Item 1. Business.
Minn Shares Inc., a Delaware
corporation (“we,” “us,” “our” or the “Company”), was incorporated in the State
of Delaware on October 22, 2010 to effect the reincorporation (the “Reincorporation”) of Minn Shares Inc., a Minnesota
corporation (“Minn Shares Minnesota”) in the State of Delaware. On December 1, 2010 we entered into an Agreement and
Plan of Merger (the “Merger Agreement”) with Minn Shares Minnesota, pursuant to which Minn Shares Minnesota was merged
with and into the Company. Pursuant to the Merger Agreement, at the time of the merger, Minn Shares Minnesota ceased to exist and
the Company continued as the surviving corporation. As a result, the Company succeeded to all of the assets, property, rights,
privileges, franchises, immunities and powers of Minn Shares Minnesota and assumed all of the duties, liabilities, obligations
and restrictions of every kind and description of Minn Shares Minnesota. Minn Shares Minnesota then ceased to exist. As a result
of the Reincorporation, the legal domicile of the Company is the State of Delaware. It has no subsidiaries and the Company selected
December 31 as its fiscal year end.
Minn Shares Minnesota was
incorporated in the State of Minnesota on January 15, 1987 under the name H. H. & P. Yogurt, Inc., and on September 8, 1994,
changed its name to Minn Shares Inc. Minn Shares Minnesota operated two yogurt shops: one in Minneapolis, Minnesota, and one in
St. Paul, Minnesota. Both stores were ultimately closed by October 1990, at which time Minn Shares Minnesota ceased to engage in
the yogurt business, and focused its business on locating a suitable merger or acquisition candidate or investigating the possibility
of becoming a closed-end, non-diversified management company.
In August 1993, Minn Shares
Minnesota filed a registration application with the Securities and Exchange Commission (the “SEC”) to become a closed-end,
non-diversified management company under the Investment Company Act of 1940 (the “Investment Company Act”), and began
activity shortly thereafter. On August 3, 2001, Minn Shares Minnesota filed an Application for Deregistration of Certain Registered
Investment Companies on Form N-8F (the “Form N-8F”), which was subsequently amended on September 14, 2001, at which
time Minn Shares Minnesota requested deregistration. On September 27, 2001, Minn Shares Minnesota’s registration under the
Investment Company Act ceased to be in effect.
Subsequent to the filing
of the Form N-8F, as amended, and deregistration under the Investment Company Act, Minn Shares Minnesota appointed a liquidating
agent to handle the winding-up of its business activities, affairs and obligations, distributing any remaining assets to its shareholders
with the intent to ultimately dissolve Minn Shares Minnesota. All of the remaining net assets were distributed to its shareholders
by the liquidating agent during the period between 2001 through 2009.
In 2009, upon the approval
of Minn Shares Minnesota’s shareholders, Minn Shares Minnesota approved a plan to cancel its dissolution and accepted an
offer from Paramount Trading, Ltd., a Nevada limited liability company (“Paramount”), to purchase a controlling interest
in Minn Shares Minnesota. Subsequently, Minn Shares Minnesota was merged with and into the Company and was reincorporated in the
State of Delaware.
On December 1, 2010, as
described above, the Company entered into an Agreement and Plan of Merger, dated December 1, 2010, pursuant to which the Company
issued an aggregate of 1,191,348 shares of common stock to the shareholders of Minn Shares Minnesota in exchange for the cancellation
of 11,913,455 shares of Minn Shares Minnesota common stock issued and outstanding before the Reincorporation.
On May 16, 2013, the Company
entered into an agreement (the “Option Agreement”) with The Globe Resources Group, LLC (“Globe”), pursuant
to which Globe acquired the right to purchase, at any time through the date that is twelve (12) months from the date of the Option
Agreement, controlling shares of the Company’s common stock. On May 13, 2014, the Company agreed to extend the term
of the Option Agreement for an additional thirty (30) day period.
On June 5, 2014, the Company
received notification that Globe had elected not to exercise its option to purchase shares of the Company under the Option Agreement.
Accordingly, the Option Agreement expired on June 15, 2014. As required by the Option Agreement, the Company will seek to find
a third party purchaser. If sold, any consideration received will be used first to pay off related selling costs, and then repay
related party advances. Remaining proceeds, if any, shall be used to repay the $113,559 advanced by Globe, plus accrued interest
at 5%. In the event the Company does not consummate a sale with a third party purchaser, no amounts under the loan are payable
to Globe.
Since December 2001, Minn
Shares Minnesota has not engaged in any business activities other than for the purpose of collecting and distributing its assets,
paying, satisfying and discharging any existing debts and obligations and doing other acts required to liquidate and wind up its
business and affairs. The current business purpose of the Company is to seek the acquisition of or merger with an existing company.
We will not restrict any potential candidate targets to any specific business, industry or geographical location and thus may acquire
any type of business.
The Company, pursuant to
SEC Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) qualifies as a “shell
company,” because it has no or nominal assets (other than cash) and no or nominal operations. Our principal business
objective for the next 12 months and beyond such time will be to achieve long-term growth potential through a combination with
a business rather than immediate, short-term earnings. Management does not intend to undertake any efforts to cause a market to
develop in our securities, either debt or equity, until we have successfully concluded a business combination. The Company intends
to comply with the periodic reporting requirements of the Exchange Act for so long as it is subject to those requirements.
The Company currently serves
as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages
of being a publicly held corporation. The Company’s principal business objective for the next 12 months and beyond such time
will be to achieve long-term growth potential through a combination with a business rather than immediate, short-term earnings.
The Company will not restrict its potential candidate target companies to any industry, specific business or geographical location
and, thus, may acquire any type of business. The Company intends to establish a market for freely trading shares following the
conclusion of a successful business combination and commencing business as an operating company.
The analysis of new business
opportunities will be undertaken by or under the supervision of the Company’s officers and directors. As of this date, the
Company has had discussions with others regarding a potential business combination with us. Except as provided by the
Option Agreement, which has expired, we have not entered into any agreements, arrangement or understanding with respect to a business
combination. Although the Company has limited funds available, the Company has unrestricted flexibility in seeking, analyzing and
participating in potential business opportunities in that it may seek a business combination target located in any business, industry
or location. In its efforts to analyze potential acquisition targets, the Company will consider the following kinds of factors:
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(a)
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Potential for growth, indicated by new technology, anticipated market expansion or new products;
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(b)
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Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;
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(c)
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Strength and diversity of management, either in place or scheduled for recruitment;
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(d)
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Capital requirements and anticipated availability of required funds, to be provided by the Company or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;
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(e)
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The cost of participation by the Company as compared to the perceived tangible and intangible values and potentials;
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(f)
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The extent to which the business opportunity can be advanced;
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(g)
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The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and
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(h)
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The impact whether financial or otherwise on the Company with respect to compliance with any federal or state regulations as required in order to complete a business combination.
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In applying the foregoing
criteria, no one of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination
based upon reasonable investigative measures and available data. 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. Due to the Company's limited capital available for investigation,
the Company may not discover or adequately evaluate adverse facts about any opportunity evaluated. In evaluating a prospective
business combination, we will conduct a due diligence review of potential targets based on information which may be available regarding
private companies, although such review may be limited given our limited personnel and financial resources and the inexperience
of our management with respect to such activities. We expect that our due diligence will encompass, among other things, meetings
with the target business’s incumbent management and inspection of its facilities, as necessary, as well as a review of financial
and other information, which is made available to us. This due diligence review will be conducted either by our management or by
third parties we may engage, including but not limited to attorneys, accountants, consultants or such other professionals. While
the Company does not have any agreements in effect with any third parties, one of the third parties, which the Company expects
will assist the Company in identifying and conducting a due diligence review of potential business combination targets is Paramount.
The costs associated with hiring third parties as required to complete a business combination are difficult to determine for the
various reasons described below and may be significant. Our limited funds and the lack of full-time management will likely make
it impracticable to conduct a complete and exhaustive investigation and analysis of a target business before we consummate a business
combination. Management decisions, therefore, will likely be made without detailed feasibility studies, independent analysis, market
surveys and the like which, if we had more funds available to us, would be desirable. We will be particularly dependent on making
decisions upon information provided by the promoters, owners, sponsors or others associated with the target business seeking our
participation.
The time and costs required
to select and evaluate a target business and to structure and complete a business combination cannot be ascertained with any degree
of certainty. The amount of time it takes to complete a business combination, the location of the target company and the size and
complexity of the business of the target company are all factors that determine the costs associated with completing a business
combination transaction. The time and costs required to complete a business combination transaction can only be ascertained once
a business combination target has been identified. Any costs incurred with respect to evaluation of a prospective business combination
that is not ultimately completed will result in a loss to us.
COMPETITION
In identifying, evaluating
and selecting a target business, we may encounter intense competition from other entities having a business objective similar to
ours. There are numerous “public shell” companies either actively or passively seeking operating businesses with which
to merge in addition to a large number of “blank check” companies formed and capitalized specifically to acquire operating
businesses. Additionally, we are subject to competition from other companies looking to expand their operations through the acquisition
of a target business. Many of these entities are well established and have extensive experience identifying and effecting business
combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than
us and our financial resources will be relatively limited when contrasted with those of many of these competitors. Our ability
to compete in acquiring certain sizable target businesses is limited by our available financial resources. This inherent competitive
limitation gives others an advantage in pursuing the acquisition of a target business.
Any of these factors may
place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that
our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage
over privately held entities with a business objective similar to ours to acquire a target business on favorable terms.
If we succeed in effecting
a business combination, there will be, in all likelihood, intense competition from competitors of the target business. Many of
our target business’ competitors are likely to be significantly larger and have far greater financial and other resources
than we will. Some of these competitors may be divisions or subsidiaries of large, diversified companies that have access to financial
resources of their respective parent companies. Our target business may not be able to compete effectively with these companies
or maintain them as customers while competing with them on other projects. In addition, it is likely that our target business will
face significant competition from smaller companies that have specialized capabilities in similar areas. We cannot accurately predict
how our target business’ competitive position may be affected by changing economic conditions, customer requirements or technical
developments. We cannot assure you that, subsequent to a business combination, we will have the resources to compete effectively.
FORM OF ACQUISITION
The manner in which the
Company participates in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of the
Company and the promoters of the opportunity, and the relative negotiating strength of the Company and such promoters.
It is likely that the Company
will acquire its participation in a business opportunity through the issuance of its common stock, par value $0.0001 per share
(the “Common Stock”) or other securities of the Company. Although the terms of any such transaction cannot be predicted,
it should be noted that in certain circumstances the criteria for determining whether or not an acquisition is a so-called “tax
free” reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”) depends
upon whether the owners of the acquired business own 80% or more of the voting stock of the surviving entity. If a transaction
were structured to take advantage of these provisions rather than other “tax free” provisions provided under the Code,
all prior stockholders would in such circumstances retain 20% or less of the total issued and outstanding shares of the surviving
entity. Under other circumstances, depending upon the relative negotiating strength of the parties, prior stockholders may retain
substantially less than 20% of the total issued and outstanding shares of the surviving entity. This could result in substantial
additional dilution to the equity of those who were stockholders of the Company prior to such reorganization. The Company does
not intend to supply disclosure to stockholders concerning a target company prior to the consummation of a business combination
transaction, unless required by applicable law or regulation. In the event a proposed business combination involves a change in
majority of directors of the Company, the Company will file and provide to stockholders a Schedule 14F-1, which shall include,
information concerning the target company, as required. The Company will file a Current Report on Form 8-K, as required, within
four business days of a business combination that results in the Company ceasing to be a shell company. This Form 8-K will include
complete disclosure of the target company, including audited financial statements.
The present stockholders
of the Company will likely not have control of a majority of the voting securities of the Company following a reorganization transaction.
As part of such a transaction, all or a majority of the Company’s directors may resign and one or more new directors may
be appointed without any vote by stockholders.
In the case of an acquisition,
the transaction may be accomplished upon the sole determination of management without any vote or approval by stockholders. In
the case of a statutory merger or consolidation directly involving the Company, it will likely be necessary to call a stockholders’
meeting and obtain the approval of the holders of a majority of the outstanding securities. The necessity to obtain such stockholder
approval may result in delay and additional expense in the consummation of any proposed transaction and may also give rise to certain
appraisal rights to dissenting stockholders. Most likely, management will seek to structure any such transaction so as not to require
stockholder approval.
The Company intends to
search for a target for a business combination by contacting various sources including, but not limited to, our affiliates, lenders,
investment banking firms, private equity funds, consultants and attorneys. The approximate number of persons or entities that will
be contacted is unknown and dependent on whether any opportunities are presented by the sources that we contact. It is anticipated
that the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys
and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the
related investigation might not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific
business opportunity, the failure to consummate that transaction may result in the loss to the Company of the related costs incurred.
The costs that will be incurred are not ascertainable at this time as the costs are expected to be tied to the amount of time it
takes to identify and complete a business combination transaction as well as the specific factors related to the business combination
target that is chosen, including such factors as the location, size and complexity of the business of the target company. The Company
has not established a timeline with respect to the identification of a business combination target. Due to our management’s
affiliation with Paramount, we expect that Paramount may assist the Company in identifying a business combination target for us.
There are currently no agreements or understandings between the Company and Paramount.
It is anticipated that
the investigation of specific business opportunities and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and attention and substantial cost for accountants, attorneys
and others. If a decision is made not to participate in a specific business opportunity, the costs theretofore incurred in the
related investigation might not be recoverable. Furthermore, even if an agreement is reached for the participation in a specific
business opportunity, the failure to consummate that transaction may result in the loss to the Registrant of the related costs
incurred. The Company has not established a timeline with respect to the identification of a business combination target. We expect
that the Company’s management, through its affiliation with Paramount, will use its contacts and business relationships to
identify a business combination target for the Company.
In the event of an acquisition,
the Company does not anticipate that it or any member of its management will have a majority ownership in any potential target
company and it is intended that any transaction will be structured so that the Investment Company Act of 1940 is not applicable.
The Company has not set any minimum transactional value of any target company. The Company does not believe that its reporting
obligations under the Securities Exchange Act of 1934, including the requirement for certified financial statements will have an
effect on the pool of potential merger or acquisition candidates. The Company will seek out potential merger candidates that believe
that public reporting status is beneficial, and therefore the candidate will understand the requirement to comply with the Exchange
Act, including the requirement for certified financial statements. At the present, it is not expected that the payment of compensation
to any director, officer or promoter will be a condition to which a target company must agree in order to complete a business combination
transaction with such entity. The Company currently does not have a corporate policy in place with respect to related party transactions
and at the present there is no intent to merge or acquire another company in which promoters, management or their affiliates or
associates, directly or indirectly, have an ownership interest.
We presently have no employees
apart from our management. Our officers and directors are engaged in outside business activities and are engaged as consultants
on a full-time basis by certain third parties including Paramount. Our officers and directors will be dividing their time amongst
these entities and anticipate that they will devote very limited time to our business until the acquisition of a successful business
opportunity has been identified. The specific amount of time that management will devote to the Company may vary from week to week
or even day to day, and, therefore, the specific amount of time that management will devote to the Company on a weekly basis cannot
be ascertained with any level of certainty. In all cases, management intends to spend as much time as is necessary to exercise
its fiduciary duties as officers or directors of the Company.
We expect no significant
changes in the number of our employees other than such changes, if any, incident to a business combination.