase Right shall lapse and all of such Stock shall become vested if (i) a Change in Control occurs before the Purchaser's Service terminates and (ii) the options are not assumed by, or Repurchase Right is not assigned to, the entity that employs the Participant immediately after the Change in Control or to its parent or subsidiary.
The Repurchase Right shall not exist with respect to shares of Stock that have been registered under a then currently effective registration statement under applicable federal securities laws and the issuer is subject to the reporting requirements of Section
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13 or 15(d) of the Exchange Act or becomes an investment company registered or required to be registered under the Investment Company Act of 1940, or (ii) a determination is made by counsel for the Company that such Exercise Price restrictions are not required in the circumstances under applicable federal or state securities laws.
3.3.4 Repurchase Price. Following a termination of the Participant's Service, which does not result from the Company's termination of Service for Cause, the Repurchase Right shall be exercisable at a price equal to (i) the Fair Market Value of vested Stock and (ii) the Purchase Price of unvested Stock. Following the termination of the Participant's Service for Cause, the Repurchase Right shall be exercisable as to both vested and unvested Shares at a price equal to the Purchase Price as set forth in the Certificate.
3.3.5 Rights of Repurchase Adjustments. If there is any change in the number of outstanding shares of Stock by reason of a stock split, reverse stock split, stock dividend, an extraordinary dividend payable in a form other than stock, recapitalization, combination or reclassification, or a similar transaction affecting the Company's outstanding securities without receipt of consideration, then (i) any new, substituted or additional securities or other property (including money paid other than as an ordinary cash dividend) distributed with respect to any Restricted Stock (or into which such Restricted Stock thereby become convertible) shall immediately be subject to the Right of Repurchase; and (ii) appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of the Restricted Stock and to the price per share to be paid upon the exercise of the Right of Repurchase; provided, however, that the aggregate Purchase Price payable for the Restricted Stock shall remain the same.
3.3.6 Escrow. Upon issuance, the certificates for Restricted Stock shall be deposited in escrow with the Company to be held in accordance with the provisions of this Agreement. Any new, substituted or additional securities or other property described in Section 3.3.5 above shall immediately be delivered to the Company to be held in escrow, but only to the extent the Shares are at the time Restricted Stock. All regular cash dividends on Restricted Stock (or other securities at the time held in escrow) shall be paid directly to the Purchaser and shall not be held in escrow. Restricted Stock, together with any other assets or securities held in escrow hereunder, shall be (i) surrendered to the Company for repurchase and cancellation upon the Company's exercise of its Right of Repurchase or Right of First Refusal or (ii) released to the Purchaser upon the Purchaser's request to the extent the Shares are no longer Restricted Stock (but not more frequently than once every six months). In any event, all Shares which have vested (and any other vested assets and securities attributable thereto) shall be released within 60 days after the earlier of (i) the Purchaser's cessation of Service or (ii) the lapse of the Right of First Refusal.
3.4 Retention of Non-Vested Shares. Purchaser shall immediately deliver to the Company each certificate representing Non-Vested Shares issued to Purchaser hereunder, or deemed to be issued to Purchaser hereunder, together with the collateral instruments of transfer executed in blank, to be held by the Company until such time as all shares represented by that certificate are Vested Shares and any indebtedness with respect to those shares has been paid in full; provided, however, that if the Company holds a certificate representing Vested Shares and Non-Vested Shares, and any indebtedness with respect to the Vested Shares has been paid in full, upon Purchaser's request the Company will cause a certificate representing the Vested Shares to be
| 35 |
delivered to Purchaser, but the Company will retain any certificate representing the Non-Vested Shares.
3.5 Non-Complying Transfers. Every attempted Transfer of any shares of the Stock in violation of this Section 3 shall be null and void ab initio, and of no force or effect.
SECTION 4: LEGENDS ON STOCK CERTIFICATES.
Purchaser agrees that the Company may place on each certificate representing Shares the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE ISSUER AND THE REGISTERED HOLDER OF THIS CERTIFICATE, WHICH AGREEMENT PROVIDES, AMONG OTHER THINGS, THAT THE ISSUER HAS A RIGHT TO REPURCHASE THE SECURITIES EVIDENCED BY THIS CERTIFICATE. A COPY OF THAT AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE ISSUER."
SECTION 5: RIGHT OF FIRST REFUSAL.
5.1 Right of First Refusal. In the event that the Stock is not readily tradable on an established securities market and the Purchaser proposes to sell, pledge or otherwise transfer to a third party any Shares acquired under this Agreement, or any interest in such Shares, to any person, entity or organization (the "Transferee") the Company shall have the Right of First Refusal with respect to all (and not less than all) of such Shares (the "Right of First Refusal"). If the Purchaser desires to transfer Shares acquired under this Agreement, the Purchaser shall give a written transfer notice ("Transfer Notice") to the Company describing fully the proposed transfer, including the number of Shares proposed to be transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal or state securities laws. The Transfer Notice shall be signed both by the Purchaser and by the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the Shares. The Company shall have the right to purchase all, and not less than all, of the Shares on the terms of the proposal described in the Transfer Notice by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company. The Company's rights under this Section 5 shall be freely assignable, in whole or in part.
5.2 Additional Shares or Substituted Securities. In the event of the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company's outstanding securities without receipt of consideration, any new, substituted or additional securities or other property (including money paid other than as an ordinary cash dividend) which are by reason of such transaction distributed with respect to any Shares subject to this Section 5 or into which such Shares thereby become convertible shall immediately be subject to this Section 5. Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of the Shares subject to this Section 5.
5.3 Termination of Right of First Refusal. Any other provision of this Section 5 notwithstanding, in the event that the Stock is readily tradable on an established securities market
| 36 |
when the Purchaser desires to transfer Shares, the Company shall have no Right of First Refusal, and the Purchaser shall have no obligation to comply with the procedures prescribed by this Section 5.
5.4 Permitted Transfers. This Section 5 shall not apply to a transfer (i) by gift to a member of the Participant's immediate family or (ii) by transfer by instrument to a trust providing that the Shares is to be passed to beneficiaries upon death of the Settlor. For purposes of this Section 5.4, "immediate family" shall mean the Purchaser's spouse (including a former spouse subject to terms of a domestic relations order); child, stepchild, grandchild, child-in-law; parent, stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and shall include adoptive relationships.
5.5 Termination of Rights as Stockholder. If the Company makes available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Shares to be purchased in accordance with this Section 5, then after such time the person from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.
SECTION 6: OBLIGATION TO SELL.
Notwithstanding anything herein to the contrary, if at any time following Purchaser's acquisition of Shares hereunder, stockholders of the Company owning 51% or more of the shares of the Company (on a fully diluted basis) (the "Control Sellers") enter into an agreement (including any agreement in principal) to transfer all of their shares to any person or group of persons who are not affiliated with the Control Sellers, such Control Sellers may require each stockholder who is not a Control Seller (a "Non-Control Seller") to sell all of their shares to such person or group of persons at a price and on terms and conditions the same as those on which such Control Sellers have agreed to sell their shares, other than terms and conditions relating to the performance or non-performance of services. For the purposes of the preceding sentence, an affiliate of a Control Seller is a person who controls, which is controlled by, or which is under common control with, the Control Seller.
SECTION 7: STOCKHOLDERS AGREEMENT.
As a condition to the transfer of Stock pursuant to this Stock Purchase Agreement, the Administrator, in its sole and absolute discretion, may require the Participant to execute and become a party to any agreement by and among the Company and any of its stockholders which exists on or after the Date of Grant (the "Stockholders Agreement"). If the Participant becomes a party to a Stockholders Agreement, in addition to the terms of the Plan and this Stock Purchase Agreement, the terms and conditions of Stockholders Agreement shall govern Participant's rights in and to the Stock; and if there is any conflict between the provisions of the Stockholders Agreement and the Plan or any conflict between the provisions of the Stockholders Agreement and this Stock Purchase Agreement, the provisions of the Stockholders Agreement shall be controlling. Notwithstanding anything to the contrary in this Section 7, if the Stockholders Agreement contains any provisions which would violate Delaware law if applied to the Participant, the terms of the Plan and this Stock Purchase Agreement shall govern the Participant's rights with respect to such provisions.
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SECTION 8: WAIVER OF RIGHTS TO PURCHASE STOCK.
By signing this Agreement, Purchaser acknowledges and agrees that neither the Company nor any other person or entity is under any obligation to sell or transfer to Purchaser any option or equity security of the Company, other than the shares of Stock subject to this Agreement and any other right or option to purchase Stock which was previously granted in writing to Purchaser by the Board (or a committee thereof). By signing this Agreement, except as provided in the immediately preceding sentence, Purchaser specifically waives all rights he or she may have had prior to the date of this Agreement to receive any option or equity security of the Company.
SECTION 9: INVESTMENT INTENT.
Purchaser represents and agrees that if he or she purchases the Stock in whole or in part and if at the time of such purchase the Stock has not been registered under the Act, that he or she will acquire the Stock upon such purchase for the purpose of investment and not with a view to the distribution of such Stock and upon each purchase, he or she will furnish to the Company a written statement to such effect.
SECTION 10: GENERAL PROVISIONS.
10.1 Further Assurances. Purchaser shall promptly take all actions and execute all documents requested by the Company which the Company deems to be reasonably necessary to effectuate the terms and intent of this Agreement. Any sale or transfer of the Stock to Purchaser by the Company shall be made free of any and all claims, encumbrances, liens and restrictions of every kind, other than those imposed by this Agreement.
10.2 Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be given to the parties hereto as follows:
10.2.1 If to the Company, to:
BIO LAB NATURALS, INC.
Attn: W. Edward Nichols, CEO
201 Columbine St., 3rd Floor, Suite 11
Denver, CO 80206
10.2.2 If to Purchaser, to the address set forth in the records of the Company.
10.2.3 Any such notice request, demand or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mail by first-class certified mail, return receipt requested, postage pre-paid, addressed as aforesaid, or (ii) if given by any other means, when delivered at the address specified in this Section 10.2.
10.3 Transfer of Rights under this Agreement. The Company may at any time transfer and assign its rights and delegate its obligations under this Agreement to any other person, Company, firm or entity, including its officers, Directors and stockholders, with or without consideration.
10.4 Purchase Rights Non Transferable. Purchaser may not sell, transfer, assign or otherwise dispose of any rights hereunder except by testament or the laws of descent and
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distribution and the rights hereunder may be exercised during the lifetime of Purchaser only by the Purchaser or by his or her guardian or legal representative.
10.5 Market Stand-Off. In the event of an underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Act, including the Company's initial public offering (a "Public Offering"), Purchaser shall not transfer for value any shares of Stock without the prior written consent of the Company or its underwriters, for such period of time from and after the effective date of such registration statement as may be requested by the Company or such underwriters (the "Market Stand-Off"). The Market Stand-Off shall be in effect for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such underwriters. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company's outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired under this Agreement until the end of the applicable stand-off period.
10.6 Adjustment. If there is any change in the number of outstanding shares of Stock by reason of a stock split, reverse stock split, stock dividend, an extraordinary dividend payable in a form other than stock, recapitalization, combination or reclassification, or a similar transaction affecting the Company's outstanding securities without receipt of consideration, then (i) any new, substituted or additional securities or other property (including money paid other than as an ordinary cash dividend) distributed with respect to any Restricted Stock (or into which such Restricted Stock thereby become convertible) shall immediately be subject to the Repurchase Right; and (ii) appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of the Restricted Stock and to the price per share to be paid upon the exercise of the Repurchase Right; provided, however, that the aggregate purchase price payable for the Restricted Stock shall remain the same.
10.7 Successors and Assigns. Except to the extent this Agreement is specifically limited by the terms and provisions of this Agreement, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successor, assigns, heirs and personal representatives.
10.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO ITS CHOICE OF LAW PROVISIONS, AS DELAWARE LAWS ARE APPLIED TO CONTRACTS ENTERED INTO AND PERFORMED IN SUCH STATE.
10.9 Severability. Should any paragraph or any part of a paragraph within this Stock Purchase Agreement be rendered void, invalid or unenforceable by any court of law for any reason, such invalidity or unenforceability shall not void or render invalid or unenforceable any other paragraph or part of a paragraph in this Stock Purchase Agreement.
10.10 Attorneys' Fees. In the event that any action, suit or proceeding is instituted upon any breach of this Agreement, the prevailing party shall be paid by the other party thereto an amount equal to all of the prevailing party's costs and expenses, including attorneys' fees incurred in each and every such action, suit or proceeding (including any and all appeals or petitions
| 39 |
therefrom). As used in this Agreement, "attorneys' fees" shall mean the full and actual cost of any legal services actually performed in connection with the matter involved calculated on the basis of the usual fee charged by the attorney performing such services and shall not be limited to "reasonable attorneys' fees" as defined in any statute or rule of court.
10.11 The Plan. This Agreement is made pursuant to the Plan, and it is intended, and shall be interpreted in a manner, to comply herewith. Any provision of this Agreement inconsistent with the Plan shall be superseded and governed by the Plan.
10.12 Miscellaneous. Title and captions contained in this Agreement are inserted for convenience and reference only and do not constitute a part of this Agreement for any purpose.
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SPOUSAL CONSENT
The undersigned spouse of __________________________ does hereby consent to the execution of the foregoing Agreement by _____________________, and the performance by him (or her) of his (or her) obligations thereunder.
| Dated:_______________ | ||
| Signature |
| 41 |
EXHIBIT A
to
ANNEX I
of
STOCK PURCHASE AGREEMENT
PROMISSORY NOTE
| $ | Date: |
FOR VALUE RECEIVED, the undersigned promises to pay to BIO LAB NATURALS, INC., a Delaware corporation, 201 Columbine St., 3rd Floor, Suite 11, Denver, CO 80206 (the "Company"), the principal sum of $_______________ with interest from the date hereof on the unpaid principal balance at the rate of _______% per annum, compounded annually. Accrued but unpaid interest under this Note shall be due and payable annually on the date immediately preceding the anniversary of this Note, at the rate of ____% per annum, and the unpaid principal balance and any remaining accrued but unpaid interest shall be due and payable on _______________, _____.
All sums paid hereunder shall be paid in lawful money of the United States of America at the principal executive offices of the Company or at such other place as the holder of this Note shall have designated to the undersigned in writing. The principal amount of this Note may be paid in whole or in part (in either case with any interest accrued through the date of payment) at any time or from time to time, prior to maturity, without penalty or charge for prepayment. All sums paid hereunder shall be applied first to any unpaid interest and then to the principal amount then outstanding.
If service of the undersigned with the Company is terminated for any reason, with or without cause, the holder of this Note shall be entitled at its option to demand payment of the full principal amount of this Note then unpaid, together with all interest accrued thereon to the date of payment, by delivery to the undersigned of written demand. Not later than 30 days after delivery of such demand the undersigned shall pay the principal amount together with all accrued interest.
The undersigned shall pay to the holder of this Note reasonable attorneys' fees and all costs and other expenses (including, without limitation, fees, costs and expenses of litigation) incurred by the holder in enforcing this Note. This Note is secured by a Security Agreement of even date herewith between the Company and the undersigned. The holder of this Note is entitled to the benefits of the Security Agreement and may enforce the agreements of the undersigned contained therein and exercise the remedies provided for thereby or otherwise available with respect to this Note.
Borrower:
Print name and Address:
| 42 |
EXHIBIT B
to
ANNEX I
of
STOCK PURCHASE AGREEMENT
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is made and entered into as of the ___ day of ______________, ____, between BIO LAB NATURALS, INC., a Delaware corporation ("Lender") and ___________________ ("Debtor").
WHEREAS, Debtor has concurrently herewith purchased from Lender _____ shares of Lender's Stock (the "Stock") pursuant to that certain Stock Purchase Agreement, dated ________________, ____, between Lender and Debtor (the "Purchase Agreement") and has made payment therefor by delivery of Debtor's promissory note of even date herewith (the "Note"); and
WHEREAS, Debtor and Lender desire to have Debtor grant to Lender a security interest in the collateral described below as security for Debtor's performance of the terms and conditions of the Purchase Agreement, the Note and this Security Agreement.
NOW, THEREFORE, on the basis of the above facts and in consideration of the mutual covenants and agreements set forth below, Lender and Debtor agree as follows:
SECTION 1: GRANT OF SECURITY INTEREST.
As security for Debtor's full and faithful performance of each and all of its obligations and liabilities under the Note, and any and all modifications, extensions or renewals thereof, the Purchase Agreement and this Security Agreement, Debtor hereby grants and assigns to Lender a continuing security interest in and to the Stock, and all stock dividends, cash dividends, liquidating dividends, new securities and all other property, moneys and rights to which Debtor may become entitled on account thereof (the "Collateral").
SECTION 2: PERFECTION OF SECURITY INTEREST.
To perfect Lender's security interest in and lien on the Collateral, Debtor shall, upon the execution of this Agreement, immediately deliver to Lender, together with collateral instruments of transfer executed in blank, all certificates representing the Stock to be held by Lender until released pursuant to Section 6 hereof.
SECTION 3: DEFAULT.
At the sole and exclusive option of Lender, upon an Event of Default (as defined in Section 3.2 below) Lender may exercise any or all of the rights and remedies of a secured party under the Delaware Uniform Commercial Code, as amended from time to time. All rights and remedies of Lender shall be cumulative and may be exercised successively or concurrently and without impairment of Lender's interest in the Collateral.
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As used herein, an Event of Default ("Event of Default") shall mean any of the following:
The failure of Debtor to perform any of its obligations under the Purchase Agreement, the Note or this Security Agreement; or
The occurrence of one or more of the following: (i) Debtor becoming the subject of any case or action or order for relief under the Bankruptcy Reform Act of 1978; (ii) the filing by Debtor of a petition or answer to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute, or the filing of any answer admitting the material allegations of a petition filed against Debtor in any proceeding under any such law or the taking of any action by Debtor for the purpose of effecting the foregoing; the appointment of a trustee, receiver or custodian of Debtor or any of Debtor's material assets or properties; (iii) Debtor making an assignment for the benefit of creditors; or (iv) the occurrence of any other act by Debtor or Debtor's creditors which Lender reasonably determines may jeopardize Debtor's ability to pay the Note or perform Debtor's obligations under the Purchase Agreement or this Security Agreement.
SECTION 4: WARRANTIES AND REPRESENTATIONS OF DEBTOR.
Debtor hereby represents and warrants that the Collateral is free and clear of any security interest, lien, restriction or encumbrance and that he has the full right and power to transfer the Collateral to Lender free and clear thereof and to enter into and carry out the Purchase Agreement, the Note and this Security Agreement.
SECTION 5: POWER OF ATTORNEY.
Debtor hereby appoints Lender's Secretary as his true and lawful attorney-in-fact to transfer the Collateral or cause it to be transferred on Lender's books whenever Lender determines in its sole and absolute discretion that such transfer is necessary or advisable to protect its rights or interests under this Security Agreement.
SECTION 6: RELEASE OF THE COLLATERAL.
Within five days following receipt by Lender of the unpaid principal amount of the Note from Debtor, Lender shall release from its security interest hereunder and deliver or cause to be delivered to Debtor the Stock.
SECTION 7: WAIVERS.
No waiver by Lender of any breach or default by Debtor under the Purchase Agreement, the Note or this Security Agreement shall be deemed a waiver of any breach or default thereafter occurring, and the taking of any action by Lender shall not be deemed an election of that action in exclusion of any other action. The rights, privileges, remedies and options granted to Lender under this Security Agreement or under any applicable law shall be deemed cumulative and may be exercised successively or concurrently.
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SECTION 8: GENERAL PROVISIONS.
8.1 Notices. All notices, requests, demands or other communications under this Security Agreement shall be in writing and shall be given to parties hereto as follows: If to the Company, to:
BIO LAB NATURALS, INC.
Attn: W. Edward Nichols, CEO
201 Columbine St., 3rd Floor, Suite 11
Denver, CO 80206
If to Debtor, to the address set forth in the records of the Company, or such other address as may be furnished by either such party in writing to the other party hereto.
Any such notice, request, demand or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mail by first-class certified mail, return receipt requested, postage prepaid, addressed as aforesaid, or (ii) if given by any other means, when delivered at the address specified in this Paragraph 8.
8.2 Successors and Assigns. This Security Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns, heirs and personal representatives.
8.3 Severability. Should any paragraph or any part of a paragraph within this Security Agreement be rendered void, invalid or unenforceable by any court of law for any reason, such invalidity or unenforceability shall not void or render invalid or unenforceable any other paragraph or part of a paragraph in this Security Agreement.
8.4 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS CHOICE OF LAW PROVISIONS, AS DELAWARE LAWS ARE APPLIED TO CONTRACTS ENTERED INTO AND PERFORMED IN SUCH STATE.
8.5 Attorneys' Fees. In the event that any action, suit or proceeding is instituted upon any breach of this Security Agreement, the prevailing party shall be paid by the other party thereto an amount equal to all of the prevailing party's costs and expenses, including attorneys' fees incurred in each and every such action, suit or proceeding (including any and all appeals or petitions therefrom). As used in this Agreement, "Attorneys' Fees" shall mean the full and actual cost of any legal services actually performed in connection with the matter involved calculated on the basis of the usual fee charged by the attorney performing such services and shall not be limited to "reasonable attorneys' fees" as defined in any statute or rule of court.
8.6 Entire Agreement. The making, execution and delivery of this Security Agreement by the parties hereto have been induced by no representations, statements, warranties or agreements other than those herein expressed. This Security Agreement, the Purchase Agreement and the Note embody the entire understanding of the parties and there are no further or other agreements or understandings, written or oral, in effect between the parties relating to the subject matter hereof, unless expressly referred to by reference herein.
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8.7 Miscellaneous. Titles and captions contained in this Security Agreement are inserted for convenience of reference only and do not constitute part of this Security Agreement for any other purpose.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Security Agreement as of the date first above written.
| DEBTOR: | LENDER: BIO LAB NATURALS, INC. | |
| By: | ||
| (Sign) | W. Edward Nichols | |
| Its: CEO | ||
| (Please print name and address) | ||
| 46 |
EXHIBIT C
to
ANNEX I
of
STOCK PURCHASE AGREEMENT
STOCK ASSIGNMENT
SEPARATE FROM CERTIFICATE
For Value Received, _________________________________ ("Holder") hereby sells, assigns and transfers unto ____________________________________ (________) shares (the "Shares") of the Stock of BIO LAB NATURALS, INC., a Delaware corporation (the "Company"), held of record by Holder and represented by Certificate No. ______, and hereby irrevocably constitutes and appoints as Holder's attorney to transfer the Shares on the books of the Company, with full power of substitution in the premises.
The signature to this assignment must correspond with the name written upon the face of the Certificate in every particular without any alteration or addition or any other change.
Dated
------------------------------
-------------------------------------------------------------------------------
(Signature of Holder)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(Please print name and address)
SIGNATURE GUARANTEED BY:
(Holder's signature must be guaranteed by a
bank, a trust company or a brokerage firm):
----------------------------------------------------
----------------------------------------------------
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LETTER REGARDING
FEDERAL AND _________ TAX CONSEQUENCES
BIO LAB NATURALS, INC.
201 Columbine St., 3rd Floor, Suite 11
Denver, CO 80206
[Purchaser]
Dear :
------------------------------
This letter is to notify you of certain federal and ___________ income tax consequences to you as a result of your purchase of shares (the "Shares") of Common Stock of BIO LAB NATURALS, INC. (the "Company") pursuant to the Stock Purchase Agreement dated __________, 20__ between you and the Company.
The conclusion of this letter is that, if the purchase price for the Shares equals their fair market value on the date you sign the Stock Purchase Agreement, you should send copies of the attached form (the "Section 83 Form") relating to Section 83 ("Section 83") of the Internal Revenue Code of 1986 (the "Internal Revenue Code"), to the Internal Revenue Service and the Company, not later than 30 days after the date of the Stock Purchase Agreement. If the purchase price for the Shares is less than their fair market value on the date you sign the Stock Purchase Agreement, you should consider carefully whether or not you should file the Section 83 Form within 30 days after you sign the Stock Purchase Agreement.
Federal Income Tax Consequences
Certain federal income tax consequences to you in connection with your purchase of the Shares are determined in accordance with Section 83.
Section 83(a). Under Section 83(a), a person to whom property is transferred in connection with the performance of services ("Section 83 property") must recognize ordinary income in the year the property is transferred in an amount equal to the fair market value of the Section 83 property at the time it is transferred less the amount, if any, paid for the Section 83 property, unless the Section 83 property is not transferable and is subject to a substantial risk of forfeiture (collectively, a "Restriction on Transfer"). If there is a Restriction on Transfer, then the person acquiring Section 83 property will not recognize income until the Restriction on Transfer lapses (unless a Section 83(b) election is made - see below), at which time the person must recognize as ordinary income the fair market value of the Section 83 property at that time less the amount, if any, paid for the Section 83 property.
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Your purchase of the Shares probably constitutes a transfer of Section 83 property. Further, the Stock Purchase Agreement provides that, if you cease to be employed by the Company for any reason, the Company must repurchase from you and you must sell to the Company all Non-Vested Shares (as defined in the Stock Purchase Agreement) for an amount which may be less than their fair market value. Under Regulations promulgated under Section 83, these provisions probably constitute a Restriction on Transfer over your Non-Vested Shares. Thus, under Section 83(a), you would not be required to recognize any income as a result of your purchase of the Shares until they vest; when they vest, you would be required under Section 83(a) to recognize as ordinary income the excess, if any, of the fair market value of the Shares (as of the day they vest) over the price you paid for those Shares under the Stock Purchase Agreement. If the price of the Company's Common Stock is greater when the Shares vest than when you purchased them, you could have a substantial tax liability in connection with your purchase of the Shares when they vest.
Section 83(b) Election. Section 83(b) provides an alternative method for taxing Section 83 property. Under Section 83(b), a person may elect to recognize ordinary income in the year Section 83 property is transferred to him or her, rather then waiting until it vests. Thus, if you make a Section 83(b) election, you will be required to recognize as ordinary income in the year you purchase the Shares the difference, if any, between the fair market value of the Shares on the date you sign the Stock Purchase Agreement and the purchase price you pay for the Shares. For example, if you make the Section 83(b) election and you paid a purchase price for the Shares equal to their fair market value, you will not pay any taxes in the year of the purchase in connection with your purchase of the Shares. On the other hand, if you make the Section 83(b) election and the purchase price of the Shares is less than their fair market value on the date you sign the Stock Purchase Agreement, you will be required to pay taxes on the difference between those amounts in the year of the purchase. In either case, however, if you make the Section 83(b) election, you will not be required to recognize any income when the Shares vest.
To make the Section 83(b) election, you must file the Section 83 Form with both the Company and the Internal Revenue Service office where you file federal income tax returns. You must file the Section 83(b) Form within 30 days after you sign the Stock Purchase Agreement. In addition, you must attach a copy of the Section 83(b) Form to your income tax return that covers the year in which you filed the Form.
Sale of Section 83 Property. If a person sells Section 83 property after the Restriction on Transfer lapses (or after making a Section 83(b) election), he or she will recognize taxable gain or loss equal to the difference between the amount realized upon the sale of the Section 83 property and the person's "adjusted basis" for the Section 83 property. The person's adjusted basis for the Section 83 property will be (i) the amount paid for the Section 83 property plus (ii) any amount which the person has included in gross income pursuant to the Section 83(b) election. Thus, upon sale, you will recognize taxable gain or loss equal to the difference between the sale price of the Shares and your adjusted basis for the Shares.
In general, the gain or loss you recognize will be capital gain or loss if the following "Capital Gain Requirements" are met: (i) the Section 83 property is a capital asset and (ii) the Section 83 property is held for more than 12 months from either the date the Restrictions on Transfer lapse or, if a Section 83(b) election is made, the date the Section 83 property is acquired. Thus, as the Shares are probably a capital asset in your hands, you will recognize capital gain or loss upon their sale if you hold them for more than 12 months from either the date they vest or, if you make the Section 83(b) election, from the date you sign the Stock Purchase Agreement.
| 49 |
Forfeiture of Section 83 Property. If a person's interest in Section 83 property is forfeited, the person will recognize gain or loss equal to the difference between the amount realized upon forfeiture and the amount paid for the Section 83 property. In your case, if your employment with the Company is terminated before all of the Shares have vested, the Company is obligated to repurchase from you, and you are obligated to sell to the Company, any Non-Vested Shares at the price you paid for them. As there would be no difference between the amount realized upon forfeiture and the amount paid for the Shares, you would not be required to recognize any gain or loss at that time. However, upon forfeiture, you would not be able to recoup any taxes you pay pursuant to a Section 83(b) election.
Delaware Income Tax Consequences.
The Delaware income tax consequences to you in connection with your purchase of the Shares are identical to the federal income tax consequences. To make the Section 83(b) election in Delaware, you must file the Section 83(b) Form with the Internal Revenue Service, as described above; there are no extra filing requirements for making the Section 83(b) election in Delaware.
If you have any questions concerning the tax consequences described in this letter, please feel free to call me.
Sincerely,
BIO LAB NATURALS, INC.
By: __________________________________________________
W. Edward Nichols
Its: CEO
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ELECTION TO INCLUDE IN GROSS INCOME IN
YEAR OF TRANSFER PURSUANT TO SECTION 83(b)
OF THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to the provisions of Section 83(b) of the Internal Revenue Code of 1986, as amended, and the regulations of the Commissioner of Internal Revenue promulgated thereunder, with respect to the Section 83 property described below, and supplies the following information in connection with that election:
The name, address, taxable year and taxpayer identification number of the undersigned are:
| Name: | ||
| Address: | ||
| Taxable Year ________ | Taxpayer I.D. No.__________ |
The description of the Section 83 property with respect to which the undersigned is making the election is as follows:
_______________ (_____) shares (the "Subject Shares") of the Common Stock of BIO LAB NATURALS, INC., a Delaware corporation (the "Company").
The date upon which the Subject Shares were transferred to, and acquired by, the undersigned was ____________, ________.
The Subject Shares are subject to restrictions under a ___________ vesting period. If the undersigned's employment terminates, the Company is obligated to purchase and the undersigned is obligated to sell to the Company all Subject Shares that are not vested for a purchase price, which in certain circumstances may be less than the fair market value of the Subject Shares.
The fair market value of the Subject Shares at the time of the transfer to, and acquisition by, the undersigned (determined without regard to any restrictions other than restrictions which by their terms will never lapse) was $_____ per share.
The amount paid by the undersigned for the Subject Shares was $____ per share.
The undersigned has furnished a copy of this election to the Company.
[Signature Page Follows]
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Dated:
---------------------------
------------------------------------------------------
(Signature)
Make 4 copies
(1) IRS (to be filed at the IRS where you ordinarily file your returns) within 30 days of the purchase
(1) IRS (to be filed with your income tax return)
(1) BIO LAB NATURALS, INC.
(1) Copy for purchaser
| 52 |
FORM OF RESOLUTIONS FOR PURCHASE RIGHTS GRANTS
RESOLUTIONS ADOPTED BY UNANIMOUS WRITTEN CONSENT
OF THE BOARD OF DIRECTORS OF
BIO LAB NATURALS, INC.
As of __________________, 20__
The undersigned directors, constituting the entire board of directors (the "Board") of BIO LAB NATURALS, INC., a Delaware corporation (the "Company"), hereby take the following actions, adopt the following resolutions, and transact the following business, by written consent without a meeting, as of the date above written, pursuant to the applicable corporate laws of the State of Delaware and the Company's Bylaws.
WHEREAS, The Company Previously Adopted the BIO LAB NATURALS, INC. STOCK OPTION AND AWARD INCENTIVE PLAN (The "Plan"), and has delegated the responsibility to administer the Plan to the Board;
WHEREAS, Two Million (2,000,000) shares of Common Stock of the Company were originally reserved for issuance under the Plan;
WHEREAS, as of the date hereof, _____________ shares remain available for issuance under the Plan; and
WHEREAS, the Board has determined that it is in the best interests of this company and its stockholders to provide, under the plan, equity incentives to those employees of the company identified below.
NOW, THEREFORE, BE IT RESOLVED, that the persons listed on the Exhibit A, which exhibit was reviewed by the Board and shall be included with this Consent, are hereby granted, as of the date hereof, the current right to purchase (the "Purchase Right") the number of shares at the per share purchase price as set forth in Exhibit A at any time on or prior to the date which is 15 days from the date this grant is first communicated to each recipient;
RESOLVED FURTHER, that this Company be, and it hereby is, authorized to accept a promissory note from each purchaser as consideration for the stock so purchased, in such form (including security for the obligation thereunder) heretofore approved by the Board;
RESOLVED FURTHER, that the officers of this Company, and each of them, be, and they hereby are, authorized, directed and empowered for and on behalf of this Company to prepare or cause to be prepared a stock purchase agreement, promissory note and/or security agreement (the "Purchase Agreements") to represent the rights granted at this meeting substantially in the form, and containing the terms and provisions, heretofore approved by the Board, and containing such other terms and provisions as such officers shall, upon advice of counsel, determine to be necessary or appropriate, their execution of such Purchase Agreements to conclusively evidence such determination;
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RESOLVED FURTHER, that the Purchase Rights shall be evidenced by stock purchase agreements and be subject to the restrictions (including transfer and/or repurchase rights), if any, set forth in such stock purchase agreements;
RESOLVED FURTHER, that the Purchase Rights shall be granted pursuant to the exemptions provided under Section 701 of the Securities Act Rules and Delaware Corporate Securities Laws;
RESOLVED FURTHER, that there is hereby reserved and set aside under the Plan the number of shares adequate to cover the shares underlying the Purchase Rights granted herein;
RESOLVED FURTHER, that upon receipt of executed Purchase Agreements from the person or persons granted rights hereunder, the officers of this Company, and each of them, be, and they hereby are, authorized, directed and empowered for and on behalf of this Company to issue the stock so purchased, and to do or cause to be done all such further acts and things and to sign, deliver and/or file all such documents and notices as any of such officers may deem necessary or advisable in order to carry out and perform the foregoing resolutions and the intention thereof; and
RESOLVED FURTHER, that the officers of this Company, and each of them, be, and they hereby are, authorized, directed and empowered for and on behalf of the Company to do or cause to be done all such acts and things and to sign, deliver and/or file all such documents and notices as any of such officers may deem necessary or advisable in order to carry out and perform the foregoing resolutions and the intention thereof.
The Secretary of the Corporation is directed to file the original executed copy of this Consent with the minutes of proceedings of the Board.
IN WITNESS WHEREOF, each of the undersigned has executed this consent as of the date first written above.
DIRECTORS:
| W. Edward Nichols, Director | Darrell Avey, Director | |
| Jeremy Ostler, Director | Calvin D. Smiley, Sr., Director |
| 54 |
EXHIBIT A
Purchase Rights Grant Information
| Name | No. Shares | Purchase Price* |
* The per share purchase price must be at least 85% of the Fair Market Value (as such term is defined in the Plan) of the underlying share as of the date of grant.
| 55 |
EXHIBIT 10.1
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement") supercedes and replaces that Agreement of Merger between the parties made and entered into as of December 31, 2019 (the "Effective Date"), by and among Prime Time Live, Inc. , a Colorado corporation, with its principal office at 5770 S. Beech Court, Greenwood Village, Co. 80121 ("PTL"), and Bio Lab Naturals, Inc., a Delaware Corporation with its principal office at 6764 S. Yates Ct. Littleton, Colorado (" BLAB"), and PTL Acquisition Sub, Inc.., a wholly-owned subsidiary of BLAB, domiciled in Colorado ("Acquisition Sub"). Each of BLAB, PTL and Acquisition Sub is referred to herein individually as the "Parties."
RECITALS
A. This reorganization, pursuant to which Acquisition Sub will acquire the assets and business of PTL and PTL Acquisition Sub will survive, will produce the result of which the entire issued share capital of PTL (the "PTL Shares") will be exchanged for and deemed for all purposes to represent shares of common stock, par value $0.0001 per share, of BLAB upon the terms and subject to the conditions set forth in this Agreement.
B. The Parties intend that the Reorganization contemplated by this Agreement will qualify as a tax-free reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the "Tax Code").
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties and mutual covenants herein made, the parties hereby agree to the foregoing and as follows:
Section 1. Definitions. Capitalized terms not otherwise defined herein have the meanings set forth in the attached Schedule 1.
Section 2. The Reorganization.
(a) Effecting the Reorganization. Upon the terms and subject to the conditions contained in this Agreement, at the Effective Time (as hereinafter defined), (i) the assets of PTL shall be transferred to PTL Acquisition Sub (the "Reorganization"); (ii) the separate corporate existence of PTL shall thereupon cease and PTL Acquisition Sub will own the assets as the wholly-owned subsidiary of BLAB (sometimes referred to herein as the "Surviving Subsidiary"), (iii) all the properties, rights and privileges, and power of PTL, shall vest in the PTL Acquisition Sub., and all debts, liabilities and duties of PTL shall become the debts, liabilities and duties of PTL Acquisition Sub, and (iv) each share of common stock of PTL issued and outstanding immediately prior to the Effective Time will be converted into and exchanged for one validly issued, fully paid and non-assessable share of the Surviving Subsidiary's common stock.
| (b) | Effect on Capital Stock. |
Conversion of PTL Shares. At the Effective Time, each PTL Share issued and outstanding on the Closing Date (as defined in Section 3, below) shall, by virtue of the Reorganization and without any action on the part of PTL, BLAB, Acquisition Sub, or the holders of the PTL Shares as of the Closing Date (the "Original Holders"), be converted into and will become one share of validly issued, fully paid and non-assessable common stock of BLAB (the "Share Ratio") such that the Original Holders will be issued a total of five million five hundred thousand (5,500,000) common shares of BLAB (the "BLAB Common Stock"), and such shares
| 1 |
shall be distributed pro rata to the holders of the PTL common stock subject to the receipt of Exchange Agreements with representations, in the form attached hereto as Schedule 1. All shares of BLAB Common Stock issued upon the exchange of PTL Shares in accordance with the terms hereof shall (i) contain a restricted securities legend in compliance with the Securities Act and (ii) be deemed to have been issued in full satisfaction of all rights pertaining to such PTL Shares. There shall be no further registration of transfers on the stock transfer books of PTL of the PTL Shares that were outstanding immediately prior to the Effective Time.
Cancellation of PTL Shares. At the Effective Time, the PTL Shares will be deemed canceled and retired and will cease to exist, and each holder of a certificate for PTL Shares will cease to have any rights with respect thereto; provided, however, that, following the Closing Date, upon surrender of an original stock certificate representing PTL Shares, BLAB will deliver a stock certificate for shares of BLAB Common Stock to which such person is entitled pursuant to the Share Ratio, bearing any necessary or appropriate restrictive legend. PTL shall thereafter be dissolved.
(c) Reorganization. The Parties intend to adopt this Agreement and the Reorganization as a plan of reorganization under Section 368(a) of the Tax Code. The shares of BLAB Common Stock issued in the Reorganization will be issued solely in exchange for PTL Shares, and no other transaction other than the Reorganization represents, provides for or is intended to be an adjustment to the consideration paid for the PTL Shares. No consideration that could constitute "other property" within the meaning of Section 356(b) of the Tax Code is being transferred by BLAB for PTL Shares in the Reorganization. The parties shall not take a position on any tax return inconsistent with this Section 2(c).
(d) Further Actions. If at any time after the Effective Time, BLAB or PTL reasonably determines that any deeds, assignments, or instruments, or conformations of transfer are necessary or desirable to carry out the purposes of this Agreement, the officers and directors of BLAB and PTL are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary or desirable actions.
(e) Options: There are Options for common shares of PTL outstanding, which shall be assumed in the transaction, by BLAB for conversion to Common stock (Schedule 4).
(f) Lock-up Shares. The shares of BLAB Common Stock issued to the PTL Inside Shareholders (as defined below) shall be locked up for twelve (12) months after the Closing Date pursuant to the terms of the lock-up agreement which shall be substantially in the form of Exhibit A attached hereto ("Lock-Up Agreement"). "PTL Inside Shareholders" shall be defined as PTL's officers, directors, employees, affiliates (ten percent (10%) shareholders, and any affiliates of each of those parties. The company may release portions of any such shares from the lockup in accordance with any Form 1-A or Registration under the '33 Act. filed for portions of the insider shares.
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| (g) | Registration Rights. |
(i) BLAB shall file a Form 1-A within 60 days after closing, for the common shares of BLAB, including any shares convertible from Preferred stock to common stock and pursue such filing to effectiveness, subject to adverse material events in the business of Prime Time Live, and adverse market conditions. BLAB shall have the right to terminate or withdraw any registration initiated by it for PTL stock under this Section 2(g) before the effective date of such registration, in the event of adverse market conditions, or due to material changes in the business of Prime Time Live, Inc.
(ii) All expenses (other than underwriting discounts and commissions and stock transfer taxes and fees) incurred in connection with a registration pursuant to Section 2(g) including, without limitation, registration, filing and qualification fees, printers' and accounting fees, audit fees, and legal fees and costs of securities counsel for BLAB shall be borne by BLAB, post-reorganization. (Such fees are NOT included in any compensation shares to any party.)
(iv) The covenants contained herein above shall survive the closing and shall be enforceable by an action by shareholders for injunction, or damages, whether or not contained a separate agreement.
Section 3. Closing.
(i) Closing Date. On the terms and subject to the conditions of this Agreement, the closing of the Reorganization (the "Closing") shall be deemed effective on December 31, 2019, even if closed in escrow so that some of the conditions can be subsequently met and any document deliveries may be made using the Effective date of Dec. 31, 2019, regardless of the actual date of delivery. All document deliveries must be made on or before Feb. 15, 2020, or this agreement shall expire. (the "Closing Date").
G) Documents to be Delivered by BLAB. On or before the Closing, BLAB will deliver or cause to be delivered to PTL:
(i) all consents or approvals required to be obtained by BLAB for the purposes of completing the Plan of Reorganization;
(ii) a certified copy of a resolution of the directors of BLAB dated as of the Closing Date appointing specified new Officers, designated by PTL, which shall include one person-full or part time-who is qualified to act as CFO for the purposes of keeping all accounting records in accordance with SEC Rules and regulations for audits on a current basis;
(iii) certified copies of such resolutions of the directors of BLAB as are required to be passed to authorize the execution, delivery and implementation of this Agreement;
Section 4. Current Directors and Officers of BLAB. The Officers of BLAB shall resign effective upon the appointment of the new Officers, designated by PTL. The Current Director of BLAB shall remain as the sole director until the completion of a reorganization with a NASDAQ qualified company, within six months from the date hereof. Should a reorganization with a NASDAQ qualified company not be accomplished within six months from the closing hereof, then the Board of BLAB may take whatever actions it deems appropriate and in the interest of shareholders at such time,
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including appointing additional directors, of the Board's choice. Officers shall be appointed by subsequent minutes, as deemed appropriate.
Section 5. PTL's Representations and Warranties. PTL represents and warrants to BLAB that the statements contained in this Section are true and correct as of the Effective Date and will be true and correct as of the Closing Date, as set forth herein and in the disclosure schedule delivered by PTL to BLAB (the " PTL Schedule"), arranged in sections corresponding to the paragraphs in this Section; the disclosure in any section or paragraph will qualify other paragraphs in this Section to the extent that it is reasonably apparent from a reading of the disclosure that it also qualifies or applies to such other paragraphs.
(a) Organization. PTL is a corporation validly existing and in good standing under the laws of the State of Colorado and has all requisite power and authority and possesses all necessary governmental approvals necessary to own, lease and operate its properties, to carry on its business as now being conducted, to execute and deliver this Agreement and the agreements contemplated herein, and to consummate the transactions contemplated hereby and thereby. PTL is duly qualified to do business and is in good standing in all jurisdictions in which its ownership of property or the character of its business requires such qualification, except where the failure to be so qualified would not reasonably be expected to have an Adverse Effect. Certified copies of the Certificate of Incorporation of PTL, as amended to date, each as currently in effect, have been made available to BLAB, are complete and correct, and no amendments have been made thereto or have been authorized since the date thereof. PTL is not in violation of any of the provisions of its Certificate of Incorporation or Bylaws.
| (b) | Capitalization. |
(i) PTL's authorized capital consists solely of 100,000,000 PTL common Shares, and 5,700,000 Common shares are outstanding as of date hereof).
(ii) There are 5,700,000 PTL common shares outstanding and no other authorized or issued PTL Common Shares or other measure of capital ownership of PTL, except stock options under the current plan for employees. There are no agreements, arrangements or understandings to which PTL is a party (written or oral) to issue any other PTL Shares or other measures of capital ownership of PTL. All of the outstanding PTL Shares were duly and validly issued and fully paid, are non-assessable and free of preemptive rights, and were issued in compliance with all applicable state and federal securities laws.
| (iii) | Except as provided in the PTL Schedule (Schedule 4), there are no outstanding |
(A) options, warrants, or other rights to purchase from PTL any PTL Shares or other measures of capital ownership of PTL; (B) debt securities or instruments convertible into or exchangeable for PTL Shares or other measures of capital ownership of PTL; or (C) commitments of any kind for the issuance of additional PTL Shares or options, warrants or other securities of PTL.
There are no options or other rights to acquire such Shares or other measures of capital ownership and there are no preemptive rights or agreements, arrangements or understandings to issue preemptive rights with respect to the issuance or sale of any PTL Shares or other measures of capital ownership of PTL created by statute, the Certificate of Incorporation or Bylaws, or any agreement or other arrangement to which PTL is a party or to which it is bound and there are no agreements, arrangements or understandings to which PTL is a party (written or
| 4 |
oral) pursuant to which PTL has the right to elect to satisfy any liability by issuing any PTL Shares or other measures of capital ownership of PTL.
(v) Other than the Bylaws, PTL is not a party or subject to any agreement or understanding, and, to PTL's knowledge, there is no agreement, arrangement or understanding between or among any persons which affects, restricts or relates to voting, giving of written consents, distributions, allocation of profits and losses, or transferability of Shares or other measures of capital ownership of PTL, including any voting trust agreement or proxy.
(c) Authorization. PTL has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by PTL and the consummation by PTL of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate and/or stockholder action by PTL and no other corporate proceedings on the part of PTL and no other stockholder vote or consent is necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by PTL. This Agreement and all other agreements and obligations entered into and undertaken in connection with the transactions contemplated hereby to which PTL is a party constitute the valid and legally binding obligations of PTL, enforceable against PTL in accordance with their respective terms, except as may be limited by principles of equity or applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or other similar laws relating to or affecting the rights and remedies of creditors generally. The execution, delivery and performance by PTL of this Agreement and the agreements provided for herein, and the consummation by PTL of the transactions contemplated hereby and thereby, will not, with or without the giving of notice or the passage of time or both, violate the provisions of the Certificate of Incorporation or Bylaws of PTL, or (i) violate any judgment, decree, order or award of any court, governmental body or arbitrator; (ii) conflict with or result in the breach or termination of any term or provision of, or constitute a default under, or cause any acceleration under, or cause the creation of any lien, charge or encumbrance upon the properties or assets of PTL pursuant to, any indenture, mortgage, deed of trust or other instrument or agreement to which PTL is a party or by which PTL or any of its properties is or may be bound; or (iii) to PTL's Knowledge, violate the provisions of any law, rule or regulation applicable to PTL, except where such violation would not reasonably be expected to have an Adverse Effect.
(d) No Conflict. The execution and delivery of this Agreement by PTL does not require any consent or approval under, result in any breach of, result in any loss of any benefit under, or constitute a change of control or default (or an event which with notice or lapse of time or both would become a default) under; give to others any right of termination, vesting, amendment, acceleration or cancellation of; or result in the creation of any lien or encumbrance on any property or asset of PTL pursuant to; any material agreement of PTL or other instrument or obligation of PTL.
(e) Litigation. There is no action, suit, legal or administrative proceeding or investigation pending or, to PTL's Knowledge, threatened against or involving PTL (either as a plaintiff or defendant) before any court or governmental agency, authority, body or arbitrator. There is not in existence on the date hereof any order, judgment or decree of any court, tribunal or agency to PTL's Knowledge enjoining or requiring PTL to take any action of any kind with respect to its business, assets or properties.
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(f) Insurance. The PTL Schedule contains a listing of all current PTL insurance policies. To PTL's Knowledge, all current insurance policies are in full force and effect, are in amounts of a nature that are adequate and customary for PTL's business, and to PTL's Knowledge are sufficient for compliance with all legal requirements and agreements to which it is a party or by which it is bound. All premiums due on current policies or renewals have been paid, and there is no material default under any of the policies.
(g) Personal Property. PTL has good and marketable title to all of its tangible personal property free and clear of all liens, leases, encumbrances, claims under bailment and storage agreements, equities, conditional sales contracts, security interests, charges, and restrictions, except for liens, if any, for personal property taxes not due. Such property is used by PTL in the ordinary course of its business and is sufficient for continued conduct of PTL's business after the Closing Date in substantially the same manner as conducted prior to the Closing Date. Such property is in good operating condition and repair, normal wear and tear excepted, and normal maintenance has been performed.
(h) Intangible Property. PTL owns, or possesses, adequate licenses or other valid rights to use all existing United States and foreign patents, trade names, service marks, copyrights, trade secrets, and applications therefor listed in the PTL Schedule, which are material to its business as currently conducted (the "PTL Intellectual Property Rights"), except where the failure to have such PTL Intellectual Property Rights would not reasonably be expected to have an Adverse Effect. PTL has the right and authority to use, and to continue to use such PTL
(i) Intellectual Property Rights after the Closing Date, such property in connection with the conduct of its business in the manner presently conducted, and to its Knowledge such use or continuing use does not and will not materially infringe upon or violate any rights of any other person, subject to the outcome of the PTL Litigation.
(j) Real Property. Except as specified on the PTL Schedule, PTL is not a party to any material lease agreements and does not have any interests in any parcel of real property, improved or otherwise.
(k) Tax Matters. Within the times and in the manner prescribed by law, PTL has filed, or will have filed, all federal, state and local tax returns and all tax returns for other governing bodies having jurisdiction to levy taxes upon it that are required to be filed. PTL has paid all taxes, interest, penalties, assessments and deficiencies that have become due, including without limitation income, franchise, real estate, and sales and withholding taxes. No examinations of the federal, state or local tax returns of PTL are currently in progress or threatened and no deficiencies have been asserted or to PTL's Knowledge assessed against PTL as a result of any audit by the Internal Revenue Service or any state or local taxing authority and no such deficiency has been proposed or threatened.
(1) Books and Records, and Audit. The general ledger and books of account of PTL, all minute books of PTL, all federal, state and local income, franchise, property and other tax returns filed by PTL, all of which have been made available to BLAB, are in all material respects complete and correct and have been maintained in accordance with good business practice and in accordance with all applicable procedures required by laws and regulations, except as would reasonably be expected to have an Adverse Effect. The financial statements of PTL shall be audited by Ben F. Borgers, CPAs in accordance with GAAP, and all SEC rules and regulations, so
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as to promptly afford BLAB the opportunity to file its Offering Statement or Registration Statement under the Securities Act of 1933. PTL shall pay such charges.
(m) Contracts and Commitments. The PTL Schedule lists all material contracts and agreements to which PTL is a party, whether written or oral, other than those between PTL and BLAB. Each such contract is a valid and binding agreement of PTL, enforceable against PTL in accordance with its terms, is in full force and effect and represents the material terms of the agreement between the respective parties. PTL has materially complied with all obligations required pursuant to such contracts to have been performed by PTL on its part and neither PTL nor, to PTL's Knowledge, any other party to such contract is in breach of or default in any material respect under any such contract.
(n) Compliance with Laws. PTL has all requisite licenses, permits and certificates, including environmental, health and safety permits, from federal, state and local authorities necessary to conduct its business as currently conducted and own and operate its assets, except where the failure to have such permits would not reasonably be expected to have an Adverse Effect. To PTL's Knowledge, PTL is not in violation of any federal, state or local law, regulation or ordinance (including, without limitation, laws, regulations or ordinances relating to building, zoning, environmental, disposal of hazardous waste, land use or similar matters) relating to its business or its properties.
(o) Employee Benefit Plans. Except as specified on the PTL Schedule, PTL has no (A) employee benefit plans as defined in ERISA Section 3(3), (B) bonus, stock option, stock purchase, incentive, deferred compensation, supplemental retirement, severance or other similar employee benefit plans, or (C) material unexpired severance agreements with any current or former employee.
(p) Indebtedness to and from Affiliates. PTL is not indebted, directly or to PTL's Knowledge indirectly, to any officer, director or affiliate (10%) stockholder of PTL in any amount other than for salaries for services rendered or reimbursable business expenses, and no such person is indebted to PTL except for advances made to employees of PTL in the ordinary course of business to meet reimbursable business expenses.
(q) Regulatory Approvals. All consents, approvals, authorizations or other requirements prescribed by any law, rule or regulation that must be obtained or satisfied by PTL and that are necessary for the execution and delivery by PTL of this Agreement or any documents to be executed and delivered by PTL in connection therewith have been, or prior to the Closing Date will be, obtained and satisfied.
(r) No Brokers. No broker or finder has acted for PTL in connection with this Agreement or the transactions contemplated hereby, and no broker or finder is entitled to any brokerage or finder's fee or other commissions in respect of such transactions based upon agreements, arrangements, or understandings made by or on behalf of PTL.
(s) Disclosure. The information concerning PTL set forth in this Agreement, the exhibits and schedules hereto, and any document, statement or certificate furnished or to be furnished in connection herewith does not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the
| 7 |
statements and facts contained herein or therein, in light of the circumstances in which they are made, not false or misleading.
(t) Tax Treatment. Neither PTL nor, to the Knowledge of PTL, any of its Affiliates has taken or agreed to take action that would prevent the Reorganization from constituting a reorganization qualifying under the provisions of Section 368 of the Tax Code.
(u) Absence of Liabilities. Except as set forth on PTL's balance sheet PTL does not have any liability or obligation, secured or unsecured, whether accrued, absolute, contingent, unasserted or otherwise, that exceeds an aggregate of $1,000.
Section 6. BLAB's, Acquisition Sub's Representations and Warranties. Each of BLAB, and Acquisition Sub represents and warrants to PTL, the surviving corporation, that the statements contained in this Section are true and correct as of the Effective Date and will be true and correct as of the Closing Date, as set forth herein and in the disclosure schedule delivered by Acquisition Sub to PTL (the "BLAB Schedule"), arranged in sections corresponding to the paragraphs in this Section to the extent that it is reasonably apparent from a reading of the disclosure that it also qualifies or applies to such other paragraphs.
| (a) | Organization. |
(i) BLAB is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority and possesses all necessary governmental approvals necessary to own, lease and operate its properties, to carry on its business as now being conducted, to execute and deliver this Agreement and the agreements contemplated herein, and to consummate the transactions contemplated hereby and thereby. BLAB is duly qualified to do business and is in good standing in all jurisdictions in which its ownership of property or the character of its business requires such qualification, except where the failure to be so qualified would not reasonably be expected to have an Adverse Effect. Certified copies of its Articles of Incorporation and Bylaws, as amended to date, have been made available to PTL, are complete and correct, and no amendments have been made thereto or have been authorized since the date thereof. BLAB is not in violation of any of the provisions of its Articles of Incorporation or Bylaws.
(ii) Acquisition Sub is a corporation validly existing and in good standing under the laws of the State of Colorado and has all requisite power and authority and possesses all necessary governmental approvals necessary to own, lease and operate its properties, to carry on its business as now being conducted, to execute and deliver this Agreement and the agreements contemplated herein, and to consummate the transactions contemplated hereby and thereby. Certified copies of its Certificate of Incorporation and Bylaws have been made available to PTL, are complete and correct, and no amendments have been made thereto or have been authorized since the date thereof. Acquisition Sub is not in violation of any of the provisions of its Certificate of Incorporation or Bylaws.
| (b) | Capitalization. |
(i) Acquisition Sub. PTL Acquisition Corp. has 1,000 shares authorized and 1,000 shares issued and outstanding to BLAB.
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(ii) BLAB's authorized capital stock consists of 1,000,000,000 shares of common stock, and 9,308,566 shares of Common Stock are issued and outstanding and 10,000,000 shares of Preferred stock are authorized There will be, at closing, three million (3,000,000) common shares (approximately) of common stock issued and outstanding of BLAB, and 500,000 shares of Series A Super Majority Voting Preferred Convertible Stock issued and outstanding to Ed Nichols and M. A. Littman equally, or if no reorganization is completed, then such will be cancelled, and 2,000 Series AA Preferred Shares are held in treasury for cancellation and approximately 6,556,539 shares of common stock of BLAB are deemed held by BLAB for cancellation pursuant to a Rescission Agreement, and such shares will be cancelled prior to closing hereunder. All of the issued and outstanding shares of common stock of BLAB were duly and validly issued and fully paid, are non-assessable and free of preemptive rights, and were issued in compliance with all applicable state and federal securities laws.
(iii) Except as shown on the Schedule 6.(b) iii attached hereto, there are no outstanding (A) options, warrants, or other rights to purchase from BLAB any capital stock of BLAB or Acquisition Sub; (B) debt securities or instruments convertible into or exchangeable for shares of such stock; or (C) commitments of any kind for the issuance of additional shares of capital stock or options, warrants or other securities of BLAB or Acquisition Sub.
(iv) BLAB owns all of the outstanding capital stock of Acquisition Sub, 1,000 shares, free and clear of all liens or other encumbrances.
(c) No Subsidiaries. Except for Acquisition Sub and as provided in the BLAB Schedule, BLAB does not own any capital stock or other equity interest in any corporation, partnership, joint venture or other entity.
(d) Authorization. Each of BLAB and Acquisition Sub has all requisite power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by BLAB and Acquisition Sub and the consummation by BLAB and Acquisition Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action by BLAB or Acquisition Sub, respectively, and no other corporate proceedings on the part of BLAB or Acquisition Sub, respectively, and no stockholder vote or consent is necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by BLAB and Acquisition Sub. This Agreement and all other agreements and obligations entered into and undertaken in connection with the transactions contemplated hereby to which BLAB or Acquisition Sub is a party constitute the valid and legally binding obligations of BLAB and Acquisition Sub, respectively, enforceable against BLAB and Acquisition Sub, respectively, in accordance with their terms, except as may be limited by principles of equity or applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance or other similar laws relating to or affecting the rights and remedies of creditors generally. The execution, delivery and performance by BLAB and Acquisition Sub of this Agreement and the agreements provided for herein, and the consummation by BLAB and Acquisition Sub of the transactions contemplated hereby and thereby, will not, with or without the giving of notice or the passage of time or both, violate the provisions of the Articles of Incorporation or Bylaws of BLAB, the Certificate of Incorporation or Bylaws of Acquisition Sub, or (i) violate any judgment, decree, order or award of any court, governmental body or arbitrator;
| (ii) | conflict with or result in the breach or termination of any term or provision of, or constitute a default under, or cause any acceleration under, or cause the creation of any lien, charge or encumbrance upon the properties or assets of BLAB or Acquisition Sub pursuant to, any |
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indenture, mortgage, deed of trust or other instrument or agreement to which BLAB or Acquisition Sub is a party or by which BLAB Acquisition Sub or any of their respective properties is or may be bound; or (iii) to BLAB's or Acquisition Sub's 's Knowledge, violate the provisions of any law, rule or regulation applicable to BLAB or Acquisition Sub, except where such violation would not reasonably be expected to have an Adverse Effect.
(e) No Conflict. The execution and delivery of s Agreement by BLAB or Acquisition Sub does not require any consent or approval under, result in any breach of, any loss of any benefit under or constitute a change of control or default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, vesting, amendment, acceleration or cancellation of, or result in the creation of any lien or encumbrance on any property or asset of BLAB or Acquisition Sub pursuant to any material agreement of BLAB or Acquisition Sub or other instrument or obligation of BLAB or Acquisition Sub.
(f) Absence of Liabilities. Acquisition Sub does not have any liability or obligation, secured or unsecured, whether accrued, absolute, contingent, unasserted or otherwise, that exceeds an aggregate of $1,000. BLAB owes a total of $25,000 plus accrued interest to Kyle Isreal, for payment made to the prior Transfer agent, which shall be converted to common stock of PTL at
$.1250 per share concurrent with the closing and exchanged for BLAB shares thereupon..
(g) Tax Treatment. Neither BLAB nor, to the Knowledge of BLAB, any of its Affiliates has taken or agreed to take action that would prevent the Reorganization from constituting a reorganization qualifying under the provisions of Section 368 of the Tax Code.
Section 7. Other Covenants and Agreements of the Parties.
(a) Acquisition Sub Consent of Stockholders. Acquisition Sub shall take all action necessary, in accordance with the Business Corporation Act of the State of Colorado, and its Certificate of Incorporation and Bylaws, to obtain the unanimous written consent of its stockholders as practicable. to approve the adoption and approval of this Agreement and the transactions contemplated hereby.
(b) PTL Shareholders Approval. PTL shall take all action necessary, in accordance with the Corporation Law of the State of Colorado, and its Certificate of Incorporation and Bylaws, to obtain written consent of at least 51% of its shareholders, in lieu of a shareholder meeting to approve the adoption and approval of this Agreement and the transactions contemplated hereby.
(c) BLAB Compensation Arrangements. BLAB intends to enter into certain compensation arrangements with consultants of PTL concurrent with closing for services (2,000,000 Series B Preferred Convertible shares--convertible to common stock upon the completion of a reorganization with a target company,, within 6 months from the date hereof, otherwise redeemable for $50,000), as set forth on Schedule 2.
(d) Expenses. Simultaneous with the execution PTL will pay a deposit for the expenses shown on Schedule 3, which shall be expended only for the purposes set forth.
Section 8. PTL's Conditions to the Reorganization. The obligation of PTL to effect the Reorganization shall be subject to the fulfillment at or prior to the Closing Date of the following conditions, unless waived by PTL:
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(a) Each of the representations and warranties of BLAB and Acquisition Sub contained in this Agreement shall be true and correct as of the date of this Agreement, except to the extent that any changed circumstances, or events making such representations and warranties not true or correct would not, individually or in the aggregate, constitute an Adverse Effect and at the Closing each of BLAB and Acquisition Sub shall have delivered to PTL a certificate to that effect;
(b) Any governmental or third-party approvals required to effect the Reorganization shall have been obtained;
(c) Each of BLAB and Acquisition Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time and at the Closing BLAB shall have delivered to PTL a certificate to that effect;
(d) From the date of this Agreement through the Effective Time, there shall not have occurred any change, circumstance or event concerning BLAB or Acquisition Sub that has had or could be reasonably likely to have an Adverse Affect;
(e) PTL shall have received a resolution from BLAB's Board of Directors, approving the Reorganization and authorizing the issuances of the shares of BLAB Common Stock hereto, and appointing the new directors, concurrent with the resignation of the prior directors.
(f) The stockholder of Acquisition Sub (BLAB) and the stockholders of PTL shall have approved the principal terms of this Agreement, the Reorganization and the transactions contemplated herein in accordance with applicable law and their Certificate of Incorporation and Bylaws.
(g) BLAB shall have changed its name to a name to be chosen by the Board to be effective upon approval by FINRA.
(h) BLAB shall promptly, after closing, apply to the OTCQB, for listing in accordance with its rules and it shall obtain OTC approval as soon as possible after closing.
(i) BLAB shall file with FINRA for the approval of a name change and a new symbol, concurrent with closing, to be made effective as soon as possible.
Section 9. BLAB's, Acquisition Sub's Conditions to the Reorganization. The obligations of BLAB and Acquisition Sub to effect the Reorganization shall be subject to the fulfillment at or prior to the Closing Date of the following conditions, unless waived by BLAB:
(a) Each of the representations and warranties of PTL contained in this Agreement shall be true and correct as of the date of this Agreement, except to the extent that any changes, circumstances or events making such representations and warranties not true or correct would not, individually or in the aggregate, constitute an Adverse Effect and at the Closing PTL shall have delivered to BLAB a certificate to that effect;
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(b) PTL shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time and at the Closing PTL shall have delivered to BLAB a certificate to that effect;
(c) From the date of this Agreement through the Effective Time, there shall not have occurred any change, circumstance, or event concerning PTL that has had or could be reasonably likely to have an Adverse Affect;
(d) PTL shall have delivered to BLAB a complete and accurate PTL shareholder Schedule and such schedule shall have been approved by BLAB;
(e) PTL shall have delivered to BLAB audited balance sheets of PTL as of Dec 31, 2019, and the related statements of operations, changes in shareholders' equity and cash flows and footnotes from inception, in compliance with SEC rules and regulations, and GAAP.
(f) At closing, PTL shall have delivered to BLAB an executed copy of the Lock-Up Agreement, duly executed by BLAB and each of the exchanging PTL shareholders who own ten per cent (10%) or more of the common stock of BLAB, post reorganization, except with the permission of the company in conjunction with the filing of a Registration Statement under the '33 Act, or a Form 1-A which may include a portion of the shares of the insiders.
Section 10. Indemnification of Directors and Officers. All rights to indemnification by PTL and BLAB existing in favor of each individual who is an officer or director of PTL or BLAB of the date of this Agreement (each such individual, an "Indemnified Person") for his acts and omissions as a director or officer of PTL or BLAB occurring prior to the Effective Time, as provided in PTL's Certificate of Incorporation or Bylaws (as in effect as of the date of this Agreement) or BLAB's Articles of Incorporation or Bylaws (as in effect as of the date of this Agreement) shall survive the Reorganization and shall continue in full force and effect (to the fullest extent such rights to indemnification are available under and are consistent with applicable law) for a period of six years from the Closing Date.
Section 11. Confidentiality. Each Party shall ensure that any nonpublic information provided to it by any other Party in confidence shall be treated as strictly confidential and that all such confidential information that each Party or any of its respective officers, directors, employees, attorneys, agents, investment bankers, or accountants may now possess or may hereinafter create or obtain relating to the financial condition, results of operations, businesses, properties, assets, liabilities, or future prospects of the other such parties, any affiliate thereof, or any customer or supplier thereof shall not be published, disclosed, or made accessible by any of them to any other person at any time or used by any of them, in each case without the prior written consent of the other Party; provided, however, that the restrictions of this Section shall not apply (a) as may otherwise be required by law, (b) as may be necessary or appropriate in connection with the enforcement of this Agreement, or (c) to the extent such information was in the public domain when received or thereafter enters the public domain other than because of disclosures by the receiving Party. Each such Party shall cause all of such other persons who received confidential information, from time to time to deliver to the disclosing party all tangible evidence of such confidential information to which the restrictions of this Section apply upon written request.
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Section 12. Termination
(a) This Agreement may be terminated and abandoned at any time prior to the Effective Time of the Reorganization:
| i. | by mutual written consent of BLAB and PTL; | |
| ii. | by either BLAB or PTL if any governmental entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Reorganization and such order, decree, ruling or other action shall have become final and nonappealable; |
| iii. | by either BLAB or PTL, so long as such Party is not in breach hereunder, if the Reorganization shall not have been consummated on or before closing date (other than as a result of the failure of the party seeking to terminate this Agreement to perform its obligations under this Agreement required to be performed at, or prior to, the Effective Time of the Reorganization, in which event such party may not terminate this Agreement pursuant to this provision for a period of ten days following such party's cure of such failure); provided, however, that if either BLAB or PTL requests an extension of the Closing after this date and the other Party consents in writing, then neither Party may terminate this Agreement under this provision until the expiration of such extension period; | |
| iv. | by BLAB, if there has been a material breach of this Agreement on the part of PTL of its obligations hereunder or if any of its representations or warranties contained herein shall be materially inaccurate and such breach or inaccuracy is not curable or, if curable, is not cured within ten (10) days after written notice of such breach is given by BLAB to PTL; or | |
| v. | by PTL, if there has been a material breach of this Agreement on the part of BLAB of its obligations hereunder or if any of its representations or warranties contained herein shall be materially inaccurate and such breach or inaccuracy is not curable or, if curable, is not cured within ten (10) days after written notice of such breach is given by PTL to BLAB. |
(b) In the event of termination of this Agreement by either PTL or BLAB provided in this Section 12, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of BLAB or PTL, other than the provisions of the last sentence of Section 11 and this Section 12. Nothing contained in this Section 12 shall relieve any Party for any breach of the representations, warranties, covenants or agreements set forth in this Agreement.
Section 13. Miscellaneous.
(a) Survival. The representations and warranties of the Parties will terminate at the Effective Time and only those covenants that by their terms survive the Effective Time shall survive the Effective Time. This Section 13 shall survive the Effective Time.
(b) Press Releases and Public Announcements. No Party will issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior
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written approval of the other Parties; provided, however, that any Party may make any public disclosure it believes in good faith is required by applicable law or any listing requirement or trading agreement.
(c) No Third-Party Beneficiaries. This Agreement will not confer any rights or remedies upon any person other than the Parties and their respective successors and permitted assigns.
(d) Notices. All notices required or permitted under this Agreement will be in writing and will be given by certified or regular mail or by any other reasonable means (including personal delivery, facsimile, or reputable express courier) to the Party to receive notice at the following addresses or at such other address as any Party may, by notice, direct:
To BLAB & Acquisition Sub: Bio Lab Naturals, Inc. PTL Acquistion Sub, Inc..
To PTL: Prime Time Live, Inc.
With a copy to: (which will not constitute notice):
Michael A. Littman
Attorney at Law
PO Box 1839
Arvada, CO 80001
All notices given by certified mail will be deemed as given on the delivery date shown on the return mail receipt, and all notices given in any other manner will be deemed as given when received.
(e) Waiver. The rights and remedies of the Parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any Party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising from this Agreement or the documents referred to in this Agreement can be discharged by one Party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the waiving Party, (b) no waiver that may be given by a Party will be applicable except in the specific instance for which it is given, and (c) no notice to or demand on one Party will be deemed to be a waiver of any obligation of such Party or of the right of the Party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.
(f) Further Assurances. The Parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other Parties may reasonably request for the purpose of carrying out the intent of this Agreement and of the documents referred to in this Agreement.
(g) Successors and Assigns. This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party may assign
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either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Parties, which may be granted or withheld at the sole discretion of such other Parties. Any unauthorized assignment is void.
(h) Severability. Any provision of this Agreement that is invalid, illegal or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction.
(i) Expenses. Each Party will pay all fees and expenses (including, without limitation, legal and accounting fees and expenses) incurred by such Party in connection with the transactions contemplated by this Agreement.
G) Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Colorado, without giving effect to principles of conflicts of laws.
(k) Counterparts: Signatures. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which will be one and the same document. Facsimiles and electronic copies in portable document format ("PDF") containing original signatures shall be deemed for all purposes to be originally signed copies of the documents that are the subject of such facsimiles or PDF versions.
(1) Entire Agreement. This Agreement, the schedules and exhibits hereto, and the agreements and instruments to be delivered by the Parties on Closing represent the entire understanding and agreement between the Parties and supersede all prior oral and written and all contemporaneous oral negotiations, commitments and understandings.
(m) Amendment. This Agreement may be amended by the Parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time. This Agreement may not be amended by the Parties hereto except by execution of an instrument in writing signed on behalf of each of BLAB, PTL, and Acquisition Sub.
[Signature page to followJ
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement and Plan of Reorganization as of the date first above written.
PRIME TIME LIVE, INC.
| By: | /s/ Darrell Avey | |
| Its: | Chief Executive Officer |
PTL ACQUISITION Sub, Inc.
| By: | W. Edward Nichols | |
| Its: | Chief Executive Officer |
BIO LAB NATURALS, INC.
| By: | W. Edward Nichols | |
| Its: | President |
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Schedule 1-Exchange Agreement with Representations Schedule 2 Form of Series B Preferred Stock
Schedule 3-Expenses to be Paid
$10,000 for the DTC approval cost. (Delete this as we will have new Nasdaq company pay). If we decide to apply earlier we will incur the cost.
$ 7,500 for OTCPink application
Transfer Agent fees related to reorganization and cancellations -Estimated at $3,000 Recording fees for name change-approx-$500
Recording fees for Series A and B stock approx. $500 FINRA filing fee $500 for name and symbol change
Schedule 4-PTL Options and Warrants
Schedule 6 b (iii)
| a) | Shares previously awarded for services in July- August of 2019, approximately 375,000 common shares and 25,000 for additional services thereafter. | |
| b) | Shares for conversion of a $25,000 note of Kyle Isreal-200,000 common shares |
EXHIBIT 21
LIST OF SUBSIDIARIES
Prime Time Live, Inc. – a Colorado corporation
EXHIBIT 5.1
EXHIBIT 23.1
Christen Lambert, Attorney at Law
(919) 473-9130
Christen@ChristenLambertLaw.com
July 2, 2020
Bio Lab Naturals, Inc.
201 Columbine St., 3rd Floor, Suite 11
Denver, CO 80206
Re: Registration Statement on Form S-1 for 6,960,999 common shares of Bio Lab Naturals, Inc.
Gentlemen:
At your request, I have examined the Registration Statement which is being filed with the Securities and Exchange Commission ("SEC"), on Form S-1 (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended, of:
| · | 6,960,999 shares held by existing shareholders. |
In rendering the following opinion, I have examined and relied upon all of the documents listed as exhibits to the S-1, and resolutions of the Board of Directors of the Company adopted by the Board of Directors of the Company authorizing the issuance of the stock, registered in Form S-1 to which this letter refers. In my examination, I have assumed the genuineness of all signatures, the authenticity, accuracy and completeness of the documents submitted to me as originals, and the conformity with the original documents of all documents submitted to me as copies.
I have not undertaken, nor do I intend to undertake, any independent investigation beyond such specified documents and records, but to the extent necessary for this opinion, I have inquired and am satisfied as to the adequacy and accuracy of such documents and records. I have examined all documents necessary to form my opinions.
Based on the foregoing, it is my opinion that the stock being registered under the Registration Statement, as issued, is duly and validly authorized, fully paid and non-assessable under Delaware Laws.
I express no opinion as to compliance with the Securities Acts or "blue sky" laws of any state in which the stock is proposed to be offered and sold or as to the effect, if any, which non-compliance with such laws might have on the validity of transfer of the stock.
I consent to the filing of this opinion as an exhibit to any filing made with the Securities and Exchange Commission or under any state or other jurisdiction's securities act for the purpose of registering, qualifying or establishing eligibility for an exemption from registration or qualification of the stock described in the Registration Statement in connection with the offering described therein.
This opinion covers only matters of Delaware law and nothing in this opinion shall be deemed to imply any opinion related to the laws of any other jurisdiction. Nothing herein shall be deemed to relate to or constitute an opinion concerning any matters not specifically set forth above.
The information set forth herein is as of the date of this letter. I disclaim any undertaking to advise you of changes which may be brought to my attention after the effective date of the Registration Statement.
Sincerely,
/s/ Christen Lambert
-------------------------------------------
Christen Lambert, Attorney at Law
EXHIBIT 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation in this Registration Statement on Form S-1 of our report dated July 2, 2020, relating to the financial statements of Bio Lab Naturals, Inc., as of December 31, 2019 and to all references to our firm included in this Registration Statement.
Certified Public Accountants
Lakewood, CO
July 2, 2020