UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
October 3, 2014 (September 29, 2014)
Date of Report (Date of earliest event reported)
AMERICAN CANNABIS COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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000-26108 |
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94-2901715 |
(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
3457 Ringsby Court, Unit 111, Denver, Colorado 80216-4900
(Address of principal executive offices) (Zip Code)
(720) 466-3789
Registrant’s telephone number, including area code
BRAZIL INTERACTIVE MEDIA, INC.
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation
of the registrant under any of the following provisions (see General Instruction A.2. below):
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[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K of American Cannabis Company, Inc. (formerly named
Brazil Interactive Media, Inc.), a Delaware Corporation (the “Company”), as well as other filings with the Securities
and Exchange Commission (“SEC”) and the Company’s press releases contain statements relating to future results,
plans, assumptions, assessments and information, including certain projections and business trends, that constitute “Forward-Looking
Statements” within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans, objectives, goals,
strategies, expectations, future events or performance and underlying assumptions and other statements that are other than statements
of historical facts. Certain statements contained herein are forward-looking statements and, accordingly, involve risks and uncertainties
that could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements, including,
without limitation, risks related to our business and risks associated with our securities. The Company’s expectations,
beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without
limitations, management’s examination of historical operating trends, and data contained in the Company’s records
and other data available from third parties. There can be no assurance that management’s expectations, beliefs or projections
will be achieved or accomplished. Certain risks and uncertainties may cause actual results to be materially different from projected
results contained in forward-looking statements in this Current Report and in other disclosures. The Company’s future results
will depend upon various other risks and uncertainties, including, but not limited to, those detailed in the Company’s other
filings with the SEC. Actual results may differ materially from those expressed or implied by forward-looking statements. The
Company disclaims any obligation to revise any forward-looking statements to reflect the occurrence, or lack thereof, of events
or circumstances after the date such forward-looking statements were made, except as required by law.
Unless otherwise provided in this Current Report, all references to “we,”
“us,” “Company,” “our,” “Brazil Interactive Media, Inc.,” “American Cannabis
Company, Inc.”, or the “Registrant” refer to the parent entity, American Cannabis Company, Inc. Unless otherwise
indicated in this Current Report, all references to the Company’s board of directors shall refer to the board of directors
of American Cannabis Company, Inc., which was appointed in conjunction with the Merger Agreement (as hereinafter defined).
Item 1.01
Entry into a Material Definitive Agreement
On May 15, 2014, the Company entered into an Agreement and Plan of Merger, by and
among the Company, Cannamerica, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (the “Merger
Sub”), and Hollister & Blacksmith, Inc. d/b/a American Cannabis Consulting, Inc. (“ACC”), a Colorado
corporation (the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub was merged with and into ACC
through a reverse triangular merger transaction (the “Merger”) upon the terms and subject to the conditions of
the Merger Agreement, and in accordance with the Delaware General Corporation Law (“DGCL”) and the Colorado
Business Corporation Act (“CBCA”). Prior to entering into the Merger Agreement, there was no relationship between the Company or its
affiliates and ACC, other than in respect of the Merger Agreement and the transactions contemplated thereby.
On May 16, 2014, the Company entered into a Separation and Exchange Agreement (the “Separation
Agreement”), between the Company, BIMI, Inc. (“BIMI”), a Delaware corporation and wholly-owned subsidiary of
the Company, and Brazil Investment Holding, LLC (“Holdings”), a Delaware limited liability company and the majority
stockholder of the Company, pursuant to which the Company distributed all shares of common stock of BIMI held by the Company in
exchange for all of our common stock held by Holdings, thereby effecting a complete divestiture of BIMI.
The Merger Agreement, Separation Agreement and subsequent events are discussed in more
detail in Item 2.01 below, which information is hereby incorporated by reference into this Item 1.01.
The summaries of the Merger Agreement and Separation Agreement, and the transactions
contemplated thereby, do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the
Merger Agreement and Separation Agreement, which are filed as Exhibit 2.1 and Exhibit 2.2 hereto, respectively, and incorporated
herein by reference. Additional information and disclosures concerning the Merger Agreement and Separation Agreement can be found
in the Company’s Information Statement on Schedule 14C filed with the SEC on September 9, 2014 (the “Schedule 14C”)
and the Company’s Information Statement on Schedule 14f-1 filed with the SEC on September 10, 2014 (the “Schedule
14f-1”).
DEFINE
Item 2.01
Completion of Acquisition or Disposition of Assets
On September 29, 2014 (the “Effective Date”), all of the transactions contemplated
by the Merger Agreement and Separation Agreement were complete, and the Merger became effective upon the filing of certificates
of merger with the Secretary of State of the States of Delaware and Colorado, in such form as required by, and executed in accordance
with the relevant provisions of the DGCL and the CBCA. Copies of the certificates of merger are filed
as Exhibit 3.1 and Exhibit 3.2 hereto, and are hereby incorporated by reference into this Item 2.01.
Our authorized capital stock consists of 100,000,000 shares of common stock, $0.00001
par value per share, and 5,000,000 shares of blank check preferred stock, par value $0.01 per share. Prior to the consummation
of the transactions contemplated by the Merger Agreement and Separation Agreement, there were 45,279,114 shares of our common
stock issued and outstanding.
As of the date of the Separation Agreement, Holdings held 35,000,000 shares of our common
stock, which represented approximately 77.30% of all issued and outstanding shares. Pursuant to the Separation Agreement, the
Company distributed all 1,000,000 shares of common stock, par value $0.0001 per share, of BIMI held by the Company, which constituted
all of the issued and outstanding shares of BIMI, in exchange for all 35,000,000 shares of our common stock held by Holdings.
On May 21, 2015 (the “Separation Exchange Date”), the Company returned all 35,000,000 shares of our common stock received
from Holdings into treasury.
Pursuant to the Separation Agreement and as of the Separation Exchange Date, the Company
and BIMI each retained all assets and liabilities in its respective name, and each took any and all actions necessary so that
(i) the Company owns or remains liable for all existing Company assets and liabilities and (ii) BIMI owns or remains liable for
all existing BIMI assets and liabilities, including all assets and liabilities of BIMI’s subsidiaries. Further, all intercompany
agreements by and between the Company, or any of its subsidiaries, and BIMI, or any of its subsidiaries, were terminated as of
the Separation Exchange Date, except for confidentiality, non-disclosure or release of liability agreements.
As of the date of the Merger Agreement, 10,000 shares of ACC’s common stock, par
value $0.001 per share, were issued and outstanding. Pursuant to the terms of the Merger Agreement, each share of ACC’s
common stock, was to be exchanged for shares of the common stock of the Company based on a ratio of 3,171.0628 to 1. On May 23,
2014 (the “Merger Issuance Date”), the Company issued 31,710,628 shares of our common stock to ACC’s shareholders,
in exchange for all their shares of ACC’s common stock. Pursuant to the terms of the Merger Agreement and as of the Effective
Date, each share of the common stock of Merger Sub was converted into and exchanged for one share of common stock of ACC held
by the Company, ACC continued as a surviving wholly-owned subsidiary of the Company and Merger Sub ceased to exist.
As of the Effective Date, following the consummation of all of the transactions contemplated
by the Merger Agreement and Separation Agreement, there were 40,425,000 shares of our common stock issued and outstanding.
As a result of the Merger Agreement, Corey Hollister was appointed as our Chief Executive
Officer, Ellis Smith as our Chief Development Officer, Anthony Baroud as our Chief Technology Officer and Trent Woloveck as our
Chief Operating Officer. Jesus Quintero was also reappointed to serve as our Chief Financial Officer. In addition, prior to the
Effective Date and as a result of the Merger Agreement, Themistocles Psomiadis and Michael Novielli resigned from our board of
directors, and Corey Hollister appointed Ellis Smith and Anthony Baroud to our board of directors to fill the vacancies created
by the resignations of Messrs. Psomiadis and Novielli. The change of control and change of directors are both discussed in more
detail in Item 5.01 and Item 5.02 below, which information is hereby incorporated by reference into this Item 2.01.
Pursuant to the Merger Agreement, the Company changed its name from “Brazil Interactive
Media, Inc.” to “American Cannabis Company, Inc.” as of the Effective Date. The change of name is discussed
in more detail in Item 5.03 below, which information is hereby incorporated by reference into this Item 2.01.
Additional information and disclosures concerning the Merger Agreement, Separation Agreement
and the transactions contemplated thereby, including detailed financial, business, operational and management information, can
be found in the Company’s Schedule 14C and Schedule 14f-1.
ACC’s financial statements and pro forma information can be found in Item 9.01
below, which is incorporated by reference into this Item 2.01.
Item 5.01
Changes in Control of Registrant
Pursuant to the Merger Agreement, Corey Hollister was appointed to our board of directors,
and effective with the Merger Agreement, Corey Hollister was appointed to serve as our Chief Executive Officer.
On June 6, 2014, our board of directors appointed Ellis Smith to serve as our Chief
Development Officer, Anthony Baroud as our Chief Technology Officer and Trent Woloveck as our Chief Operating Officer. Jesus Quintero
was also reappointed to serve as our Chief Financial Officer on June 6, 2014.
On September 22, 2014 and as a result of the Merger Agreement, Themistocles Psomiadis
and Michael Novielli resigned from our board of directors, and Corey Hollister appointed Ellis Smith and Anthony Baroud to our
board of directors to fill the vacancies created by the resignations of Messrs. Psomiadis and Novielli.
As a result of the Merger Agreement, among ACC’s former shareholders, Corey Hollister
and Ellis Smith each beneficially own approximately 31.38% of our issued and outstanding common stock, and Anthony Baroud beneficially
owns approximately 11.77% of our issued and outstanding common stock as of the Effective Date. Collectively, all of ACC’s
former shareholders exercise control over (i) approximately 78% of our issued and outstanding common stock, and (ii) approximately
70% of common stock on a fully-diluted basis. Because of the change to our executive officers, the change in composition of our
board of directors and the issuance of securities pursuant by the Merger Agreement, there has been a change of control of the
Company as a result of the Merger Agreement.
On September 10, 2014, the Company filed with the SEC and transmitted to our stockholders
of record the Schedule 14F-1, disclosing the anticipated change in control.
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers: Compensatory Arrangements of Certain Officers
In connection with the Merger Agreement, on April 30, 2014 Alan T. Hawkins resigned
as our General Counsel and Secretary, and on May 2, 2014 Themistocles Psomiadis resigned as our Chief Executive Officer. Pursuant
to the Merger Agreement, Corey Hollister was appointed to serve as our Chief Executive Officer. On June 6, 2014, our board of
directors appointed Ellis Smith to serve as our Chief Development Officer, Anthony Baroud as our Chief Technology Officer and
Trent Woloveck as our Chief Operating Officer. Jesus Quintero was also reappointed to serve as our Chief Financial Officer on
June 6, 2014.
On April 30, 2014, Corey Hollister was appointed to our board of directors by a
majority of our shareholders and by all of the members of our board of directors. In connection with the Merger Agreement, on
September 22, 2014, Michael Novielli and Themistocles Psomiadis resigned from their positions as members of our board of
directors. The resignations were not for cause or due to any disagreement with the Company on any matter relating to the
Company’s operations, policies or practices. Also on September 22, 2014, our board of directors appointed Ellis Smith
and Anthony Baroud to serve as members of the board of directors, to fill the vacancies created by the resignations of
Messrs. Novielli and Psomiadis.
On September 10, 2014, the Company filed with the SEC and transmitted the Schedule 14f-1
to our stockholders of record, which included the biographical information for Messrs. Hollister, Smith, Baroud and Quintero set
forth below. The resignations of Messrs. Novielli and Psomiadis as directors of the Company, and the election of Messrs. Smith
and Baroud as directors of the Company, became effective no less than 10 days after we filed the Schedule 14F-1.
Pursuant to the Merger Agreement, the following individuals serve as our executive officers and
members of our board of directors:
Name |
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Age |
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Position |
Corey Hollister |
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39 |
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Chief Executive Officer, Director |
Ellis Smith |
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37 |
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Chief Development Officer, Director |
Anthony Baroud |
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52 |
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Chief Technology Officer, Director |
Jesus Quintero |
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52 |
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Chief Financial Officer |
Trent Woloveck |
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29 |
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Chief Operating Officer |
The business experience of each such person is set forth below.
Corey Hollister. Since May 2014 to the present, Corey Hollister has served as
our Chief Executive Officer and as a director. In March 2013, Mr. Hollister co-founded ACC, and from March 2013 to May 2014, Mr.
Hollister served as a Managing Director of ACC. From September 2009 to July 2013, Mr. Hollister co-owned and was director of Colorado
Kind Care LLC d/b/a The Village Green Society, a Colorado-based Medical Marijuana Center. From September 2009 to June 2010, Mr.
Hollister served as the Director of Operations of Colorado Kind Care LLC, where he oversaw all aspects of operations, including
legal, accounting, regulatory compliance, seed-to-sale tracking, security, staff management and production. From October 2007
to September 2009, Mr. Hollister owned and operated Built-to-Last Fitness, a private health and wellness company focused on exercise
and nutritional guidance for individuals, companies and schools. Prior to this, Mr. Hollister was based in Boston, MA and worked
in marketing and advertising. Our board of directors believes Mr. Hollister’s qualifications to serve as an executive of
the Company and as a member of our board of directors include his past success in founding and operating businesses, his leadership
and corporate management experience, and his unique experience in Colorado and across the country advising clients in emerging
medical cannabis markets.
Ellis Smith. Since June 2014, Ellis Smith has served as our Chief Development
Officer, and since September 2014 as a director. In March 2013, Mr. Smith co-founded ACC, and from March 2013 to May 2014, Mr.
Smith served as a Managing Director of ACC. From September 2010 to July 2013, Mr. Smith co-owned Colorado Kind Care LLC d/b/a
The Village Green Society, a Colorado-based Medical Marijuana Center, where he was responsible for managing the operations and
protocols supporting the growth and production of medical marijuana. From 2008 to 2010, Mr. Smith founded and operated The Happy
Camper Organics Inc., a medical marijuana company focused on the growth of wholesale cannabis for sale to medical marijuana businesses.
From 2005 to 2010, Mr. Smith founded and operated Bluebird Productions, a video production company. Mr. Smith has been published
and recognized for his horticultural experience and organic gardening in the cannabis industry, and he is known for assisting
in identifying the Hemp Russet Mite and working with SKUNK magazine to educate the industry. Our board of directors believes Mr.
Smith’s qualifications to serve as an executive of the Company and as a member of our board of directors include his past
success in founding and operating businesses, his unique experience in horticultural and organic gardening, and his recognized
qualifications in the emerging medical cannabis markets.
Anthony Baroud. Since June 2014, Anthony Baroud has served as our Chief Technology
Officer, and since September 2014 as a director. In August 2005, Mr. Baroud founded Baroud Development Group, LLC, an umbrella
organization of construction and real estate development companies serving the Illinois market, where he directed the operations
of all its companies. Mr. Baroud has also founded and served as an equity partner of several businesses focused on the provision
of renewable energy solutions, and is a member of the Chicago Sustainable Business Alliance. Our board of directors believes Mr.
Baroud’s qualifications to serve as an executive of the Company and as a member of our board of directors include his past
success as an entrepreneur, and in the areas of product development, applied technology and operations.
Jesus Quintero, CPA - From January, 2013 to the present, Jesus Quintero has served
as our Chief Financial Officer. From 2011 to the present, Mr. Quintero has served as a financial consultant to several multi-million
dollar businesses in South Florida. He has extensive experience in public company reporting and SEC/SOX compliance, and held senior
finance positions with Avnet, Inc. (NYSE:AVT), Latin Node, Inc., Globetel Communications Corp. (AMEX:GTE) and Telefonica of Spain.
His prior experience also includes tenure with PriceWaterhouse and Deloitte & Touche. Mr. Quintero earned a B.S. in Accounting
from St. John’s University and is a certified public accountant. He is fluent in English and Spanish, and conversant in
Brazilian Portuguese. Our board of directors believes Mr. Quintero’s qualifications to continue to serve as an executive
of the Company include his extensive experience as a financial consultant and with public company reporting.
Trent Woloveck. Since June 2014, Trent Woloveck has served as our Chief
Operating Officer. Mr. Woloveck's finance and sales background working for a Fortune 50 healthcare company has allowed him to
transition best practices in both distribution and business operations to the growing marijuana industry. Coupling four years
of healthcare experience with two years of business risk consulting around IPO and SOX compliance, Mr. Woloveck has a strong
foundation of finance, operations, information technology and sales. Mr. Woloveck’s business acumen and diverse view of
end-to-end business processes has enabled him to effectively consult businesses toward efficient and effective operations.
Mr. Woloveck’s corporate background and industry knowledge of managing a dispensary allows him to maintain an
enterprise perspective, helping move the business towards a well-defined strategic vision. Our board of directors believes
Mr. Woloveck’s qualifications to serve as an executive of the Company include his success and understanding of the
corporate structure, and knowledge of the equity markets.
Prior to the Merger, on April 29, 2014 ACC entered into an Executive Employment Agreement
with each of Corey Hollister and Ellis Smith (the “Employment Agreements”) to serve as the Chief Executive Officer
and Chief Development Officer of ACC, respectively. The Employment Agreements both provide that the executive will serve for an
initial term of five (5) years, with automatic annual renewals of one (1) year following the initial term, subject to other customary
termination and notice provisions. Pursuant to the Employment Agreements, both Corey Hollister and Ellis Smith will receive an
annual base salary of seventy-five thousand dollars ($75,000) with an incentive bonus equal to five percent (5%) of annual income
if net annual income of ACC exceeds one million dollars ($1,000,000). The foregoing summary of the Employment Agreements do not
purport to be complete and are subject to, and qualified in their entirety by, the full text of the Executive Employment Agreement
of Corey Hollister and Ellis Smith, which are each filed as Exhibit 10.1 and Exhibit 10.2 hereto, respectively, and incorporates
herein by reference.
The Company’s officers and directors have no direct or indirect material interest
in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K, there are no family relationships among
our directors and officers pursuant to Item 404(d) of Regulation S-K, and the Company has not entered into or adopted a material
compensatory plan to which its principal executive officers participate or are a party.
Item 5.03
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Pursuant to the Merger Agreement, the Company filed a Certificate of Amendment to amend
its Articles of Incorporation in order to change its name from Brazil Interactive Media, Inc. to American Cannabis Company, Inc.
as of the Effective Date. A copy of the Certificate of Amendment is filed as Exhibit 3.3 hereto, and is hereby incorporated by
reference into this Item 5.03.
The amendment to the Company’s Articles of Incorporation was previously disclosed
in the Company’s Schedule 14C.
Item 9.01
Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
The audited financial statements of ACC of December 31, 2013, and the notes to the audited
financial statements, are filed as Exhibit 99.1 hereto, and are hereby incorporated by reference into this item 9.01.
The unaudited financial statement of ACC as of June 30, 2014 and 2013, and the notes
to the unaudited financial statements, are filed as Exhibit 99.2 hereto, and are hereby incorporated by reference into this item
9.01.
(b) Pro forma financial information
The unaudited pro forma condensed combined balance sheet as of June 30, 2014, and the
unaudited pro forma condensed combined statements of operations for the six months ended June 30, 2014 and the year ended December
31, 2013 are filed as Exhibit 99.3 hereto, and are hereby incorporated by reference into this item 9.01.
The financial statements of ACC and the pro forma financial information filed herewith
as Exhibits 99.1, 99.2 and 99.3 were previously filed with the SEC as Exhibits E, F and G to the Company’s Schedule 14C.
Exhibits
The documents set forth below are filed herewith.
Exhibit No. |
Description |
2.1 |
Agreement and Plan of Merger, dated as of May 15, 2014,
by and among the Company, Cannamerica, Inc., and Hollister & Blacksmith, Inc. |
2.2 |
Separation and Exchange Agreement, dated as of May 16,
2014, by and among the Company, BIMI, Inc., and Brazil Investment Holding, LLC. |
3.1 |
State of Delaware Certificate of Merger of Domestic Corporation
Into Foreign Corporation, for Cannamerica Corp. and Hollister & Blacksmith Inc., effective as of September 29, 2014. |
3.2 |
State of Colorado Statement of Merger, for Cannamerica
Corp. and Hollister & Blacksmith Inc., effective as of September 29, 2014. |
3.3 |
Certificate of Amendment of the Restated Certificate of
Incorporation of Brazil Interactive Media, Inc., effective as of September 29, 2014. |
10.1 |
Executive Employment Agreement between Hollister &
Blacksmith, Inc. and Corey Hollister, dated April 29, 2014. |
10.2 |
Executive Employment Agreement between Hollister &
Blacksmith, Inc. and Ellis Smith, dated April 29, 2014. |
99.1 |
Audited Financial Statements of Hollister & Blacksmith
Inc. for the Year-Ended December 31, 2013, and related notes. |
99.2 |
Unaudited Financial Statements of Hollister & Blacksmith
Inc. for the Six Months Ended June 30, 2014 and 2013, and related notes. |
99.3 |
Pro Forma Financial Statements for the Company and Hollister
& Blacksmith Inc. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto duly authorized.
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American Cannabis Company, Inc. |
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Date: October 3, 2014 |
By: |
/s/ Corey Hollister |
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Corey Hollister |
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Chief Executive Officer |
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EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
by and among
Brazil Interactive Media, Inc.,
Cannamerica Corp.,
and
Hollister & Blacksmith, Inc.
Dated as of May 15, 2014
AGREEMENT AND PLAN OF MERGER, dated as of
May 15, 2014 (this ''Agreement''), by and among Brazil Interactive Media, Inc., a Delaware corporation (the ''Company''),
Cannamerica Corp., a Delaware corporation and a wholly owned subsidiary of the Company (''Merger Sub''), and Hollister & Blacksmith,
Inc., (d/b/a American Cannabis Consulting, American Cannabis Company and Cube Root), a Colorado corporation (''ACC'').
WHEREAS, the respective Boards of Directors
of the Company, Merger Sub and ACC have approved and declared advisable the merger of Merger Sub with and into ACC (the ''Merger'')
upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State
of Delaware (the ''DGCL'') and the Colorado Business Corporation Act (the “CBCA”);
WHEREAS, the respective Boards of Directors
of the Company and ACC have determined that the Merger is in furtherance of and consistent with their respective business strategies
and is in the best interest of their respective stockholders, and the Company has approved this Agreement and the Merger as the
sole stockholder of Merger Sub; and
WHEREAS, for federal income tax purposes,
the Company, Merger Sub and ACC intend that the Merger qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the ''Code'').
NOW, THEREFORE, in consideration of the
foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to
be legally bound hereby, the parties hereto agree as follows:
Article I The Merger
Section 1.1 The Merger. Upon the
terms and subject to satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the DGCL and
the CBCA, Merger Sub, at the Effective Time, shall be merged with and into ACC. As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and ACC shall continue as the surviving corporation of the Merger (the ''Surviving Corporation'')
and shall be a wholly owned subsidiary of the Company.
Section 1.2 Closing. The closing
of the Merger (the ''Closing'') shall take place on such date as mutually determined by the parties hereto after the
satisfaction or waiver of the conditions (excluding conditions that, by their nature, cannot be satisfied until the Closing
Date) set forth in Article VI, unless this Agreement has been theretofore terminated pursuant to its terms (the actual date
of the Closing being referred to herein as the ''Closing Date''). The Closing shall be held at the place previously agreed to
in writing by the parties. As soon as practicable after the Closing Date, the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger relating to the Merger (the ''Certificate of Merger'') with the Secretary of
State of the States of Delaware and Colorado, in such form as required by, and executed in accordance with the relevant
provisions of, the DGCL and CBCA (the date and time of such filing, or if another date and time is specified in such filing,
such specified date and time, being the ''Effective Time'').
Section 1.3 Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL and CBCA, as the
case may be. Without limiting the generality of the foregoing, at the Effective Time, except as otherwise provided herein, all
the property, rights, privileges, powers and franchises of ACC and Merger Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of ACC and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Certificate of Incorporation;
By-laws. At the Effective Time, (i) the Certificate of Incorporation, as amended, of the Surviving Corporation shall be its Certificate
of Incorporation and (ii) the By-laws of the Surviving Corporation shall be its By-laws, in each case until thereafter changed
or amended as provided therein or applicable Law.
Section 1.5 Directors and Officers
of Surviving Corporation. At the Effective Time, the initial directors of the Surviving Corporation shall be the persons designated
on Exhibit A hereto, each to hold office in accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation.
The initial officers of the Surviving Corporation shall be the persons designated on Exhibit A hereto, each to hold office in
accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation.
Section 1.6 Directors; Officers; Change of Company Name.
The parties will take all action necessary such that as of the Effective Time (x) the Board of Directors of the Company shall
consist of the three (3) members as set forth on Exhibit B hereto, and (y) the officers of the Company shall consist of the officers
set forth on Exhibit B hereto. The parties shall take such action as is necessary to structure the Board of Directors of the Company
to satisfy Section 14(f) of the Securities Exchange Act of 1934 and Rule 14f-1 hereunder, including federal securities laws
and applicable corporate governance requirements. Immediately after the Closing date, the Company shall file with the U.S. Securities
and Exchange Commission an information statement on Schedule 14F-1 disclosing a change in the majority of directors of the
Company (“Schedule 14F-1”).
Section 1.7 Name Change; Immediately
after the Effective Time, the Company shall take, or cause to be taken, all action necessary to amend the Company Certificate
(as defined) such that the Company shall be renamed (the ''Name Change'').
Article II Exchange and Conversion
of Securities; Reverse Split; Series G Conversion; Amendments
Section 2.1 Exchange and Conversion
of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Merger Sub, ACC
or the holders of any of the following securities:
(a) Exchange of ACC Common Stock for
Company Common Stock. Each share of common stock, par value $0.001 per share, of ACC (''ACC Common Stock'') issued and outstanding
immediately prior to the Effective Time, shall be exchanged for that number of shares of Common Stock of the Company (''Company
Common Stock'') equal to three thousand one hundred seventy one point six hundred and twenty eight millionths (3,171.0628 to 1)
(the “Exchange Ratio”). At the Effective Time, all such shares of ACC Common Stock shall be tendered to Merger Sub.
Section 2.2 The Company’s
Articles of Incorporation.
(a) Company Articles. The Company
understands that the authorized capital stock of BIMI shall consist of 100,000,000 shares
of Company Common Stock, par value $0.00001 per share, and 5,000,000 shares of blank check preferred stock, par value $0.01 per
share (the ''Company Preferred Stock'').
Section 2.3 Appraisal Rights.
Notwithstanding anything in this Agreement to the contrary, shares of ACC Common Stock outstanding immediately prior to the Effective
Time and held by a stockholder who has not voted in favor of the Merger or consented thereto in writing and who has properly demanded
appraisal for such shares in accordance with the DGCL and CBCA, shall not be converted into a right to receive shares of Company
Common Stock unless such stockholder fails to perfect or withdraws or otherwise loses such stockholder's right to appraisal. If,
after the Effective Time such stockholder fails to perfect or withdraws or loses such stockholder's right to appraisal, such shares
of ACC Common Stock shall be treated as if they had been converted as of the Effective Time into the right to receive such consideration.
ACC shall give the Company prompt notice of any demands received by ACC for appraisal of shares of ACC Common Stock. ACC shall
not settle, make any payments with respect to, or offer to settle, any claim with respect to dissenting shares without the consent
of the Company.
Article III Representations and Warranties
of the Company and Merger Sub
Except as set forth in the Disclosure
Schedule which identifies exceptions by specific section references delivered by the Company to ACC prior to the execution of
this Agreement (the ''Company Disclosure Schedule''), the Company and Merger Sub hereby jointly and severally represent and warrant
to ACC as follows:
Section 3.1 Organization and Qualification;
Subsidiaries. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of
Delaware. Each subsidiary of the Company has been duly organized, and is validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, as the case may be.
Section 3.2 Certificate of Incorporation and By-laws; Corporate
Books and Records. The copies of the Company's Restated Certificate of Incorporation (the ''Company Certificate'') and By-laws
(the ''Company By-laws'') provided to ACC are complete and correct copies thereof as in effect on the date hereof. Neither the
Company nor Merger Sub is in violation of any of the provisions of the Company or Merger Sub's Certificate or the Company or Merger
Sub's By-laws. True and complete copies of all minute books of the Company have been made available by the Company to ACC.
Section 3.3 Capitalization
(a) As of the Effective Time, (A) 45,300,000
shares of Company Common Stock (other than treasury shares) will be issued and outstanding, all of which shall be validly issued
and fully paid, nonassessable and free of preemptive rights, and (B) 54,700,000 shares of Company Common Stock will be held in
the treasury of the Company.
(b) There are no options, warrants or
other rights, agreements, arrangements or commitments of any character to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound relating to the issued or unissued capital stock or other equity interests
of the Company or any of its subsidiaries, or securities convertible into or exchangeable for such capital stock or other equity
interests, or obligating the Company or any of its subsidiaries to issue or sell any shares of its capital stock or other equity
interests, or securities convertible into or exchangeable for such capital stock of, or other equity interests in, the Company
or any of its subsidiaries.
(c) Other than as disclosed in Exhibit C
[Disclosure Schedule] attached, there are no outstanding contractual obligations of the Company or any of its subsidiaries
(A) restricting the transfer of, (B) affecting the voting rights of, (C) requiring the repurchase, redemption or disposition
of, or containing any right of first refusal with respect to, (D) requiring the registration for sale of, or (E) granting any
preemptive or antidilutive right with respect to, any shares of Company Common Stock, Company Series H Preferred, or any
capital stock of, or other equity interests in, the Company or any of its subsidiaries. Each outstanding share of capital
stock of each subsidiary of the Company is duly authorized, validly issued, fully paid, nonassessable and free of preemptive
rights and is owned, beneficially and of record, by the Company or another of its subsidiaries, free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on the Company's or
such other of its subsidiary's voting rights, charges and other encumbrances of any nature whatsoever. There are no
outstanding contractual obligations of the Company or any of its subsidiaries to provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in, any of its subsidiaries or any other person, other than guarantees
by the Company of any indebtedness or other obligations of any wholly-owned subsidiary.
(d) Other than as disclosed in Exhibit
C [Disclosure Schedule] attached, the Company does not have outstanding any bonds, debentures, notes, or other obligations the
holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the
stockholders of the Company on any matter. The Company has not adopted a stockholder rights plan.
Section 3.4 Authority.
(a) Each of the Company and Merger Sub
has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and
Merger Sub and the consummation by the Company and Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings on the part of the Company or Merger Sub and no
stockholder votes are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly authorized and validly executed and delivered by each of the Company and Merger Sub and constitutes a legal, valid
and binding obligation of each of the Company and Merger Sub, enforceable against each of the Company and Merger Sub in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity principles.
(b) The Board of Directors of the Company (the ''Company Board''),
by resolutions duly adopted by unanimous vote by unanimous written consent and not subsequently rescinded or modified in any way
(the ''Company Board Approval''), has duly (i) determined that this Agreement and the transactions contemplated hereby (including
the Merger) are advisable and fair to and in the best interests of the Company and its stockholders, and (ii) approved and adopted
this Agreement, and the transactions contemplated hereby (including the Merger). The Company Board Approval constitutes approval
of this Agreement and the Merger as required under any applicable state takeover Law and no such state takeover Law is applicable
to the Merger or the other transactions contemplated hereby, including, without limitation, the restrictions on business combinations
contained in Section 203 of the DGCL.
(c) Merger Sub's Board of Directors,
by unanimous written consent, has (i) determined that this Agreement and the transactions contemplated hereby (including the Merger)
are advisable and fair to and in the best interests of the Company, as Merger Sub's sole stockholder, (ii) approved and adopted
this Agreement and the transactions contemplated hereby (including the Merger) and (iii) recommended that the Company approve
and adopt this Agreement and the transactions contemplated hereby (including the Merger).
Section 3.5 No Conflict; Required
Filings and Consents.
(a) The execution and delivery of this
Agreement by each of the Company and Merger Sub does not, and the performance of this Agreement by each of the Company and Merger
Sub will not, (A) (assuming the Company Stockholder Approval is obtained) conflict with or violate any provision of the Company
Certificate or Company By-laws or any equivalent organizational documents of any of its Subsidiaries (including Merger Sub), (B)
(assuming that all consents, approvals, authorizations and permits described in Section 3.5(b) have been obtained and all filings
and notifications described in Section 3.5(b) have been made and any waiting periods thereunder have terminated or expired) conflict
with or violate any Law applicable to the Company or any of its subsidiaries.
(b) The execution and delivery of this
Agreement by each of the Company and Merger Sub does not, and the performance of this Agreement by each of the Company and Merger
Sub will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity
or any other person, except (A) under the Exchange Act, the Securities Act, applicable Blue Sky Law and the filing and recordation
of the Certificate of Merger as required by the DGCL and CBCA and (B) where failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not, individually or in the aggregate, have a material adverse effect.
Section 3.6 Ownership of Merger
Sub; No Prior Activities. Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of
the State of Delaware. Merger Sub is a direct wholly-owned subsidiary of the Company. Merger Sub has not conducted any activities
other than in connection with the organization of Merger Sub, the negotiation and execution of this Agreement and the consummation
of the transactions contemplated hereby. Merger Sub has no Subsidiaries.
Section 3.7 Financials.
(a) The consolidated financial statements
of the Company as of the period ending December 31, 2012, audited through December 31, 2013 (including the notes thereto)
provided by the Company to ACC (the “Company Financial Statements”) were prepared in accordance with GAAP applied
(except as may be indicated in the notes thereto) on a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto), and present fairly the consolidated financial position, results of operations and cash flows of the Company
and the consolidated subsidiaries of the Company as of the respective dates thereof and for the respective periods indicated therein.
The books and records of the Company and each of its subsidiaries have been, and are being, maintained in accordance with applicable
material legal and accounting requirements.
(b) Except as and to the extent set forth on
the consolidated balance sheet of the Company and its consolidated subsidiaries included in the Company’s Financial Statements,
none of the Company or any of its consolidated subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a balance sheet or in notes thereto prepared in accordance
with GAAP, except for normal year-end adjustments and liabilities or obligations incurred in the ordinary course of business that
would not, individually or in the aggregate, have a material adverse effect.
Section 3.8 All federal, state and local income and other
tax returns (including, without limitation, any and all returns or declarations in respect of income, estimated, real property,
personal property, sales, use, payroll and other taxes or impositions) of the Company and the Merger Sub required to be filed
on or before the date hereof have been filed and are true, correct and complete, and all taxes shown on said returns or on any
assessments received by the Company or Merger Sub to be due and payable on or before the date hereof have been paid. All federal,
state and local income and other tax returns (including, without limitation, any and all returns or declarations in respect of
income, estimated, real property, personal property, sales, use, payroll and other taxes or impositions) of the Company and Merger
Sub required to be filed on or before the date hereof have been filed and are true, correct and complete, and all taxes shown
on said returns or on any assessments received by the Company or the Merger Sub to be due and payable on or before the date hereof
have been paid. Neither the Company nor the Merger Sub have been advised of any deficiency claimed or proposed to be claimed against
or relating to the Company or the Merger Sub by any taxing authority which has not been paid, settled or adequately reserved for,
and there are no matters under discussion with any taxing authority which might result in the assessment of additional amounts
against or relating to the Corporation or the Seller.
Article IV Representations and Warranties
of ACC
Except as set forth in the Disclosure
Schedule which identifies exceptions by specific section references delivered by ACC to the Company prior to the execution of
this Agreement (the ''ACC Disclosure Schedule''), ACC hereby represents and warrants to the Company as follows:
Section 4.1 Organization and Qualification;
Subsidiaries. ACC is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado.
ACC has no subsidiaries. ACC has the requisite power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being conducted. ACC is duly qualified or licensed to do business,
and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature
of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed
or in good standing that would not, individually or in the aggregate, have a material adverse effect.
Section 4.2 Certificate of
Incorporation and By-laws; Corporate Books and Records. The copies of ACC's Certificate of Incorporation (the ''ACC
Certificate'') and By-laws (the ''ACC By-laws'') as provided to the Company are complete and correct copies thereof as in
effect on the date hereof. ACC is not in violation of any of the provisions of the ACC Certificate or the ACC By-laws. True
and complete copies of all minute books of ACC have been made available by ACC to the Company.
Section 4.3 Capitalization
(a) The authorized capital stock of ACC
consists of 12,000 shares of ACC Common Stock. As of the Effective Time, 10,000 shares of
ACC Common Stock (other than treasury shares) were issued and outstanding, all of which were validly issued and fully paid, nonassessable
and free of preemptive rights and (B) 2,000 shares of ACC Common Stock were held in the treasury of ACC. All capital stock or
other equity securities of ACC have been issued in compliance with applicable federal and state securities laws.
(b) As of the Effective Time, there were
no options, warrants or other rights, agreements, arrangements or commitments of any character to which ACC is a party or by which
ACC is bound relating to the issued or unissued capital stock or other equity interests of ACC, or securities convertible into
or exchangeable for such capital stock or other equity interests, or obligating ACC to issue or sell any shares of its capital
stock or other equity interests, or securities convertible into or exchangeable for such capital stock of, or other equity interests
in, ACC. ACC has not issued any shares of its capital stock, or securities convertible into or exchangeable for such capital stock
or other Equity Interests, other than those shares of capital stock reserved for issuance as set forth in this Section 4.3 or
Section 4.3 of the ACC Disclosure Schedule. ACC has previously provided the Company with a true and complete list, as of the date
hereof, of the shareholders of ACC.
(c) There are no outstanding contractual obligations of ACC (A)
restricting the transfer of, (B) affecting the voting rights of, (C) requiring the repurchase, redemption or disposition
of, or containing any right of first refusal with respect to, (D) requiring the registration for sale of, or (E) granting
any preemptive or antidilutive right with respect to, any shares of ACC Common Stock or any capital stock of, or other equity
interests in, ACC. There are no outstanding contractual obligations of ACC to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in any person.
(d) ACC does not have outstanding any
bonds, debentures, notes, or other obligations the holders of which have the right to vote (or convertible into or exercisable
for securities having the right to vote) with the stockholders of ACC on any matter. ACC has not adopted a stockholders rights
plan.
Section 4.4 Authority.
(a) ACC has all necessary corporate power
and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement by ACC and the consummation by ACC of the
transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of ACC and no stockholder votes are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been duly authorized and validly executed and delivered by ACC and
constitutes a legal, valid and binding obligation of ACC, enforceable against ACC in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(b) The Board of Directors of ACC (the
''ACC Board''), and the shareholders of ACC by resolutions duly adopted by joint unanimous written consent and not subsequently
rescinded or modified in any way (the ''ACC Board Approval''), has duly (i) declared that this Agreement and the transactions
contemplated hereby (including the Merger) are advisable and fair to and in the best interests of ACC and its stockholders, and
(ii) approved and adopted this Agreement and the transactions contemplated hereby (including the Merger) and (iii) the Board resolved
to recommend that the stockholders of ACC adopt this Agreement and vote for the approval of the Merger and directed that this
Agreement and the transactions contemplated hereby be submitted for consideration by ACC's stockholders in accordance with this
Agreement.
Section 4.5 No Conflict; Required
Filings and Consents.
(a) The execution and delivery of this
Agreement by ACC does not, and the performance of this Agreement by ACC will not, (A) (assuming the ACC Stockholder Approval is
obtained) conflict with or violate any provision of the ACC Certificate or ACC By-laws or any equivalent organizational documents
of any of its subsidiaries, (B) (assuming that all consents, approvals, authorizations and permits described in Section 4.5(b)
have been obtained and all filings and notifications described in Section 4.5(b) have been made and any waiting periods thereunder
have terminated or expired) conflict with or violate any Law applicable to ACC or any of its subsidiaries or by which any property
or asset of ACC or any of its subsidiaries is bound or affected or (C) require any consent or approval under, result in any breach
of or any loss of any benefit under, 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 a lien or other encumbrance on any property or asset of ACC or any of its subsidiaries pursuant
to, any contract or other instrument or obligation, except, with respect to clauses (B) and (C), for any such conflicts, violations,
consents, approvals, breaches, losses, defaults or other occurrences which would not, individually or in the aggregate, have a
material adverse effect.
(b) The execution and delivery of this
Agreement by ACC does not, and the performance of this Agreement by ACC will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental Entity or any other person, except
(A) under the Exchange Act, the Securities Act, applicable Blue Sky Law and the filing and recordation of the
Certificate of Merger as required by the DGCL and CBCA and (B) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, have a
material adverse effect.
Section 4.6 Financial Statements.
(a) The audited consolidated financial
statements as of the period ending December 31, 2013 (including the notes thereto) when delivered to the Company (the “ACC
Financial Statements”) were prepared in accordance with GAAP applied (except as may be indicated in the notes thereto) on
a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto), and present fairly the
consolidated financial position, results of operations and cash flows of ACC as of the respective dates thereof and for the respective
periods indicated therein. The books and records of ACC have been, and are being, maintained in accordance with applicable material
legal and accounting requirements.
(b) Except as and to the extent set forth
on the balance sheet of ACC included in the ACC Financial Statements, ACC has no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be reflected on a balance sheet or in notes thereto prepared
in accordance with GAAP, except for normal year-end adjustments and liabilities or obligations incurred in the ordinary course
of business that would not, individually or in the aggregate, have a material adverse effect.
Section 4.7 Brokers. No broker,
finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Merger based
upon arrangements made by or on behalf of ACC.
Section 4.8 Tax Treatment. ACC
has not taken or agreed to take any action that would prevent the Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code. ACC is not aware of any agreement, plan or other circumstance that would prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
Section 4.9 Litigation. Except
as and to the extent disclosed, (a) there is no suit, claim, action, proceeding or investigation pending or, to the knowledge
of ACC, threatened in writing against ACC and (b) ACC is not subject to any outstanding and unsatisfied order, writ, injunction,
decree or arbitration ruling, award or other finding. There is no suit, claim, action, proceeding or investigation pending or,
to the knowledge of ACC, threatened in writing against ACC that, as of the date hereof, challenges the validity or propriety,
or seeks to prevent consummation of, the Merger or any other transaction contemplated by this Agreement.
Section 4.10 Vote Required. The
affirmative vote of the holders of a majority of the outstanding shares of ACC Common Stock are the only votes of the holders
of any class or series of capital stock or other equity securities of ACC necessary to approve this Agreement and the transactions
contemplated hereby, including the Merger (the ''ACC Stockholder Approval'').
Section 4.11 All federal, state
and local income and other tax returns (including, without limitation, any and all returns or declarations in respect of income,
estimated, real property, personal property, sales, use, payroll and other taxes or impositions) of ACC required to be filed on
or before the date hereof have been filed and are true, correct and complete, and all taxes shown on said returns or on any assessments
received by ACC to be due and payable on or before the date hereof have been paid. All federal, state and local income and other
tax returns (including, without limitation, any and all returns or declarations in respect of income, estimated, real property,
personal property, sales, use, payroll and other taxes or impositions) of ACC required to be filed on or before the date hereof
have been filed and are true, correct and complete, and all taxes shown on said returns or on any assessments received by ACC
to be due and payable on or before the date hereof have been paid. ACC has not been advised of any deficiency claimed or proposed
to be claimed against or relating to ACC by any taxing authority which has not been paid, settled or adequately reserved for,
and there are no matters under discussion with any taxing authority which might result in the assessment of additional amounts
against or relating to the Corporation or the Seller.
Article V Covenants
Section 5.1 Tax-Free Reorganization
Treatment
(a) The Company and ACC shall use their
commercially reasonable best efforts, and shall cause their respective Subsidiaries to use their commercially reasonable best
efforts, to take or cause to be taken any action necessary for the Merger to qualify as a reorganization within the meaning of
Section 368(a) of the Code. Neither the Company nor ACC shall, nor shall they permit any of their respective Subsidiaries to,
take or cause to be taken any action that could reasonably be expected to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
(b) This Agreement is intended to constitute,
and the parties hereto hereby adopt this Agreement as, a ''plan of reorganization'' within the meaning Treasury Regulation Sections 1.368-2(g)
and 1.368-3(a). Each of the Company and ACC shall report the Merger as a reorganization within the meaning of Section 368 of the
Code, unless otherwise required pursuant to a ''determination'' within the meaning of Section 1313(a) of the Code.
Article VI Closing Conditions
Section 6.1 Conditions to Obligations
of Each Party Under This Agreement. The respective obligations of each party to effect the Merger and the other transactions contemplated
herein shall be subject to the satisfaction at or prior to the Effective Time of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by applicable Law:
(a) Stockholder Approval. The
Company Stockholder Approval and the ACC Stockholder Approval shall have been obtained.
(b) No Order. No governmental
entity, nor any federal or state court of competent jurisdiction or arbitrator shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order, decree, judgment, injunction or arbitration award or finding or other
order (whether temporary, preliminary or permanent), in any case which is in effect and which prevents or prohibits consummation
of the Merger or any other transactions contemplated in this Agreement.
(c) Consents and Approvals. All
material consents, approvals and authorizations of any governmental entity required of ACC, the Company or any of their subsidiaries
shall have been obtained.
(d) Execution and Delivery of Lock-Up
and Leak-Out Agreements. Each stockholder listed on attached Schedule F shall execute and deliver to the Company a Lock-Up
and Leak-Out agreement on or prior to the Effective Time. A stockholder shall not receive its respective certificate evidencing
its shares of Company Common Stock unless and until it has executed and delivered its Lock-Up and Leak-Out agreement to the Company.
(e) During the time period commencing
on the Closing Date and entering on the effective date of the board member resignations, as provided in the Schedule 14F-1,
the Board of Directors, as specified in Section 1.6, shall be prevented from taking any action that would result in a material
change in the Company’s business or operations, unless any such Board action is approved by all Board members.
Section 6.2 Additional Conditions
to Obligations of the Company and Merger Sub. The obligations of the Company and Merger Sub to effect the Merger and the other
transactions contemplated herein are also subject to the following conditions:
(a) Representations and Warranties.
The representations and warranties of ACC contained in this Agreement shall be true and correct (without giving effect to any
limitation as to materiality set forth therein) at and as of the Effective Time as if made at and as of such time, except where
the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, have a
material adverse effect.
(b) Agreements and Covenants.
ACC 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.
Section 6.3 Additional Conditions to Obligations of ACC.
The obligation of ACC to effect the Merger and the other transactions contemplated herein are also subject to the following conditions:
(a) Representations and Warranties.
The representations and warranties of the Company and Merger Sub contained in this Agreement shall be true and correct at and
as of the Effective Time.
(b) Agreements and Covenants.
The Company and Merger 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 each of them on or prior to the Effective Time.
(c) Consents and Approvals. All
material consents, approvals and authorizations of any person other than a Governmental Entity required to be set forth in Section
3.5 or Section 4.5 or the related sections of the Company Disclosure Schedule or the ACC Disclosure Schedule, as applicable,
shall have been obtained.
Article VII Termination, Amendment
and Waiver
Section 7.1 Termination. This
Agreement may be terminated, and the Merger contemplated hereby may be abandoned, at any time prior to the Effective Time, by
action taken or authorized by the Board of Directors of the terminating party or parties, whether before or after approval of
the matters presented in connection with the Merger by the stockholders of the Company or the stockholders of ACC:
(a) By mutual written consent of ACC
and the Company, by action of their respective Boards of Directors;
(b) By either the Company or ACC if the
Merger shall not have been consummated prior to May 31, 2013 (such date, the ''Outside Date''); provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be available to any party whose failure to fulfill any obligation
under this Agreement (including without limitation such party's obligations set forth in Section 5.7) has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before the Outside Date;
(c) By either the Company or ACC if any
governmental entity shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall
have become final and nonappealable (which order, decree, ruling or other action the parties shall have used their commercially
reasonable best efforts to resist, resolve or lift, as applicable, subject to the provisions of Section 5.7);
(d) By written notice of ACC (if ACC is
not in material breach of its obligations or its representations and warranties under this Agreement), if there has been a
breach by the Company or Merger Sub of any representation, warranty, covenant or agreement contained in this Agreement which
(i) would result in a failure of a condition set forth in Section 6.3(a) or 6.3(b) and (ii) cannot be cured prior to the
Outside Date; provided that ACC shall have given the Company written notice, delivered at least twenty (20) days prior
to such termination, stating ACC's intention to terminate this Agreement pursuant to this Section 7.1(d) and the basis for
such termination;
(e) By written notice of the Company
(if the Company is not in material breach of its obligations or its representations and warranties under this Agreement), if there
has been a breach by ACC of any representation, warranty, covenant or agreement contained in this Agreement which (i) would result
in a failure of a condition set forth in Section 6.2(a) or 6.2(b) and (ii) cannot be cured prior to the Outside Date; provided
that the Company shall have given ACC written notice, delivered at least twenty (20) days prior to such termination, stating
the Company's intention to terminate this Agreement pursuant to this Section 7.1(e) and the basis for such termination; or
(h) By written notice of either ACC or
the Company if (i) the Company Stockholder Approval shall not have been obtained at the Company Stockholders' Meeting duly convened
therefor (or at any adjournment or postponement thereof), or (ii) the ACC Stockholder Approval shall not have been obtained at
the ACC Stockholders' Meeting duly convened therefor (or at any adjournment or postponement thereof).
Section 7.2 Effect of Termination. Limitation on Liability.
In the event of termination of this Agreement by either ACC or the Company as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of ACC or the Company or their respective subsidiaries,
officers or directors except (x) with respect to this Section 7.2 and Article VIII and (y) with respect to any liabilities or
damages incurred or suffered by a party as a result of the willful and material breach by the other party of any representations,
warranties, covenants or other agreements set forth in this Agreement.
Section 7.3 Amendment. To the
extent permitted by applicable Law, this Agreement may be amended by the parties, by action taken or authorized by their respective
Boards of Directors, at any time before or after approval of the matters presented in connection with the Merger by the stockholders
of ACC and the Company; provided, that after any such approval, no amendment shall be made that by law requires further
approval by the Company's or ACC's stockholders, as the case may be, without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the parties.
Section 7.4 Waiver. At any time
prior to the Effective Time, any party hereto may (a) extend the time for the performance of any of the obligations or other acts
of the other party hereto, (b) waive any inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto, and (c) waive compliance by the other party with any of the agreements or
conditions contained herein.
Section 7.5 Fees and Expenses.
Subject to Section 7.2(a), Section 7.2(b) and Section 7.2(c) hereof, all expenses incurred by the parties hereto shall
be borne solely and entirely by the party which has incurred the same (including, but not limited to, fees and expenses of
counsel, accountants, investment bankers and other advisors).
Article VIII General Provisions
Section 8.1 Non-Survival of Representations
and Warranties. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Effective Time. This Section 8.1 shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 8.2 Notices. Any notices
or other communications required or permitted under, or otherwise in connection with this Agreement, shall be in writing and shall
be deemed to have been duly given when delivered in person or upon confirmation of receipt when transmitted by facsimile transmission
(but only if followed by transmittal by national overnight courier or hand for delivery on the next business day) or on receipt
after dispatch by registered or certified mail, postage prepaid, addressed, or on the next business day if transmitted by national
overnight courier, in each case as follows:
If to ACC, addressed to it at:
Hollister & Blacksmith, Inc.
Attention: Corey Hollister
3457 Ringsby Court
Denver, Colorado 82016-4900
with a copy to:
Pedersen & Houpt
161 North Clark Street, Suite 3100
Chicago, Illinois 60601-3242
Attention: Jerold N. Siegan, Esq.
If to the Company or Merger Sub, addressed
to it at:
Brazil Interactive Media, Incorporated
801 Brickell Avenue, Suite 900
Miami, Florida 33131
With a copy to:
Thompson Hine, LLP
335 Madison Avenue, 12th Floor
New York, NY 10017
Attention: Peter J. Gennuso, Esq.
Section 8.3 Headings. The headings
contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.
Section 8.4 Severability. If any
term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic
or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in
an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.
Section 8.5 Entire Agreement.
This Agreement (together with the Exhibits, ACC Disclosure Schedule and Company Disclosure Schedule and the other documents delivered
pursuant hereto) constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject matter hereof, and except as otherwise expressly provided
herein, is not intended to confer upon any other person any rights or remedies hereunder.
Section 8.6 Governing Law; Consent
to Jurisdiction; Waiver of Trial by Jury.
(a) This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of Delaware, without regard to laws that may be applicable under conflicts
of laws principles.
(b) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware State
court, or Federal court of the United States of America, sitting in Delaware, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement or the agreements delivered in connection herewith or
the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each
of the parties hereby irrevocably and unconditionally (A) agrees not to commence any such action or proceeding except in such
courts, (B) agrees that any claim in respect of any such action or proceeding may be heard and determined in such Delaware
State court or, to the extent permitted by law, in such Federal court, (C) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding
in any such Delaware State or Federal court and (D) waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such Delaware State or Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section 8.2. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner permitted by Law.
Section 8.7 Counterparts. This Agreement
may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party notwithstanding that all parties are
not signatory to the same counterpart. In the event that any signature is delivered by facsimile transmission or by an e-mail
which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid
and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as
if such signature page were an original thereof.
[Remainder of page intentionally
left blank]
IN WITNESS WHEREOF, the Company, Merger
Sub and ACC have caused this Agreement to be executed as of the date first written above by their respective officers thereunto
duly authorized.
Brazil Interactive Media, Inc.
Themistocles Psomiadis
By: /s/ Themistocles Psomiadis
a duly authorized signatory
Cannamerica Corp.
Michael Novielli
By: /s/ Michael Novielli
a duly authorized signatory
Hollister & Blacksmith, Inc.
Corey Hollister
By: /s/ Corey Hollister
a duly authorized signatory
[Signature page to Agreement and Plan
of Merger]
EXHIBIT A
DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION
Directors:
Corey Hollister
Officers:
Corey Hollister, CEO
EXHIBIT B
BOARD OF DIRECTORS AND OFFICERS OF
THE COMPANY
Directors:
Michael Novielli
Themistocles Psomiadis
Corey Hollister
Officers:
Corey Hollister, CEO and President
Jesus Quintero, CFO
EXHIBIT C
DISCLOSURE SCHEDULES
Accounts Payable
Business Wire |
635.00 |
Chiropractic Economics |
2,150.00 |
Commworld of San Diego-North Inc. |
1,920.06 |
Doherty, Daniel |
2,500.00 |
E-Vault/i365 Inc |
4,603.08 |
Fish & Richardson P.C. |
2,367.89 |
Gersten Savage LLP |
2,375.00 |
LightfootGuestMoore&Co.P.C. |
9,811.95 |
Mercardo, Scott |
500.00 |
Mitchell, Robin |
6,607.56 |
MPA Media |
15,653.30 |
Russell Scott Design |
4,775.00 |
Smith Katzenstein Furlow LLP |
1,468.15 |
|
55,366.99 |
|
|
Estimated Sales Tax Payable |
832.00 |
|
|
|
56,198.99 |
EXHIBIT 2.2
SEPARATION AND EXCHANGE AGREEMENT
by and among
BRAZIL INTERACTIVE MEDIA, INC.,
BIMI, INC.
and
BRAZIL INVESTMENTS HOLDING LLC
SEPARATION AND
EXCHANGE AGREEMENT dated as of the date of signature below (this “Agreement”) by and among Brazil Interactive
Media, Inc., a Delaware corporation (the “Company”), BIMI, Inc., a Delaware corporation and wholly-owned subsidiary
of the Company (“BIMI Sub”), and Brazil Investments Holding, LLC, a Delaware limited liability company with
entity number 5210015 and formerly named Brazil Interactive Holdings, LLC (“BIMI Holding” and, together with
the Company and BIMI Sub, collectively, the “Parties,” and each a “Party”).
RECITALS
WHEREAS, on March
13, 2013, the Company entered into an Agreement and Plan of Merger, by and among the Company, BIMI Holding, BIMI Sub and BIMI
Acquisition Corp. (the “Merger Agreement”), by which BIMI Holding became the majority stockholder of the Company
and BIMI Sub became a wholly-owned subsidiary of the Company; and
WHEREAS, the Boards
of Directors of the Parties have determined that it is in the best interest of the Parties and their respective stockholders to
separate BIMI Sub from the Company, and have expressly approved such a divestiture by this Agreement; and
WHEREAS,
in furtherance of the foregoing, Boards of Directors of the Parties have determined that it is in the best interest of the Parties
and their respective stockholders to enter into a transaction in the manner provided in this Agreement whereby the Company will
exchange all of the outstanding equity of BIMI Sub, consisting of one million (1,000,000) shares of common stock, $0.0001 par
value (the “Sub Shares”), to BIMI Holding, in exchange for 35,000,000 shares of common stock, par value $0.00001
per share, of the Company (the “Exchange Shares”) from BIMI Holding for return to treasury, on the terms and
subject to the conditions set forth herein (the “Exchange”);
NOW, THEREFORE,
in consideration of the foregoing and the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:
ARTICLE I
THE SHARES AND THE EXCHANGE SHARES
Section 1.1 The
Shares. The Exchange Shares shall be transferred to the Company, and the Sub Shares shall be transferred to BIMI Holding,
pursuant to Article II hereof.
ARTICLE II
THE EXCHANGE
Section 2.1 The Exchange. Upon the terms and subject
to the conditions of this Agreement, the Company agrees to assign and sell to BIMI Holding, the Sub Shares, and in exchange therefore
at the Exchange Closing (as defined hereinafter), BIMI Sub shall assign and sell to the Company the Exchange Shares.
Section 2.2 Exchange
Closing. At the Exchange Closing, the Company will deliver a certificate representing the Sub Shares to BIMI Holding, and
BIMI Holding will deliver certificates representing the Exchange Shares to the Company for return to treasury. Subject to the
satisfaction of the conditions set forth in Article VII, the time and date of such deliveries shall be on a date and
at a place to be specified by the Parties (the “Exchange Closing”), which date is scheduled for Friday, March
28, 2014, but may be changed at the Company’s discretion, and is conditional upon the satisfaction or waiver of the conditions
set forth in Article VII.
ARTICLE III
THE BUSINESS SEPARATION
Section 3.1 Business
Separation. On the terms and subject to the conditions set forth in this Agreement, prior to the Exchange Closing, the
Company shall, and shall cause BIMI Sub and each other subsidiary of the Company to, effect each of the transactions set forth
in this Article III of this Agreement, which transactions (collectively, the “Business Separation”) shall take
place as provided below.
Section 3.2 Assets
and Liabilities. The Parties agree that the Company and BIMI Sub each shall retain all assets and liabilities in their name,
and to take any and all actions necessary so that, at the Exchange Closing, (i) the Company will own or be liable for all existing
Company assets and liabilities, as set forth and limited in Annex A to this Agreement, and (ii) BIMI Sub will own or be liable
for, all existing BIMI Sub assets and liabilities, including all assets and liabilities of BIMI Sub’s subsidiaries.
(a)
In furtherance of the foregoing, the Parties agree that, as of the Exchange Closing, each Party will be deemed to have beneficial
ownership of all of the assets, together with all rights and privileges incident thereto, and will be deemed to have all of the
liabilities, and all duties, obligations and responsibilities incident thereto, that such Party is intended to have pursuant to
the terms of this Agreement.
(b)
As of the Exchange Closing, BIMI Sub and its subsidiaries shall have no liability for any debt or obligation listed in Annex A
of this Agreement, and furthermore, no liability whatsoever for any other debt or obligation of the Company, in the United States
of America, including but not limited to any obligation in the United States of America to Cellcast UK Limited, its subsidiaries
or affiliates. This Agreement shall not affect the pre-existing debts and liabilities of BIMI Sub subsidiaries in Brazil.
(c)
As of the Exchange Closing, the Company shall retain liability for the debts or obligations listed in Annex A to this Agreement,
and for any other debt or obligation of the Company in the United States of Americaf not listed in Annex A.
Section 3.3 Termination
of Intercompany Agreements.
(a)
Except as set forth in Section 3.3(b), the Company, on behalf of itself and each of its subsidiaries, and BIMI Sub, on behalf
of itself and each of its subsidiaries, hereby terminate, effective as of the Exchange Closing, any and all intercompany agreements.
No such terminated intercompany agreement will be of any further force or effect from and after the Exchange Closing and all Parties
shall be released from all liabilities thereunder. Each Party shall take, or cause to be taken, any and all actions as may be
reasonably necessary to effect the foregoing.
(b)
The provisions of Section 3.3(a) shall not apply to this Agreement, which shall continue to be outstanding after the
Exchange, nor any confidentiality, non-disclosure, release of liability and hold
harmless agreements among any Parties.
Section 3.4 No
Intercompany Accounts. The Parties agree that there are no intercompany accounts outstanding between the Company and
BIMI Sub or any of BIMI Sub’s subsidiaries.
Section 3.5 Bank
Accounts; Cash Balances. The Parties agree that the Company and BIMI Sub each shall retain all bank and brokerage accounts
held in their respective names, with such cash balances as may exist.
(a)
On or prior to the Exchange Closing, each Party agrees to take all actions necessary to amend all contracts or agreements governing
each bank and brokerage account owned by any Party (the “Accounts”) so that such Accounts, if currently linked (whether
by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to) to any Account owned by any
other Party, are de-linked from the Accounts owned by such other Party.
(b)
Each Party agrees to take all actions necessary to amend all agreements governing the Accounts so that such Accounts, if currently
linked, are de-linked from such other Parties’ Accounts.
Section 3.6 Resignation.
On or prior to the Exchange Closing:
(a)
The Company shall deliver to BIMI Holding the resignation or evidence of removal, effective as of the Exchange Closing, of the
officers and directors of BIMI Sub.
(b)
BIMI Sub shall deliver to the Company the resignation or evidence of removal, effective as of the Exchange Closing, of Andrea
Villas Boas as director of the Company.
Section 3.7 Transaction
Expenses. All legal fees and other expenses incurred on behalf of the Parties in connection with this Agreement shall be the
individual responsibility of the respective Party incurring such expense.
Section 3.8 2013
Company Audit Participation. The Company shall, at the Company’s expense, conduct a 2013 fiscal year audit of the books,
records and financial statements of the Company and its subsidiaries, including BIMI, Inc., Brazil Interactive Media Participacões,
Ltda. and EsoTV Brasil Promoção Publicidade Licenciamento e Comércio Ltda. (the “2013 Audit”).
Irrespective of the timing of the 2013 Audit, whether it should occur prior or subsequent to the Exchange Closing, BIMI Sub and
BIMI Holding agree and promise to take any and all actions necessary, including but not limited to providing access to books and
records, all financial information, all banking statements, and all other data necessary to complete the 2013 Audit to the Company
and its auditors, and any and all action necessary to cause BIMI Sub and each other subsidiary of BIMI Sub, including Brazil Interactive
Media Participacões, Ltda. and EsoTV Brasil Promoção Publicidade Licenciamento e Comércio Ltda., to
comply with and facilitate the completion of the 2013 Audit.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company represents
and warrants to BIMI Holding as of the date hereof that:
Section 4.1 Existence
and Power. BIMI Sub is a corporation duly incorporated, validly existing and in good standing under the laws of the State
of Delaware. The Company and BIMI Sub have the requisite corporate power and authority to enter into and perform their obligations
under this Agreement.
Section 4.2 Capitalization of BIMI Sub. The
authorized capital stock of BIMI Sub consists of 100,000,000 shares of capital stock, divided into two classes with
80,000,000 shares designated as common stock at $.0001 par value (the “Common Stock”) and 20,000,000 shares
designated as preferred stock at $.0001 par value (the “Preferred Stock”), of which, as of the Exchange Closing,
no more than 1,000,000 shares of Common Stock are issued and outstanding, and no shares of Preferred Stock are issued and
outstanding. All of the issued and outstanding shares of BIMI Sub Common Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership
thereof.
Section 4.3 Authorization.
The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of the
Company, and this Agreement is a valid and binding obligation of the Company, enforceable against it in accordance with their
terms.
Section 4.4 Board
Approvals. The transactions contemplated by this Agreement, including without limitation the exchange of the Shares and the
compliance with the terms of this Agreement, have been unanimously adopted, approved and declared advisable unanimously by the
Board of Directors of the Company.
Section 4.5 No
Debts or Obligations. BIMI Sub has no debt, obligation, or liabilities whatsoever, neither independently nor for any debt
or obligation of the Company, including but not limited to any obligation to Cellcast UK Limited, its subsidiaries or affiliates.
Section 4.6 Non-Contravention.
The execution, delivery and performance of this Agreement, and the consummation by the Company of the transactions contemplated
hereby, will not conflict with, violate or result in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both would constitute a default) under, or result in the termination of or accelerate the performance
required by, or result in a right of termination or acceleration under, any provision of the articles of incorporation or bylaws
of the Company or the articles of incorporation, charter, bylaws or other governing instrument of any subsidiary of the Company.
Section 4.7 Purchase
for Own Account. The Company is acquiring the Exchange Shares for its own account and not with a view to the distribution
thereof in violation of the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission
(the “SEC”) promulgated thereunder (the “Securities Act”).
Section 4.8 Private
Placement. The Company understands that (i) the Exchange Shares have not been registered under the Securities Act or
any state securities laws, by reason of their issuance by the Company in a transaction exempt from the registration requirements
thereof and (ii) the Exchange Shares may not be sold unless such disposition is registered under the Securities Act and applicable
state securities laws or is exempt from registration thereunder. The Company represents that it is an institutional “accredited
investor” (as defined in Rule 501(a) of Regulation D under the Securities Act).
Section 4.9 Legend.
Each certificate representing an Exchange Share will bear a legend to the following effect unless the Company determines otherwise
in compliance with applicable law:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND NEITHER THIS SHARE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
BIMI HOLDING
BIMI Holding represents
and warrants to the Company as of the date hereof that:
Section 5.1 Existence and Power. BIMI Holding is duly
organized and validly existing under the laws of the state of its organization and has all requisite power and authority to enter
into and perform its obligations under this Agreement.
Section 5.2 Authorization. The execution, delivery and performance
of this Agreement has been duly authorized by all necessary action on the part of BIMI Holding, and this Agreement is a valid
and binding obligation of BIMI Holding, enforceable against it in accordance with its terms.
Section 5.3 Ownership.
BIMI Holding holds the Exchange Shares in its name and when exchanged, the Exchange Shares will be assigned to the Company free
and clear of any and all competing interests, liens or claims by any other party. The Exchange Shares represent all of BIMI Holding’s
equity interest in the Company, and neither BIMI Holding nor its beneficial owners and/or managers have any claim against the
Company or any other person or entity whatsoever for any further interest in the Company. The Exchange has been duly authorized
by all necessary corporate action. When assigned and sold against receipt of the consideration therefor, the Exchange Shares will
be validly issued, fully paid and nonassessable, will not subject the holders thereof to personal liability and will not be issued
in violation of preemptive rights or competing claims.
Section 5.4 Non-Contravention.
The execution, delivery and performance of this Agreement will not conflict with, violate or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or both would constitute a default) under, or result
in the termination of or accelerate the performance required by, or result in a right of termination or acceleration under, any
provision of the organizational or governing documents of BIMI Holding.
Section 5.5 Purchase
for Own Account. BIMI Holding is acquiring the Shares for its own account and not with a view to the distribution thereof
in violation of the Securities Act.
Section 5.6 Private
Placement. BIMI Holding understands that (i) the Sub Shares have not been registered under the Securities Act or any
state securities laws, by reason of their issuance by BIMI Sub in a transaction exempt from the registration requirements thereof
and (ii) the Sub Shares may not be sold unless such disposition is registered under the Securities Act and applicable state
securities laws or is exempt from registration thereunder. BIMI Holding represents that it is an institutional “accredited
investor” (as defined in Rule 501(a) of Regulation D under the Securities Act).
Section 5.7 Legend.
Each certificate representing the Sub Shares will bear a legend to the following effect unless the Company determines otherwise
in compliance with applicable law:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND NEITHER THIS SHARE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”
ARTICLE VI
CONDITIONS TO CLOSING
Section 7.1 Conditions
to Each Party’s Obligation To Effect the Exchange. The respective obligations of the parties hereunder to effect the
Exchange shall be subject to the following conditions:
(a)
No Injunctions or Restraints; Illegality. No order, injunction or decree issued by any court or agency of competent jurisdiction
or other law preventing or making illegal the consummation of the Exchange shall be in effect.
Section 7.2 Conditions
to the Obligations of the Company. The obligations of the Company hereunder to effect the Exchange shall be subject to the
satisfaction, or waiver by the Company, of the following conditions:
(a)
2013 Company Audit Participation. The Company shall, at the Company’s expense, conduct a 2013 fiscal year audit of
the books, records and financial statements of the Company and its subsidiaries, including BIMI, Inc., Brazil Interactive Media
Participacões, Ltda. and EsoTV Brasil Promoção Publicidade Licenciamento e Comércio Ltda. (the “2013
Audit”). Irrespective of the timing of the 2013 Audit, whether it should occur prior or subsequent to the Exchange Closing,
BIMI Sub and BIMI Holding agree and promise to take any and all actions necessary, including but not limited to providing access
to books and records, all financial information, all banking statements, and all other data necessary to complete the 2013 Audit
to the Company and its auditors, to cause BIMI Sub and each other subsidiary of the Company, including Brazil Interactive Media
Participacões, Ltda. and EsoTV Brasil Promoção Publicidade Licenciamento e Comércio Ltda., to comply
with and facilitate the completion of the 2013 Audit.
(b)
No Injunctions or Restraints; Illegality. No order, injunction or decree issued by any court or agency of competent jurisdiction
or other law preventing or making illegal BIMI Holding’s unrestricted and unlimited right to vote the Shares shall be in
effect.
(c)
No Other Event. No other event or development shall have occurred or failed to occur that, in the judgment of the board
of directors of the Company, in its sole discretion, prevents the consummation of the Transactions or any portion thereof or makes
the consummation of the Transactions inadvisable.
Section 7.3 Right Not to Close.
Each of the conditions set forth in Section 7.2 is for the benefit of the Company, and the board of directors of the Company
may, in its sole and absolute discretion, determine whether to waive any condition, in whole or in part. Any determination
made by the board of directors of the Company concerning the satisfaction or waiver of any or all of the conditions in Section 7.2
will be conclusive and binding on the Parties. The satisfaction of the conditions set forth in Section 7.2 will not
create any obligation on the part of the Company to effect the Exchange or in any way limit the Company’s right to terminate
this Agreement as set forth in Section 8.1.
ARTICLE VII
TERMINATION
Section 7.1 Injunction;
Illegality. This Agreement may be terminated at any time prior to the Exchange Closing by Company if (a) an order, injunction
or decree shall have been issued by any court or agency of competent jurisdiction and shall be nonappealable, or other law shall
have been issued preventing or making illegal the completion of the Exchange or the other transactions contemplated by this Agreement,
or (b) in the sole judgment of the Company, it is no longer in the best interests of the Company and its shareholders to complete
the Exchange.
ARTICLE VIII
MUTUAL RELEASES; INDEMNIFICATION
Section 8.1 Release
of Pre-Exchange Claims.
(a)
Effective as of the Exchange Closing, BIMI Sub and BIMI Holding do hereby, for themselves and each of their subsidiaries, release
and forever discharge the Company and each of its subsidiaries, directors, officers and stockholders, from any and all liabilities
whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract, by operation
of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or
to have failed to occur or any conditions existing or alleged to have existed at or before the Exchange Closing, including in
connection with this Agreement and the Exchange.
(b)
Effective as of the Exchange Closing, the Company does hereby release and forever discharge BIMI Holding, BIMI Sub, and each of
their subsidiaries, directors, officers and stockholders from any and all liabilities whatsoever to the Company, whether at law
or in equity (including any right of contribution), whether arising under any contract, by operation of law or otherwise, existing
or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed at or before the Exchange Closing, including in connection with this Agreement
and the Exchange.
(c)
BIMI Sub shall not make, and shall not permit any subsidiary of BIMI Sub to make, any claim or demand, or commence any action
asserting any claim or demand, including any claim of contribution or indemnification, against the Company with respect to any
liabilities released pursuant to Section 9.1(a). The Company shall not make any claim or demand, or commence any action
asserting any claim or demand, including any claim of contribution or any indemnification, against BIMI Sub or its subsidiaries
with respect to any liabilities released pursuant to Section 9.1(b). BIMI Holding shall not make, and shall not permit any
subsidiary of BIMI Holding to make, any claim or demand, or commence any action asserting any claim or demand, including any claim
of contribution or indemnification, against the Company with respect to any liabilities released pursuant to Section 9.1(a).
Section 8.2 Indemnification
by BIMI Sub. BIMI Sub shall indemnify, defend and hold harmless, the Company and each of its subsidiaries, directors,
officers and stockholders, from and against any and all losses of the Company relating to, arising out of or resulting from any
of the following (without duplication):
(a)
any BIMI Sub liability, including the failure of any subsidiary of BIMI Sub or any other person to pay, perform or otherwise promptly
discharge any BIMI Sub liabilities in accordance with their respective terms, whether prior to, at or after the Exchange Closing;
and
(b)
any breach by BIMI Sub or its subsidiaries of any provision of this Agreement or that certain Settlement Agreement among the Parties
dated September 3, 2013, subject to any limitations of liability provisions and other provisions applicable to any such breach
set forth therein.
Section 8.3 Survival
of Indemnities. The rights and obligations of each of the Parties under this Article IX shall survive the Effective
Date indefinitely, unless a specific survival or other applicable period is expressly set forth herein, and shall survive the
sale or other transfer by any Party or any of its subsidiaries of any assets or businesses or the assignment by it of any liabilities.
Section 8.4 Limitation
of Liability. EXCEPT TO THE EXTENT SPECIFICALLY PROVIDED IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE
TO THE OTHER PARTY FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES (INCLUDING
IN RESPECT OF LOST PROFITS OR REVENUES), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY
OUT OF ANY PROVISION OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices.
All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed
to have been given if delivered personally or by facsimile or seven days after having been sent by certified mail, return receipt
requested, postage prepaid, to the parties to this Agreement at the following address or to such other address either party to
this Agreement shall specify by notice to the other party:
(a)(i) if to Company, to:
Brazil Interactive Media, Inc.
801 Brickell
Avenue, Ste. 900
Miami, FL 33131
Attention: General Counsel
with a copy to:
Thompson Hine LLP
Attention: Peter Gennuso
335 Madison
Avenue
New York, NY 10004
Attention: Peter Gennuso
(b) if to Purchaser, to:
Brazil Investments Holding LLC
16860 SW 1st Street
Pembroke Pines, Florida 33027
Attention: Percival Palesel
Section 9.2 Further Assurances. Each party hereto
shall do and perform or cause to be done and performed all further acts and shall execute and deliver all other agreements, certificates,
instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated hereby.
Section 9.3 Amendments and Waivers. Any provision
of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is duly executed and delivered
by the Parties. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 9.4 Fees and Expenses. Each Party hereto shall pay all of its own fees and expenses
(including attorneys’ fees) incurred in connection with this Agreement and the transactions contemplated hereby.
Section 9.5 Successors
and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and assigns, provided that none of the Parties may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the consent of the other Parties hereto.
Section 9.6 Third
Party Beneficiaries. This Agreement is solely for the benefit of the Parties and should not be deemed to confer upon
third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without
reference to this Agreement.
Section 9.7 Governing Law. This Agreement shall
be governed and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and
wholly performed within such state, without regard to any applicable conflicts of law principles. The parties hereto agree
that any suit, action or proceeding brought by either party to enforce any provision of, or based on any matter arising out
of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in any federal or state
court located in the State of Delaware. Each of the parties hereto submits to the jurisdiction of any such court in any suit,
action or proceeding seeking to enforce any provision of, or based on any matter arising out of, or in connection with, this
Agreement or the transactions contemplated hereby and hereby irrevocably waives the benefit of jurisdiction derived from
present or future domicile or otherwise in such action or proceeding. Each party hereto irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 9.8 Waiver
Of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.9 Entire
Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and written, between the parties and/or their affiliates
with respect to the subject matter of this Agreement.
Section 9.10 Effect
of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.
Section 9.11 Severability.
If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be deemed
to be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded
and shall be enforced in accordance with its terms to the maximum extent permitted by law.
Section 9.12 Counterparts;
Third Party Beneficiaries. This Agreement may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures were upon the same instrument. No provision of this Agreement shall confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 9.13 Performance.
Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set
forth herein to be performed by any subsidiary or affiliate of such Party.
Section 9.14 Specific
Performance. The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms. It is accordingly agreed that the Parties shall be entitled to seek
specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity.
[Remainder of page left blank – signature page is next page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and year first above written.
BRAZIL INTERACTIVE MEDIA, INC. |
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/s/ Corey Hollister |
Name: |
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Corey Hollister |
Title: |
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President and Chief Executive Officer |
Date: |
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May 16, 2014 |
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BIMI, INC. |
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/s/ Corey Hollister |
Name: |
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Corey Hollister |
Title: |
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President and Chief Executive Officer |
Date: |
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May 16, 2014 |
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BRAZIL INVESTMENTS HOLDING LLC |
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/s/ José Percival Palesel |
Name: |
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José Percival Palesel |
Title: |
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Manager |
Date: |
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May 16, 2014 |
EXHIBIT 3.1
STATE OF DELAWARE
CERTIFICATE OF MERGER OF
DOMESTIC CORPORATION INTO
FOREIGN CORPORATION
Pursuant to Title 8, Section 252 of the Delaware General
Corporation Law, the undersigned corporation executed the following Certificate of Merger:
FIRST: | | The name of each constituent corporation is Hollister & Blacksmith Inc., a Colorado
corporation and Cannamerica Corp., a Delaware corporation. |
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SECOND: | | The Agreement and Plan of Merger has been approved, adopted, certified, executed and
acknowledged by each of the constituent corporations pursuant to Title 8, Section 252. |
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THIRD: | | The name of the surviving corporation is Hollister & Blacksmith Inc., a Colorado
corporation. |
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FOURTH: | | The Certificate of Incorporation of the surviving corporation shall be its Certificate
of Incorporation. |
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FIFTH: | | The merger is to become effective on September 29, 2014 at 12:01 a.m. |
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SIXTH: | | The Agreement of Merger is on file at 3457 Ringsby Court, Suite 111, Denver, Colorado
80216-4900, the place of business of the surviving corporation. |
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SEVENTH: | | A copy of the Agreement of Merger will be furnished by the surviving corporation on
request, without cost, to any stockholder of the constituent corporations. |
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EIGHTH: | | The surviving corporation agrees that it may be served with process in the State of
Delaware in any proceeding for enforcement of any obligation of the surviving corporation arising from this merger, including
any suit or other proceeding to enforce the rights of any stockholders as determined in appraisal proceedings pursuant to the
provisions of Section 262 of the Delaware General Corporation Laws, and irrevocably appoints the Secretary of State of Delaware
as its agent to accept services of process in any such suit or proceedings. The Secretary of State shall mail any such process
to the surviving corporation at 3457 Ringsby Court, Suite 111, Denver, Colorado 80216-4900. |
IN WITNESS WHEREOF, said surviving corporation has
caused this certificate to be signed by an authorized officer, the 25th day of September, 2014.
By: |
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/s/ Corey Hollister |
Name: |
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Corey Hollister |
Title: |
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President and CEO |
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EXHIBIT 3.3
CERTIFICATE OF AMENDMENT OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
BRAZIL INTERACTIVE MEDIA, INC.
Brazil Interactive Media, Inc. (the “Corporation”)
hereby certifies that:
1. | | FIRST: The original Certificate of Incorporation of the Corporation was filed with
the Secretary of State of the State of Delaware on September 24, 2001 under the name “NatureWell, Incorporated”, and
a Restated Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on April 20, 2006. |
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2. | | SECOND: A Certificate of Amendment to the Restated Certificate of Incorporation of
the Corporation was filed with the Secretary of State of the State of Delaware on April 21, 2013 whereby the Corporation, among
other things, changed the name of the Corporation to “Brazil Interactive Media, Inc.” |
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3. | | THIRD: Pursuant to Section 242 of the General Corporation Law of the State of Delaware,
this Certificate of Amendment to the Restated Certificate of Incorporation, as amended (this “Amendment”), further
amends the provisions of the Corporation’s Restated Certificate of Incorporation. |
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4. | | FOURTH: The terms and provisions of this Amendment have been duly approved by written
consent of the required number of shares of outstanding stock of the Corporation pursuant to Subsection 228(a) of the General
Corporation Law of the State of Delaware. |
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5. | | FIFTH: Article First of the Corporation’s Restated Certificate of Incorporation,
as amended, is deleted in its entirety and substituted by the following: |
“The name
of the Corporation is American Cannabis Company, Inc.”
6. | | SIXTH: The effective date of this Certificate of Amendment of the Corporation’s
Restated Certificate of Incorporation is September 29, 2014 at 12:01 am. |
IN WITNESS WHEREOF, the undersigned has executed
this Certificate of Amendment of the Corporation’s Restated Certificate of Incorporation, as amended, to be effective on
September 25, 2014.
/s/ Corey Hollister
Corey Hollister
Chief Executive Officer
EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement
(this “Agreement”) is made and entered into as of the day of April 29th, 2014, by and between Hollister
& Blacksmith, Inc., a Colorado corporation (the “Corporation”) and Corey Hollister (the “Executive”)
as follows:
WITNESSETH:
WHEREAS, the Executive
is currently serving as the Chief Executive Officer of the Corporation; and
WHEREAS, the parties
hereby desire to enter into this Agreement to set forth the terms and conditions for the employment relationship of the Executive
with the Corporation; and
WHEREAS, the Board
of Directors of the Corporation (the “Board”) has approved and authorized the Corporation's execution and entry into
this Agreement with the Executive; and
NOW, THEREFORE,
in consideration of the mutual covenants herein contained, and such other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Incorporation of Recitals. The above recitals are hereby incorporated into and made a part of this Agreement.
2. Term. Employment shall be for a term commencing on the date hereof and expiring five (5) years from the date hereof, unless terminated earlier pursuant to Section 7 hereof. Notwithstanding the previous sentence, this Agreement and the employment of the Executive shall be automatically renewed (subject to Section 7) for successive one-year periods upon the terms and conditions set forth herein, commencing on the fifth anniversary of the date of this Agreement, and on each anniversary date thereafter. For purposes of this Agreement, any reference to the “term” of this Agreement shall include the original term and any extension thereof.
3. Employment of the Executive/Duties of the Executive.
(a)
The Corporation hereby agrees to employ the Executive as Chief Executive Officer of the Corporation and the Executive hereby agrees
to be employed by the Corporation in such capacity upon the terms and conditions herein set forth.
(b)
The Executive shall serve as Chief Executive Officer of the Corporation, reporting to the Board. The Executive shall devote business
time, efforts, attention, skill and energy to the Company's business as Executive deems necessary to fulfill his responsibilities.
During the term of this agreement the Executive may serve as an officer, director or otherwise participate in educational, welfare,
social, religious and civic organizations. The Executive shall endeavor to devote a minimum of 40 hour per week of his time to
the Corporation.
(c)
Executive agrees that he will at all times faithfully, industriously, and to the best of his ability, experience, and
talents, perform all of the duties that may be required of and from him pursuant to the express and implicit terms of this
Agreement, to the reasonable satisfaction of the Company.
(d)
Before the end of each of the Company's fiscal years, the Executive shall meet with the Board to set agreed management performance
objectives for the Executive for the upcoming year which shall be formally reviewed annually, with informal reviews to be performed
from time to time throughout the year.
4. Compensation; Base Salary; Bonuses; Milestones.
(a)
During the term of this Agreement, the Corporation shall pay to the Executive a base salary in the amount set forth in Schedule
A per annum (“Annual Base Salary”), which Annual Base Salary may be adjusted from time to time by the Corporation,
payable in equal bimonthly installments and in the manner consistent with the Corporation's general policies regarding compensation
of executive employees.
(b)
The Board (or a committee of the Board) shall review Executive's Annual Base Salary compensation quarterly for the first year
and annually thenceforth at the conclusion of the Company's fiscal year, and make a recommendation for any adjustment to the then-current
Base Salary. Subject to the immediately preceding sentence, the actual increase in Executive's Annual Base Salary shall be made
within the Board's sole judgment and discretion and shall be based, in part, on an analysis of total compensation paid to Executive
officers of comparable entities within this region and any other criteria the Board determines are appropriate.
(c)
After the first year of this Agreement, if the Board authorizes cash incentive compensation to the other executive officers of
the Corporation, the Executive shall be eligible to participate in such plan, program or arrangement as determined by the Board
in its sole discretion.
(d)
The Board (or a committee of the Board) shall review Executive's performance at the conclusion of the Company's fiscal year, and
make a recommendation for any annual incentive bonus compensation for the Executive. Any bonus shall be paid to the Executive
in a lump sum no later than April 15th of the year following the year in which the bonus compensation was earned. Subject
to the immediately preceding sentence, the amount of any such bonus, as determined by the Board in the exercise of its reasonable
discretion will be based on, among other things, the Company's performance for the completed fiscal year (December 31) as reflected
by such factors as gross revenue, net profits, and achievement of specific predetermined goals, including without limitation development
of a strategic acquisition and organic growth plan. Executive shall also be eligible to participate in such other bonus or incentive
compensation programs as may be established by the Company for other executives.
5. Executive Benefits.
(a)
In addition to the compensation described in Section 4, the Corporation shall make available to the Executive, subject to
the terms and conditions of the applicable plans, including without limitation the eligibility rules, participation for the
Executive and the Executive eligible dependents contingent for the corporation to operate and not impact operations and
maintain all liabilities in the Corporation-sponsored employee benefit plans or arrangements and such other usual and
customary benefits now or hereafter generally available to employees of the Corporation. If approved by the board benefit
plans will include health insurance, Life insurance, disability insurance, and all other normal and customary benefits such
as paid vacation. Executive shall also be entitled to participate in, or enjoy the benefit of, any other fringe benefits or
prerequisites that are now or may be or become applicable to the Corporation's executive employees, including any executive
stock option plan or program adopted for executive officers of the Company. The Corporation is not obligated to provide or
continue any of these benefits and may on an executive group basis, without prior notice, discontinue any benefit already
provided or as may be provided in the future, within the exclusive discretion of the Board, however in such event the
Executive shall be entitled to received any benefits, accrued but unpaid as of the effective date of any such discontinuance
of benefits.
(b)
In the event of Change in Control, as hereafter defined, or involuntary termination of the Executive's employment hereunder, any
unvested stock option of the Executive will immediately vest. For purposes of this Agreement, a “Change in Control”
will be deemed to have occurred is there is a merger or consolidation of the Corporation, or any sale, lease or exchange of all
or substantially all of the consolidated assets of the Corporation and its subsidiaries (if any) to any other entity or person,
and (a) in the case of a merger or consolidation, if the voting stockholders of the Corporation before the transaction hold less
than fifty-one percent (51%) of the voting common stock of the survivor of such merger or consolidation or its parent corporation,
or (b) in the case of a sale, lease or exchange, the Corporation does not own at least fifty-one percent (51%) percent of the
voting common stock of the other entity. However, no “Change in Control” will be deemed to have occurred if Executive
is part of the purchasing group that consummates the Change in Control transaction.
(c)
Executive is entitled to twenty one (21) days of paid time off (“Paid Time Off') per year, in addition to the Company's
normal holidays. Paid Time Off will be scheduled taking into account the Executive's duties and obligations at the Company. Sick
leave, holiday pay and all other leaves of absence will be in accordance with the Company's stated personnel policies. In the
event the Executive's employment is terminated for any reason, Executive shall have the right to compensation for any un-used
Paid Time Off for the last twenty four months.
6. Expenses. The Corporation shall also pay or reimburse the Executive for reasonable
and necessary expenses incurred by the Executive in connection with his duties on behalf of the Corporation, including, but not
limited to all expenses of travel and living expenses while away from home on business or at the request of and in the service
of the Corporation, provided that such expenses are incurred and accounted for in accordance with the policies and procedures
established by the Corporation. Executive shall be entitled to parking expenses (excluding violations) when on the job, be it
at the office or while on business trips.
7. Termination.
(a)
Either party to this Agreement may give the other party written notice of such party's intention to terminate this Agreement and
the employment of the Executive at least ninety (90) days prior to the end of the initial or an extended term.
(b)
The Corporation may, subject to applicable law, terminate this Agreement by giving the Executive Six (6) months notice if the
Executive incurs a condition that prevents Executive from carrying out his essential job functions for a period of Nine (9) months
or longer. The incapacity of the Executive as described in the preceding sentence shall be determined by a medical doctor mutually
selected by the Corporation and the Executive or Executive's representative.
(c)
Any other provision of this Agreement notwithstanding, the Corporation may terminate Executive's employment without notice and
without any further compensation obligations, (except his accrued benefits and any benefit continuation or conversion rights he
may have under the terms of the benefit plan or applicable law) including without limitation any severance pay, if the termination
is based on a material violation of this Agreement, fraud, embezzlement, securities law violation, other gross misconduct which
causes material economic damage to the Corporation or material damage to the business reputation of the Corporation, or an intentional
breach of the confidentiality, non-solicitation and non-competition provisions set forth herein. For purposes of this Agreement,
no act or failure to act on the part of the Executive shall be deemed “intentional” if it was due primarily to an
error in judgment or negligence, but shall be deemed “intentional” only if done or omitted to be done by the Executive
not in good faith and without reasonable belief that his action or omission was in the best interest of the Corporation
(d)
Should the Corporation terminate the Executive's employment for any reason other than those listed in Section 7(c) above, after
12 Months of employment or in the event there is a change in the majority of the directors of the Company, or the sale of a controlling
interest in the stock (other than the contemplated merger with Brazil Interactive Media) of the Company or sale of substantially
all of the assets of the Company's operating subsidiaries, the Executive shall be paid as severance (a) an amount equal to Five
(5) years Base Salary at Executive's then current compensation less customary withholdings, payable in twelve equal installments
on the first day of each calendar month beginning on the first day of the first month after his termination, plus his accrued
benefits and any benefit continuation or conversion rights he may have the terms of the Corporation's benefit plans or applicable
law. This severance pay shall be doubled if the Executive is terminated as a result of a Change in Control of the Corporation
or any subsidiary of the Corporation. The Corporation shall have no other compensation obligations to the Executive.
(e)
Employment and any further compensation obligations, pursuant to this Agreement will be deemed terminated upon the death of the
Executive, except for any compensation obligation that has vested prior to the death of the Executive.
(f)
If the Corporation requires the Executive to relocate, without Executive's consent, to an office more than Fifty (50) miles from
which Executive conducted business as of the date of this Agreement the Executive may resign his position and terminate his employment
hereunder and, in such event, if the Executive so resigns, (i) he shall receive the severance and other entitlements provided
under Section 7(d) above and (ii) all unvested options issued to Executive, if any, shall vest immediately.
(g)
The Executive agrees that after his employment with the Corporation has terminated Executive will provide, upon reasonable notice,
such information and assistance to the Corporation as may reasonably be requested by the Corporation in connection with any litigation
in which it or any of its affiliates is or may become a party; provided, however, that the Corporation agrees to reimburse the
Executive for any related expenses, including travel expenses.
8. Confidentiality, Non-solicitation and Non-competition Agreement.
(a)
Acknowledgment. The Executive acknowledges that in the course of his employment by the Corporation, he will or may have access
to and become informed of confidential and secret information which is a competitive asset of the Corporation (“Confidential
Information”) including, without limitation: (i) the terms of any agreement between the Corporation and any employee, customer
or supplier; (ii) pricing strategy; (iii) merchandising and marketing methods; (iv) product development ideas and strategies;
(v) personnel training and development programs; (vi) financial results; (vii) strategic plans and demographic analyses; (viii)
proprietary computer systems software; (ix) customer information and lists; and (x) any non-public information concerning the
Corporation, its employees, suppliers or customers. The Executive agrees that he will keep all Confidential Information in strict
confidence during the term of his employment by the Corporation and thereafter, and will never directly or indirectly make known,
divulge, reveal, furnish, make available, or use any Confidential Information except in the course of his regular authorized duties
on behalf of the Corporation. The Executive agrees that the obligations of confidentiality hereunder shall survive termination
of his employment at the Corporation regardless of any actual or alleged breach by the Corporation of this Agreement, until and
unless any such Confidential Information shall have become, through no fault of the Executive, generally known to the public or
the Executive is required by law to make disclosure. The Executive's obligations under this Section 8 are in addition to, and
not in limitation of or preemption of, all other obligations of confidentiality which the Executive may have to the Corporation
under general legal or equitable principles.
(b)
Confidential Information. Except in the ordinary course of the Corporation's business, the Executive has not made, nor shall Executive
at any time following the date of the Agreement, make or cause to make, any copies, pictures, duplicates, facsimiles or other
reproductions or recordings or any abstracts or summaries including or reflecting Confidential Information. All such documents
and other property furnished to the Executive by the Corporation or otherwise acquired or developed by the Corporation shall at
all times be the property of the Corporation and the Executive shall not at any time, directly or indirectly, use or disclose,
make known, divulge, reveal or furnish to any person, business, firm or corporation, partnership, or other entity any material
including or reflecting Confidential Information. Upon termination of the Executive's employment with the Corporation, the Executive
will return to the Corporation any such documents or other property of the Corporation which are in the possession, custody or
control of the Executive.
(c)
Competition. Throughout the period following involuntary termination of employment with the Corporation during which termination
payments are being made and accepted by the Executive (hereinafter referred as the “Restricted Period”), the Executive
shall not, directly or indirectly, own, manage, operate, join or control, or participate in the ownership, management, operation
or control of, or be a proprietor, director, officer, stockholder, member, partner or an employee or agent of, or consultant to,
any person, business, division of a business, firm, corporation, partnership or other entity anywhere in the United States of
America which engages in (i) the primary business of the Corporation, and/or (ii) any other principal line of business engaged
in or developed by the Corporation or any subsidiary of the Corporation after the date hereof but prior to the date of termination
of the Executive's employment with the Corporation in any state or country in which the Corporation or any subsidiary has conducted
business during the Measuring Period (hereinafter the “Restricted Business”). The “Measuring Period” shall
be the six (6) month period preceding the date of termination of the Executive's employment with the Corporation.
(d)
Solicitations of Customers. During the Restricted Period, the Executive shall not, directly or indirectly, for his own account
or as proprietor, stockholder, member, partner, director, officer, employee, agent or otherwise for or on behalf of any person,
business, firm corporation, partnership or other entity other than the Corporation, sell or broker, offer to sell or broker or
solicit or assist in the offer to sell or broker or solicit any orders for the purchase of any products or services sold by the
Corporation (including any subsidiaries) or its successors or assigns during the Measuring Period (“Products”) to
or from any person, corporation or other entity which was a customer of the Corporation at any time during the Measuring Period.
For purposes of this Agreement, “customer of the Corporation” means and includes (i) any and all persons, businesses,
corporations, partnerships or other entities which: (A) have done business with the Corporation and its successors and assigns
as a customer during the Measuring Period, (B) have been contacted by the Corporation, its successors and assigns for the purpose
of purchasing products and services, or (C) have preexisting business relationships and/or dealings with the Executive when his
employment with the Corporation terminates and (ii) all persons, businesses, corporations, partnerships or other entities which
control, or are controlled by, the same person, business, corporation, partnership or other entities which control, or are controlled,
by the same person, business, corporation, partnership or other entity which controls any such customer of the Corporation, its
successors and assigns. For the purposes of this Agreement, “customers” includes prospective customers and referral
sources of customers.
(e)
Solicitations of Employees. During the one (1) year period following voluntary or involuntary termination of employment with the
Corporation (whether or not termination payments are being made) and for the additional time thereafter, if any, during which
termination payments are being made, the Executive shall not, directly or indirectly, for his own account or as proprietor, stockholder,
partner, director, officer, employee, agent or otherwise for or on behalf of any person, business, firm, corporation, partnership
or other entity than the Corporation, its successors or assigns solicit any person who is an employee of the Corporation, its
successors and assigns for employment with any person, business, firm, corporation, partnership or other entity other than the
Corporation.
(f)
Cumulative Provisions. The covenants and agreements contained in this Section 8 are independent of each other and cumulative.
(g)
Binding Effect: Third Party Beneficiaries. The provisions of this Section 8 shall inure to the benefit of the Corporation, its
successors and assigns.
(h)
Remedies for Breach. The Executive further acknowledges and agrees that his obligations under this Agreement are unique and that
any breach or threatened breach of such obligations may result in irreparable harm and substantial damages to the Corporation,
its successors and assigns and that the Corporation's remedy at law for any such violation would be inadequate. Accordingly, in
the event of a breach or threatened breach by the Executive of any of the provisions of this Agreement, the Corporation, its successors
and assigns shall have the right, in addition to exercising any other remedies at law or equity which may be available to it under
this Agreement.
(i)
Divisibility. The Executive agrees that the provisions of this Section 8 are divisible and separable so that if any provision
hereof shall be held to be unreasonable, unlawful or unenforceable, such holding shall not impair the remaining provisions hereof.
If any provision hereof is held to be unreasonable, unlawful or unenforceable in duration, geographical scope or character of
restriction of the Executive by any court of competent jurisdiction, it is the express desire and agreement of the Parties that
such provisions shall be modified to the extent necessary in order that such provision or portion thereof shall be legally enforceable
to the fullest extent permitted by law, and the parties hereto do hereby expressly authorize any court of competent jurisdiction
to enforce any such provision or portion thereof or to modify any such provision or portion thereof in order that any such provision
or portion thereof shall be enforced by such court to the fullest extent permitted by applicable law.
9. Indemnification.
(a) The Corporation
will indemnify the Executive to the fullest extent permitted by the laws of the state of Colorado in effect at that time, or certificate
of incorporation and by-laws of the Corporation, whichever affords the greater protection to the Executive. The foregoing notwithstanding,
the Corporation shall not indemnify the Executive for acts of his own negligence, willfulness or malfeasance or if the articles
of incorporation or by-laws prohibit such indemnification.
(b)
The Executive shall notify the Corporation in writing as soon as reasonably practicable after being informed in writing of a claim
from a third party and in respect of which a right of indemnification given pursuant to this Indemnification Agreement may apply.
The Corporation shall have the right to elect, by written notice delivered to the Executive within 10 days of receipt by the Corporation
of the notice from the Executive in respect of the claim, at the sole expense of the Corporation, to participate in or assume
control of the negotiation, settlement or defense of the claim, provided that: such will be done at all times in a diligent and
bona fide matter; the Corporation acknowledges in writing its obligation to indemnify the Executive in accordance with the terms
contained in this Agreement in respect of that claim; and the Corporation shall pay all reasonable out-of-pocket expenses incurred
by the Executive as a result of such participation or assumption.
(c)
If the Corporation elects to assume such control, the Executive shall cooperate with the Corporation and its counsel and shall
have the right to participate in the negotiation, settlement or defense of such claim at his own expense. If the Corporation does
not so elect or, having elected to assume such control, thereafter fails to proceed with the settlement or defense of any such
claim in accordance with paragraphs (a) or (b), the Executive shall be entitled to assume such control. In such case, the Corporation
shall cooperate where necessary with the Executive and his counsel in connection with such claim and The Corporation shall be
bound by the results obtained by the Executive with respect to such claim.
(d)
If any claim is of a nature such that the Executive is required by applicable law to make a payment to any person (a “Third
Party”) with respect to such claim before the completion of settlement negotiations or related legal proceedings, including
all legal fees and expenses relating to the defense and negotiation of a claim for which the Corporation has not elected to assume
control, the Corporation shall, forthwith after demand by the Executive, make such payment on behalf of the Executive or, if the
Executive made such payment, reimburse the Executive for any such payment. If the amount of any liability under the claim in respect
of which such a payment was made, as finally determined, is less than the amount which was paid by the Corporation to the Executive,
the Executive shall, forthwith after receipt of the difference from the Third Party, pay such difference to the Corporation;
(e)
Except in the circumstances contemplated by this section 9, and whether or not the Corporation assumes control of the negotiation,
settlement or defense of any claim, the Executive shall not settle or compromise any claim except with the prior written consent
of the Corporation (which consent shall not be unreasonably withheld). A failure by the Corporation to respond in writing to a
written request by the Executive for consent for a period of ten (10) days or more shall be deemed a consent by the Corporation
to such request;
(f)
The Corporation and the Executive shall provide each other on an ongoing basis with all information which may be relevant to the
other's liability hereunder and shall supply copies of all relevant documentation promptly as they become available; and
(g)
Notwithstanding Section 9(c), if the Executive has assumed control of the negotiation, settlement and defense of a claim, the
Corporation shall not settle any claim or conduct any related legal or administrative proceeding in a manner which would, in the
opinion of the Executive, acting reasonably, have a material adverse impact on the Executive, unless the Executive fails to respond
in writing to a written request by the Corporation for consent to the proposed action by the Corporation within ten (10) days.
A failure by the Executive to respond in writing to a written request by the Corporation for consent for a period of ten (10)
days or more shall be deemed a consent by the Executive to such request.
10. Arbitration. Any dispute between the parties under this Agreement shall be resolved (except as provided below) through informal arbitration by an arbitrator (who is selected as provided below) and under the rules of the American Arbitration Association. The Arbitration shall be conducted under the rules of said Association at the location where the Executive is then employed by the Corporation, provided, however, that the arbitration shall be conducted at the location specified by the Corporation if the Executive's out-of-pocket expenses of travel and lodging are borne by the Corporation. Each party shall be entitled to present evidence and argument to the arbitrator. The arbitrator shall have the right only to interpret and apply the provisions of this Agreement and may not change any of its provisions. The arbitrator shall permit reasonable pre-hearing discovery of facts, to the extent necessary to establish a claim or defense to a claim, subject to supervision by the arbitrator. The determination of the arbitrator shall be conclusive and binding upon the parties and judgment upon the same may be entered in any court having jurisdiction thereof. The arbitrator shall give written notice to the parties stating his or their determination, and shall furnish to each party a signed copy of such determination. The expenses of arbitration shall be borne equally by the Executive and the Corporation or as the arbitrator shall otherwise equitably determine.
In the event the services of an arbitrator are required and if the Executive and Corporation are unable within five (5) days after determining such services are required to agree upon the identity of an arbitrator, within ten (10) days thereafter the Executive and Corporation shall each select an arbitrator and the two arbitrators shall select by mutual agreement an arbitrator. If either party fails to select an arbitrator, then the other party shall select the second arbitrator, and an arbitrator shall be selected by mutual agreement of the two arbitrators. In the event the selected arbitrators are unable to agree on an arbitrator, the two arbitrators shall each select an arbitrator from a list of arbitrator provided by the American Arbitration Association and those arbitrators shall mutually agree upon the selection of an arbitrator who will be the arbitrator.
11. Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the subject matter hereof and contains all of the covenants and agreements between the parties with respect to such subject matter. Each party to this Agreement acknowledges that no representations, inducements, promises, or other agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, pertaining to the subject matter hereof, which are not embodied herein, and that no other agreement, statement, or promise pertaining to the subject matter hereof that is not contained in this Agreement shall be valid or binding on either party. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Corporation. The prior approval by a majority affirmative vote of the full Board shall be required in order for the Corporation to authorize any amendments or additions to this Agreement, to give any consents or waivers of provisions of this Agreement, or to take any other action under this Agreement.
12. Withholding of Taxes. The Corporation may withhold from any amount payable under this Agreement all federal, state or provincial, city or other taxes as the Corporation is required to withhold pursuant to any law or government regulation or ruling.
13. Assignment; Successors and Binding Agreement.
(a)
Assignment by the Corporation. Subject to the terms of this Agreement, the Corporation may assign this Agreement to any entity
merging with or acquiring the Corporation, provided the Corporation's obligations hereunder shall be legal obligations and shall
be assumed by such entity, as set forth in subsection 13(c) below.
(b)
Assignment by Executive. No interest of Executive or his spouse or any other beneficiary under this Agreement, or any right
to receive any payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment
or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligations or debts of, or other claims
against, Executive or his spouse or other beneficiary, including claims for alimony, support, separate maintenance and claims
in bankruptcy proceedings.
(c)
Successors. The Corporation shall require any person or entity which acquired (whether direct or indirect, by purchase, merger,
reorganization, consolidation, acquisition of property or stock, liquidation, or otherwise) all or a substantial portion of the
Corporation's stock or assets, by agreement in form and substance reasonably satisfactory to Executive, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform this
Agreement if no such acquisition had taken place. Regardless of whether such an agreement is executed, this Agreement shall be
binding upon any successor of the Corporation in accordance with the operation of law, and such successor shall be deemed “the
Corporation” for purposes of this Agreement. As used in this Agreement, the term “the Corporation” shall include
any acquirer of or successor to the Corporation's stock, business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
14. Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof confirmed), or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as Federal Express, or UPS addressed to the Corporation (to the attention of the Secretary of the Corporation) at its principal executive offices and to the Executive at his principal residence, or to such other address as either party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address shall be effective only upon receipt.
15. Law and Interpretation. This Agreement shall be governed by, construed and interpreted in accordance with the laws of the State of Colorado without regard for its conflict of laws provisions. With respect to each and every term and condition in this Agreement, the parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the parties hereto desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration shall be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement or any agreement or instrument subject hereto. The parties further acknowledge that they have been advised of the implications of the common representation of the Corporation and the Executive by counsel (with regard to the preparation of this Agreement) and the inherent conflicts of interest that may arise out of such common representation. The parties expressly consent to such common representation and waive any claims that they may have as a result of such common representation.
16. Validity. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of the Agreement and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal.
17. Survival of Provisions. Notwithstanding any other provision of this Agreement, the parties' respective rights and obligations under Sections 5, 7, 8, 9, 10, 11, 13, 14, 15, 16, 17, 19, 20 and 22 will survive any termination or expiration of this Agreement or the termination of Executive's employment for any reason whatsoever.
18. Legal Fees and Expenses. If any action at law or in equity is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to such costs and reasonable attorney's fees, in addition to any other relief to which that party may be entitled. The term “prevailing party” shall mean that party whose position is substantially upheld in a final judgment rendered in such arbitration or litigation.
19. Intellectual Property/Assignment. All ideas, programs, creations, discoveries or inventions, suggestions or improvement by Executive which in any way relate to or connect with any of the Corporation's products, pricing, costs, sales and/or processes shall be the sole property of the Corporation.
20. Waiver. No waiver by either party hereto
at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed
by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent
time. No delay on the part of either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof,
nor shall any waiver on the part of either party of such right, power or privilege nor any single or partial exercise of any such
right, power, or privilege, preclude any other further exercise thereof or the exercise of any other such right, power or privilege.
21. Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which taken together will be deemed to constitute one and the same instrument, notwithstanding that all parties are not signatory to the same counterpart. The exchange of copies of this Agreement and of signature pages by electronic mail or facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by electronic mail or facsimile shall be deemed to be their original signatures for all purposes.
22. Insurance. The Executive shall be indemnified by the Company against liability as an officer and director of the Company and any subsidiary or affiliate of the Company to the maximum extent permitted by applicable law or the By-Laws of the Company, whichever is greater. The foregoing indemnification and directors and officers liability insurance coverage shall continue to apply following termination of the Executive's employment hereunder for Executive's actions and omissions during the period of Executive's employment with the Corporation, except with respect to the Executive's own acts of negligence, willfulness or malfeasance.
23. Currency. All references to currencies within this Agreement are in US dollars except where otherwise specified.
24. Headings. Headings in this Agreement are for informational purposes only and will not be used to construe the intent of this Agreement.
IN WITNESS WHEREOF, the parties hereof
have executed this Agreement as of the day and year first written.
HOLLISTER & BLACKSMITH, INC.,
a Colorado corporation
/s/ Ellis Smith
By: Ellis Smith, Chief Development Officer
EXECUTIVE:
/s/ Corey Hollister
Corey Hollister
SCHEDULE A
SALARY
1. | | Annual Base Salary of; Seventy Five Thousand Dollars. ($75,000.00) |
2. | | Executive Incentive Bonus Schedule; Paid to Executive as described in per paragraph
4d A. 5% of net annual income, if net annual income exceeds 1,000,000.00 |
3. | | Compensation to be reviewed quarterly for year one and annually thenceforth. |
HOLLISTER & BLACKSMITH, INC.,
a Colorado corporation
By: /s/ Ellis Smith
Ellis Smith, Chief Development Officer
EXECUTIVE:
By: /s/ Corey Hollister
Corey Hollister
EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement
(this “Agreement”) is made and entered into as of the day of April 29th, 2014, by and between Hollister
& Blacksmith, Inc., a Colorado corporation (the “Corporation”) and Ellis Smith (the “Executive”) as
follows:
WITNESSETH:
WHEREAS, the Executive
is currently serving as the Chief Development Officer of the Corporation; and
WHEREAS, the parties
hereby desire to enter into this Agreement to set forth the terms and conditions for the employment relationship of the Executive
with the Corporation; and
WHEREAS, the Board
of Directors of the Corporation (the “Board”) has approved and authorized the Corporation's execution and entry into
this Agreement with the Executive; and
NOW, THEREFORE,
in consideration of the mutual covenants herein contained, and such other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. Incorporation of Recitals. The above recitals are hereby incorporated into and made a part of this Agreement.
2. Term. Employment shall be for a term commencing on the date hereof and expiring five (5) years from the date hereof, unless terminated earlier pursuant to Section 7 hereof. Notwithstanding the previous sentence, this Agreement and the employment of the Executive shall be automatically renewed (subject to Section 7) for successive one-year periods upon the terms and conditions set forth herein, commencing on the fifth anniversary of the date of this Agreement, and on each anniversary date thereafter. For purposes of this Agreement, any reference to the “term” of this Agreement shall include the original term and any extension thereof.
3. Employment of the Executive/Duties of the Executive.
(a)
The Corporation hereby agrees to employ the Executive as Chief Development Officer of the Corporation and the Executive hereby
agrees to be employed by the Corporation in such capacity upon the terms and conditions herein set forth.
(b)
The Executive shall serve as Chief Development Officer of the Corporation, reporting to the Board. The Executive shall devote
business time, efforts, attention, skill and energy to the Company's business as Executive deems necessary to fulfill his responsibilities.
During the term of this agreement the Executive may serve as an officer, director or otherwise participate in educational, welfare,
social, religious and civic organizations. The Executive shall endeavor to devote a minimum of 40 hour per week of his time to
the Corporation.
(c)
Executive agrees that he will at all times faithfully, industriously, and to the best of his ability, experience, and
talents, perform all of the duties that may be required of and from him pursuant to the express and implicit terms of this
Agreement, to the reasonable satisfaction of the Company.
(d)
Before the end of each of the Company's fiscal years, the Executive shall meet with the Board to set agreed management performance
objectives for the Executive for the upcoming year which shall be formally reviewed annually, with informal reviews to be performed
from time to time throughout the year.
4. Compensation; Base Salary; Bonuses; Milestones.
(a)
During the term of this Agreement, the Corporation shall pay to the Executive a base salary in the amount set forth in Schedule
A per annum (“Annual Base Salary”), which Annual Base Salary may be adjusted from time to time by the Corporation,
payable in equal bimonthly installments and in the manner consistent with the Corporation's general policies regarding compensation
of executive employees.
(b)
The Board (or a committee of the Board) shall review Executive's Annual Base Salary compensation quarterly for the first year
and annually thenceforth at the conclusion of the Company's fiscal year, and make a recommendation for any adjustment to the then-current
Base Salary. Subject to the immediately preceding sentence, the actual increase in Executive's Annual Base Salary shall be made
within the Board's sole judgment and discretion and shall be based, in part, on an analysis of total compensation paid to Executive
officers of comparable entities within this region and any other criteria the Board determines are appropriate.
(c)
After the first year of this Agreement, if the Board authorizes cash incentive compensation to the other executive officers of
the Corporation, the Executive shall be eligible to participate in such plan, program or arrangement as determined by the Board
in its sole discretion.
(d)
The Board (or a committee of the Board) shall review Executive's performance at the conclusion of the Company's fiscal year, and
make a recommendation for any annual incentive bonus compensation for the Executive. Any bonus shall be paid to the Executive
in a lump sum no later than April 15th of the year following the year in which the bonus compensation was earned. Subject
to the immediately preceding sentence, the amount of any such bonus, as determined by the Board in the exercise of its reasonable
discretion will be based on, among other things, the Company's performance for the completed fiscal year (December 31) as reflected
by such factors as gross revenue, net profits, and achievement of specific predetermined goals, including without limitation development
of a strategic acquisition and organic growth plan. Executive shall also be eligible to participate in such other bonus or incentive
compensation programs as may be established by the Company for other executives.
5. Executive Benefits.
(a)
In addition to the compensation described in Section 4, the Corporation shall make available to the Executive, subject to
the terms and conditions of the applicable plans, including without limitation the eligibility rules, participation for the
Executive and the Executive eligible dependents contingent for the corporation to operate and not impact operations and
maintain all liabilities in the Corporation-sponsored employee benefit plans or arrangements and such other usual and
customary benefits now or hereafter generally available to employees of the Corporation. If approved by the board benefit
plans will include health insurance, Life insurance, disability insurance, and all other normal and customary benefits such
as paid vacation. Executive shall also be entitled to participate in, or enjoy the benefit of, any other fringe benefits or
prerequisites that are now or may be or become applicable to the Corporation's executive employees, including any executive
stock option plan or program adopted for executive officers of the Company. The Corporation is not obligated to provide or
continue any of these benefits and may on an executive group basis, without prior notice, discontinue any benefit already
provided or as may be provided in the future, within the exclusive discretion of the Board, however in such event the
Executive shall be entitled to received any benefits, accrued but unpaid as of the effective date of any such discontinuance
of benefits.
(b)
In the event of Change in Control, as hereafter defined, or involuntary termination of the Executive's employment hereunder, any
unvested stock option of the Executive will immediately vest. For purposes of this Agreement, a “Change in Control”
will be deemed to have occurred is there is a merger or consolidation of the Corporation, or any sale, lease or exchange of all
or substantially all of the consolidated assets of the Corporation and its subsidiaries (if any) to any other entity or person,
and (a) in the case of a merger or consolidation, if the voting stockholders of the Corporation before the transaction hold less
than fifty-one percent (51%) of the voting common stock of the survivor of such merger or consolidation or its parent corporation,
or (b) in the case of a sale, lease or exchange, the Corporation does not own at least fifty-one percent (51%) percent of the
voting common stock of the other entity. However, no “Change in Control” will be deemed to have occurred if Executive
is part of the purchasing group that consummates the Change in Control transaction.
(c)
Executive is entitled to twenty one (21) days of paid time off (“Paid Time Off') per year, in addition to the Company's
normal holidays. Paid Time Off will be scheduled taking into account the Executive's duties and obligations at the Company. Sick
leave, holiday pay and all other leaves of absence will be in accordance with the Company's stated personnel policies. In the
event the Executive's employment is terminated for any reason, Executive shall have the right to compensation for any un-used
Paid Time Off for the last twenty four months.
6. Expenses. The Corporation shall also pay or reimburse the Executive for reasonable
and necessary expenses incurred by the Executive in connection with his duties on behalf of the Corporation, including, but not
limited to all expenses of travel and living expenses while away from home on business or at the request of and in the service
of the Corporation, provided that such expenses are incurred and accounted for in accordance with the policies and procedures
established by the Corporation. Executive shall be entitled to parking expenses (excluding violations) when on the job, be it
at the office or while on business trips.
7. Termination.
(a)
Either party to this Agreement may give the other party written notice of such party's intention to terminate this Agreement and
the employment of the Executive at least ninety (90) days prior to the end of the initial or an extended term.
(b)
The Corporation may, subject to applicable law, terminate this Agreement by giving the Executive Six (6) months notice if the
Executive incurs a condition that prevents Executive from carrying out his essential job functions for a period of Nine (9) months
or longer. The incapacity of the Executive as described in the preceding sentence shall be determined by a medical doctor mutually
selected by the Corporation and the Executive or Executive's representative.
(c)
Any other provision of this Agreement notwithstanding, the Corporation may terminate Executive's employment without notice and
without any further compensation obligations, (except his accrued benefits and any benefit continuation or conversion rights he
may have under the terms of the benefit plan or applicable law) including without limitation any severance pay, if the termination
is based on a material violation of this Agreement, fraud, embezzlement, securities law violation, other gross misconduct which
causes material economic damage to the Corporation or material damage to the business reputation of the Corporation, or an intentional
breach of the confidentiality, non-solicitation and non-competition provisions set forth herein. For purposes of this Agreement,
no act or failure to act on the part of the Executive shall be deemed “intentional” if it was due primarily to an
error in judgment or negligence, but shall be deemed “intentional” only if done or omitted to be done by the Executive
not in good faith and without reasonable belief that his action or omission was in the best interest of the Corporation
(d)
Should the Corporation terminate the Executive's employment for any reason other than those listed in Section 7(c) above, after
12 Months of employment or in the event there is a change in the majority of the directors of the Company, or the sale of a controlling
interest in the stock (other than the contemplated merger with Brazil Interactive Media) of the Company or sale of substantially
all of the assets of the Company's operating subsidiaries, the Executive shall be paid as severance (a) an amount equal to Five
(5) years Base Salary at Executive's then current compensation less customary withholdings, payable in twelve equal installments
on the first day of each calendar month beginning on the first day of the first month after his termination, plus his accrued
benefits and any benefit continuation or conversion rights he may have the terms of the Corporation's benefit plans or applicable
law. This severance pay shall be doubled if the Executive is terminated as a result of a Change in Control of the Corporation
or any subsidiary of the Corporation. The Corporation shall have no other compensation obligations to the Executive.
(e)
Employment and any further compensation obligations, pursuant to this Agreement will be deemed terminated upon the death of the
Executive, except for any compensation obligation that has vested prior to the death of the Executive.
(f)
If the Corporation requires the Executive to relocate, without Executive's consent, to an office more than Fifty (50) miles
from which Executive conducted business as of the date of this Agreement the Executive may resign his position and terminate
his employment hereunder and, in such event, if the Executive so resigns, (i) he shall receive the severance and other
entitlements provided under Section 7(d) above and (ii) all unvested options issued to Executive, if any, shall vest
immediately.
(g)
The Executive agrees that after his employment with the Corporation has terminated Executive will provide, upon reasonable notice,
such information and assistance to the Corporation as may reasonably be requested by the Corporation in connection with any litigation
in which it or any of its affiliates is or may become a party; provided, however, that the Corporation agrees to reimburse the
Executive for any related expenses, including travel expenses.
8. Confidentiality, Non-solicitation and Non-competition Agreement.
(a)
Acknowledgment. The Executive acknowledges that in the course of his employment by the Corporation, he will or may have access
to and become informed of confidential and secret information which is a competitive asset of the Corporation (“Confidential
Information”) including, without limitation: (i) the terms of any agreement between the Corporation and any employee, customer
or supplier; (ii) pricing strategy; (iii) merchandising and marketing methods; (iv) product development ideas and strategies;
(v) personnel training and development programs; (vi) financial results; (vii) strategic plans and demographic analyses; (viii)
proprietary computer systems software; (ix) customer information and lists; and (x) any non-public information concerning the
Corporation, its employees, suppliers or customers. The Executive agrees that he will keep all Confidential Information in strict
confidence during the term of his employment by the Corporation and thereafter, and will never directly or indirectly make known,
divulge, reveal, furnish, make available, or use any Confidential Information except in the course of his regular authorized duties
on behalf of the Corporation. The Executive agrees that the obligations of confidentiality hereunder shall survive termination
of his employment at the Corporation regardless of any actual or alleged breach by the Corporation of this Agreement, until and
unless any such Confidential Information shall have become, through no fault of the Executive, generally known to the public or
the Executive is required by law to make disclosure. The Executive's obligations under this Section 8 are in addition to, and
not in limitation of or preemption of, all other obligations of confidentiality which the Executive may have to the Corporation
under general legal or equitable principles.
(b)
Confidential Information. Except in the ordinary course of the Corporation's business, the Executive has not made, nor shall Executive
at any time following the date of the Agreement, make or cause to make, any copies, pictures, duplicates, facsimiles or other
reproductions or recordings or any abstracts or summaries including or reflecting Confidential Information. All such documents
and other property furnished to the Executive by the Corporation or otherwise acquired or developed by the Corporation shall at
all times be the property of the Corporation and the Executive shall not at any time, directly or indirectly, use or disclose,
make known, divulge, reveal or furnish to any person, business, firm or corporation, partnership, or other entity any material
including or reflecting Confidential Information. Upon termination of the Executive's employment with the Corporation, the Executive
will return to the Corporation any such documents or other property of the Corporation which are in the possession, custody or
control of the Executive.
(c)
Competition. Throughout the period following involuntary termination of employment with the Corporation during which termination
payments are being made and accepted by the Executive (hereinafter referred as the “Restricted Period”), the Executive
shall not, directly or indirectly, own, manage, operate, join or control, or participate in the ownership, management, operation
or control of, or be a proprietor, director, officer, stockholder, member, partner or an employee or agent of, or consultant to,
any person, business, division of a business, firm, corporation, partnership or other entity anywhere in the United States of
America which engages in (i) the primary business of the Corporation, and/or (ii) any other principal line of business engaged
in or developed by the Corporation or any subsidiary of the Corporation after the date hereof but prior to the date of termination
of the Executive's employment with the Corporation in any state or country in which the Corporation or any subsidiary has conducted
business during the Measuring Period (hereinafter the “Restricted Business”). The “Measuring Period” shall
be the six (6) month period preceding the date of termination of the Executive's employment with the Corporation.
(d)
Solicitations of Customers. During the Restricted Period, the Executive shall not, directly or indirectly, for his own account
or as proprietor, stockholder, member, partner, director, officer, employee, agent or otherwise for or on behalf of any person,
business, firm corporation, partnership or other entity other than the Corporation, sell or broker, offer to sell or broker or
solicit or assist in the offer to sell or broker or solicit any orders for the purchase of any products or services sold by the
Corporation (including any subsidiaries) or its successors or assigns during the Measuring Period (“Products”) to
or from any person, corporation or other entity which was a customer of the Corporation at any time during the Measuring Period.
For purposes of this Agreement, “customer of the Corporation” means and includes (i) any and all persons, businesses,
corporations, partnerships or other entities which: (A) have done business with the Corporation and its successors and assigns
as a customer during the Measuring Period, (B) have been contacted by the Corporation, its successors and assigns for the purpose
of purchasing products and services, or (C) have preexisting business relationships and/or dealings with the Executive when his
employment with the Corporation terminates and (ii) all persons, businesses, corporations, partnerships or other entities which
control, or are controlled by, the same person, business, corporation, partnership or other entities which control, or are controlled,
by the same person, business, corporation, partnership or other entity which controls any such customer of the Corporation, its
successors and assigns. For the purposes of this Agreement, “customers” includes prospective customers and referral
sources of customers.
(e)
Solicitations of Employees. During the one (1) year period following voluntary or involuntary termination of employment with the
Corporation (whether or not termination payments are being made) and for the additional time thereafter, if any, during which
termination payments are being made, the Executive shall not, directly or indirectly, for his own account or as proprietor, stockholder,
partner, director, officer, employee, agent or otherwise for or on behalf of any person, business, firm, corporation, partnership
or other entity than the Corporation, its successors or assigns solicit any person who is an employee of the Corporation, its
successors and assigns for employment with any person, business, firm, corporation, partnership or other entity other than the
Corporation.
(f)
Cumulative Provisions. The covenants and agreements contained in this Section 8 are independent of each other and cumulative.
(g)
Binding Effect: Third Party Beneficiaries. The provisions of this Section 8 shall inure to the benefit of the Corporation, its
successors and assigns.
(h)
Remedies for Breach. The Executive further acknowledges and agrees that his obligations under this Agreement are unique and that
any breach or threatened breach of such obligations may result in irreparable harm and substantial damages to the Corporation,
its successors and assigns and that the Corporation's remedy at law for any such violation would be inadequate. Accordingly, in
the event of a breach or threatened breach by the Executive of any of the provisions of this Agreement, the Corporation, its successors
and assigns shall have the right, in addition to exercising any other remedies at law or equity which may be available to it under
this Agreement.
(i)
Divisibility. The Executive agrees that the provisions of this Section 8 are divisible and separable so that if any provision
hereof shall be held to be unreasonable, unlawful or unenforceable, such holding shall not impair the remaining provisions hereof.
If any provision hereof is held to be unreasonable, unlawful or unenforceable in duration, geographical scope or character of
restriction of the Executive by any court of competent jurisdiction, it is the express desire and agreement of the Parties that
such provisions shall be modified to the extent necessary in order that such provision or portion thereof shall be legally enforceable
to the fullest extent permitted by law, and the parties hereto do hereby expressly authorize any court of competent jurisdiction
to enforce any such provision or portion thereof or to modify any such provision or portion thereof in order that any such provision
or portion thereof shall be enforced by such court to the fullest extent permitted by applicable law.
9. Indemnification.
(a) The Corporation
will indemnify the Executive to the fullest extent permitted by the laws of the state of Colorado in effect at that time, or certificate
of incorporation and by-laws of the Corporation, whichever affords the greater protection to the Executive. The foregoing notwithstanding,
the Corporation shall not indemnify the Executive for acts of his own negligence, willfulness or malfeasance or if the articles
of incorporation or by-laws prohibit such indemnification.
(b)
The Executive shall notify the Corporation in writing as soon as reasonably practicable after being informed in writing of a claim
from a third party and in respect of which a right of indemnification given pursuant to this Indemnification Agreement may apply.
The Corporation shall have the right to elect, by written notice delivered to the Executive within 10 days of receipt by the Corporation
of the notice from the Executive in respect of the claim, at the sole expense of the Corporation, to participate in or assume
control of the negotiation, settlement or defense of the claim, provided that: such will be done at all times in a diligent and
bona fide matter; the Corporation acknowledges in writing its obligation to indemnify the Executive in accordance with the terms
contained in this Agreement in respect of that claim; and the Corporation shall pay all reasonable out-of-pocket expenses incurred
by the Executive as a result of such participation or assumption.
(c)
If the Corporation elects to assume such control, the Executive shall cooperate with the Corporation and its counsel and shall
have the right to participate in the negotiation, settlement or defense of such claim at his own expense. If the Corporation does
not so elect or, having elected to assume such control, thereafter fails to proceed with the settlement or defense of any such
claim in accordance with paragraphs (a) or (b), the Executive shall be entitled to assume such control. In such case, the Corporation
shall cooperate where necessary with the Executive and his counsel in connection with such claim and The Corporation shall be
bound by the results obtained by the Executive with respect to such claim.
(d)
If any claim is of a nature such that the Executive is required by applicable law to make a payment to any person (a “Third
Party”) with respect to such claim before the completion of settlement negotiations or related legal proceedings, including
all legal fees and expenses relating to the defense and negotiation of a claim for which the Corporation has not elected to assume
control, the Corporation shall, forthwith after demand by the Executive, make such payment on behalf of the Executive or, if the
Executive made such payment, reimburse the Executive for any such payment. If the amount of any liability under the claim in respect
of which such a payment was made, as finally determined, is less than the amount which was paid by the Corporation to the Executive,
the Executive shall, forthwith after receipt of the difference from the Third Party, pay such difference to the Corporation;
(e)
Except in the circumstances contemplated by this section 9, and whether or not the Corporation assumes control of the negotiation,
settlement or defense of any claim, the Executive shall not settle or compromise any claim except with the prior written consent
of the Corporation (which consent shall not be unreasonably withheld). A failure by the Corporation to respond in writing to a
written request by the Executive for consent for a period of ten (10) days or more shall be deemed a consent by the Corporation
to such request;
(f)
The Corporation and the Executive shall provide each other on an ongoing basis with all information which may be relevant to the
other's liability hereunder and shall supply copies of all relevant documentation promptly as they become available; and
(g)
Notwithstanding Section 9(c), if the Executive has assumed control of the negotiation, settlement and defense of a claim, the
Corporation shall not settle any claim or conduct any related legal or administrative proceeding in a manner which would, in the
opinion of the Executive, acting reasonably, have a material adverse impact on the Executive, unless the Executive fails to respond
in writing to a written request by the Corporation for consent to the proposed action by the Corporation within ten (10) days.
A failure by the Executive to respond in writing to a written request by the Corporation for consent for a period of ten (10)
days or more shall be deemed a consent by the Executive to such request.
10. Arbitration. Any dispute between the parties under this Agreement shall be resolved (except as provided below) through informal arbitration by an arbitrator (who is selected as provided below) and under the rules of the American Arbitration Association. The Arbitration shall be conducted under the rules of said Association at the location where the Executive is then employed by the Corporation, provided, however, that the arbitration shall be conducted at the location specified by the Corporation if the Executive's out-of-pocket expenses of travel and lodging are borne by the Corporation. Each party shall be entitled to present evidence and argument to the arbitrator. The arbitrator shall have the right only to interpret and apply the provisions of this Agreement and may not change any of its provisions. The arbitrator shall permit reasonable pre-hearing discovery of facts, to the extent necessary to establish a claim or defense to a claim, subject to supervision by the arbitrator. The determination of the arbitrator shall be conclusive and binding upon the parties and judgment upon the same may be entered in any court having jurisdiction thereof. The arbitrator shall give written notice to the parties stating his or their determination, and shall furnish to each party a signed copy of such determination. The expenses of arbitration shall be borne equally by the Executive and the Corporation or as the arbitrator shall otherwise equitably determine.
In the event the services of an arbitrator are required and if the Executive and Corporation are unable within five (5) days after determining such services are required to agree upon the identity of an arbitrator, within ten (10) days thereafter the Executive and Corporation shall each select an arbitrator and the two arbitrators shall select by mutual agreement an arbitrator. If either party fails to select an arbitrator, then the other party shall select the second arbitrator, and an arbitrator shall be selected by mutual agreement of the two arbitrators. In the event the selected arbitrators are unable to agree on an arbitrator, the two arbitrators shall each select an arbitrator from a list of arbitrator provided by the American Arbitration Association and those arbitrators shall mutually agree upon the selection of an arbitrator who will be the arbitrator.
11. Agreement. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the subject matter hereof and contains all of the covenants and agreements between the parties with respect to such subject matter. Each party to this Agreement acknowledges that no representations, inducements, promises, or other agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, pertaining to the subject matter hereof, which are not embodied herein, and that no other agreement, statement, or promise pertaining to the subject matter hereof that is not contained in this Agreement shall be valid or binding on either party. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Corporation. The prior approval by a majority affirmative vote of the full Board shall be required in order for the Corporation to authorize any amendments or additions to this Agreement, to give any consents or waivers of provisions of this Agreement, or to take any other action under this Agreement.
12. Withholding of Taxes. The Corporation may withhold from any amount payable under this Agreement all federal, state or provincial, city or other taxes as the Corporation is required to withhold pursuant to any law or government regulation or ruling.
13. Assignment; Successors and Binding Agreement.
(a)
Assignment by the Corporation. Subject to the terms of this Agreement, the Corporation may assign this Agreement to any entity
merging with or acquiring the Corporation, provided the Corporation's obligations hereunder shall be legal obligations and shall
be assumed by such entity, as set forth in subsection 13(c) below.
(b)
Assignment by Executive. No interest of Executive or his spouse or any other beneficiary under this Agreement, or any right
to receive any payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment or other alienation or encumbrance of any kind, nor may such interest or right to receive a payment
or distribution be taken, voluntarily or involuntarily, for the satisfaction of the obligations or debts of, or other claims
against, Executive or his spouse or other beneficiary, including claims for alimony, support, separate maintenance and claims
in bankruptcy proceedings.
(c)
Successors. The Corporation shall require any person or entity which acquired (whether direct or indirect, by purchase, merger,
reorganization, consolidation, acquisition of property or stock, liquidation, or otherwise) all or a substantial portion of the
Corporation's stock or assets, by agreement in form and substance reasonably satisfactory to Executive, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform this
Agreement if no such acquisition had taken place. Regardless of whether such an agreement is executed, this Agreement shall be
binding upon any successor of the Corporation in accordance with the operation of law, and such successor shall be deemed “the
Corporation” for purposes of this Agreement. As used in this Agreement, the term “the Corporation” shall include
any acquirer of or successor to the Corporation's stock, business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
14. Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof confirmed), or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as Federal Express, or UPS addressed to the Corporation (to the attention of the Secretary of the Corporation) at its principal executive offices and to the Executive at his principal residence, or to such other address as either party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address shall be effective only upon receipt.
15. Law and Interpretation. This Agreement shall be governed by, construed and interpreted in accordance with the laws of the State of Colorado without regard for its conflict of laws provisions. With respect to each and every term and condition in this Agreement, the parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the parties hereto desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration shall be given to the issue of which party hereto actually prepared, drafted or requested any term or condition of this Agreement or any agreement or instrument subject hereto. The parties further acknowledge that they have been advised of the implications of the common representation of the Corporation and the Executive by counsel (with regard to the preparation of this Agreement) and the inherent conflicts of interest that may arise out of such common representation. The parties expressly consent to such common representation and waive any claims that they may have as a result of such common representation.
16. Validity. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of the Agreement and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal.
17. Survival of Provisions. Notwithstanding any other provision of this Agreement, the parties' respective rights and obligations under Sections 5, 7, 8, 9, 10, 11, 13, 14, 15, 16, 17, 19, 20 and 22 will survive any termination or expiration of this Agreement or the termination of Executive's employment for any reason whatsoever.
18. Legal Fees and Expenses. If any action at law or in equity is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to such costs and reasonable attorney's fees, in addition to any other relief to which that party may be entitled. The term “prevailing party” shall mean that party whose position is substantially upheld in a final judgment rendered in such arbitration or litigation
19. Intellectual Property/Assignment. All ideas, programs, creations, discoveries or inventions, suggestions or improvement by Executive which in any way relate to or connect with any of the Corporation's products, pricing, costs, sales and/or processes shall be the sole property of the Corporation.
20. Waiver. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No delay on the part of either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of either party of such right, power or privilege nor any single or partial exercise of any such right, power, or privilege, preclude any other further exercise thereof or the exercise of any other such right, power or privilege.
21. Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which taken together will be deemed to constitute one and the same instrument, notwithstanding that all parties are not signatory to the same counterpart. The exchange of copies of this Agreement and of signature pages by electronic mail or facsimile transmission shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by electronic mail or facsimile shall be deemed to be their original signatures for all purposes.
22. Insurance. The Executive shall be indemnified by the Company against liability as an officer and director of the Company and any subsidiary or affiliate of the Company to the maximum extent permitted by applicable law or the By-Laws of the Company, whichever is greater. The foregoing indemnification and directors and officers liability insurance coverage shall continue to apply following termination of the Executive's employment hereunder for Executive's actions and omissions during the period of Executive's employment with the Corporation, except with respect to the Executive's own acts of negligence, willfulness or malfeasance
23. Currency. All references to currencies within this Agreement are in US dollars except where otherwise specified.
24. Headings. Headings in this Agreement are for informational purposes only and will not be used to construe the intent of this Agreement.
IN WITNESS WHEREOF, the parties hereof
have executed this Agreement as of the day and year first written.
HOLLISTER & BLACKSMITH, INC.,
a Colorado corporation
/s/ Corey Hollister
By: Corey Hollister, Chief Executive Officer
EXECUTIVE:
/s/ Ellis Smith
Ellis Smith
SCHEDULE A
SALARY
1. | | Annual Base Salary of; Seventy Five Thousand Dollars. ($75,000.00) |
2. | | Executive Incentive Bonus Schedule; Paid to Executive as described in per paragraph
4d A. 5% of net annual income, if net annual income exceeds 1,000,000.00 |
3. | | Compensation to be reviewed quarterly for year one and annually thenceforth. |
HOLLISTER & BLACKSMITH, INC.,
a Colorado corporation
By: /s/ Corey Hollister
Corey Hollister, Chief Executive Officer
EXECUTIVE:
By: /s/ Ellis Smith
Ellis Smith
EXHIBIT 99.1
![https:||www.sec.gov|Archives|edgar|data|945617|000072174814000956|image_026.jpg](image_005.jpg)
7951 SW 6th St., Suite. 216
Plantation, FL 33324
Tel: 954-424-2345
Fax: 954-424-2230
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Shareholders
Hollister & Blacksmith, Inc.
dba American Cannabis Consulting:
We have audited the accompanying balance sheet
of Hollister & Blacksmith, Inc. dba American Cannabis Consulting (“the Company”) as of December 31, 2013, and
the related income statement, shareholders’ equity and cash flows for the period from inception (March 5, 2013) through
December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required
to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by the management, as well
as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013, and the results
of its operations, changes in shareholders’ equity and cash flows for the period from inception (March 5, 2013) through
December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.
/s/ Bongiovanni & Associates, PA
Bongiovanni & Associates, PA
Certified Public Accountants
Plantation, Florida
The United States of America
July 23, 2014
www.ba.cpa.net
HOLLISTER & BLACKSMITH, INC. |
D/B/A AMERICAN CANNABIS CONSULTING |
BALANCE SHEET |
DECEMBER 31, 2013 |
| |
|
| |
|
| |
December 31, |
| |
2013 |
| |
| | |
ASSETS | |
| | |
| |
| | |
CURRENT ASSETS | |
| | |
Cash and cash equivalents | |
$ | 17,597 | |
Prepaid expenses | |
| 4,368 | |
Accounts receivable, net | |
| 1,250 | |
Total current assets | |
| 23,215 | |
| |
| | |
PROPERTY AND EQUIPMENT, net | |
| 1,765 | |
| |
| | |
Total assets | |
$ | 24,980 | |
| |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | |
| |
| | |
CURRENT LIABILITIES | |
| | |
Deferred revenue | |
| 11,109 | |
Due to director | |
| 3,006 | |
Accrued expenses | |
| 1,698 | |
Accrued payroll liabilities | |
| 636 | |
Accounts payable | |
| 152 | |
Total current liabilities | |
| 16,601 | |
| |
| | |
Total liabilities | |
| 16,601 | |
| |
| | |
| |
| | |
SHAREHOLDERS’ EQUITY | |
| | |
Common stock, $.001 par value; 12,000 shares authorized; 8,000 shares issued and
outstanding as of December 31, 2013 | |
| 8 | |
Additional paid in capital | |
| 792 | |
Retained earnings | |
| 7,579 | |
Total shareholders’ equity | |
| 8,379 | |
| |
| | |
| |
| | |
Total liabilities and shareholders’ equity | |
$ | 24,980 | |
The Report of Independent Registered Public
Accounting Firm and accompanying notes are an integral part of these financial statements.
HOLLISTER & BLACKSMITH, INC. |
D/B/A AMERICAN CANNABIS CONSULTING |
STATEMENT OF OPERATIONS DECEMBER 31, 2013 |
|
| |
From March 5, 2013 |
| |
(Date of Inception) through |
| |
December 31, 2013 |
| |
| | |
REVENUES | |
| | |
Consulting and advisory | |
$ | 70,273 | |
Supplies | |
| 5,063 | |
Total revenues | |
$ | 75,336 | |
| |
| | |
COST OF REVENUES | |
| | |
Compensation and fees for services | |
| 15,215 | |
Travel and other expense for services | |
| 3,982 | |
Cost of supplies | |
| 4,060 | |
Total cost of revenues | |
| 23,257 | |
| |
| | |
GROSS PROFIT | |
| 52,079 | |
| |
| | |
OPERATING EXPENSES | |
| | |
General and administrative expenses | |
| 13,530 | |
Selling and marketing expenses | |
| 19,608 | |
Total operating expenses | |
| 33,138 | |
| |
| | |
INCOME FROM OPERATIONS | |
| 18,941 | |
| |
| | |
NET INCOME | |
$ | 18,941 | |
| |
| | |
| |
| | |
Basic and fully diluted net income per common share | |
$ | 2.36 | |
| |
| | |
Weighted average common shares outstanding | |
| 8,000 | |
The Report of Independent Registered Public
Accounting Firm and accompanying notes are an integral part of these financial statements.
HOLLISTER & BLACKSMITH, INC. |
D/B/A AMERICAN CANNABIS CONSULTING |
STATEMENT OF STOCKHOLDERS' EQUITY DECEMBER 31, 2013 |
| |
| |
| |
| |
| |
|
| |
Common Stock, $.001 Par, | |
| |
| |
Total |
| |
12,000 Shares Authorized | |
Additional | |
Retained | |
Shareholders’ |
| |
Shares | |
Amount | |
Paid in Capital | |
Earnings | |
Equity |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
BALANCE, March 5, 2013 (Date of Inception) | |
| — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock | |
| 8,000 | | |
| 8 | | |
| 792 | | |
| — | | |
| 800 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income | |
| — | | |
| — | | |
| — | | |
| 18,941 | | |
| 18,941 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Distributions | |
| — | | |
| — | | |
| — | | |
| (11,362 | ) | |
| (11,362 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
BALANCE, December 31, 2013 | |
| 8,000 | | |
$ | 8 | | |
$ | 792 | | |
$ | 7,579 | | |
$ | 8,379 | |
The Report of Independent Registered Public
Accounting Firm and accompanying notes are an integral part of these financial statements.
HOLLISTER & BLACKSMITH, INC. |
D/B/A AMERICAN CANNABIS CONSULTING |
STATEMENT OF CASH FLOWS DECEMBER 31, 2013 |
| |
From March 5, 2013 |
| |
(Date of Inception) through |
| |
December 31, 2013 |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | |
Net income | |
$ | 18,941 | |
Adjustments to reconcile net income to net cash provided | |
| | |
by operating activities | |
| | |
Depreciation | |
| 486 | |
Changes in operating assets and liabilities: | |
| | |
Prepaid expenses | |
| (4,368 | ) |
Accounts receivable | |
| (1,250 | ) |
Deferred revenue | |
| 11,109 | |
Due to director | |
| 3,006 | |
Accrued expenses | |
| 1,698 | |
Accrued payroll liabilities | |
| 636 | |
Accounts payable | |
| 152 | |
Net cash provided by operating activities | |
| 30,410 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| | |
Purchase of property and equipment | |
| (2,251 | ) |
Net cash used in investing activities | |
| (2,251 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| | |
Proceeds from issuance of common stock | |
| 800 | |
| |
| (11,362 | ) |
Net cash used in financing activities | |
| (10,562 | ) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | |
| 17,597 | |
CASH AND CASH EQUIVALENTS, beginning of period | |
| — | |
CASH AND CASH EQUIVALENTS, end of year | |
$ | 17,597 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |
$ | | |
Cash paid during the period for interest | |
| | |
Cash paid during the period for income taxes | |
$ | | |
The Report of Independent Registered Public
Accounting Firm and accompanying notes are an integral part of these financial statements.
Note 1. Organization and Description of Business
Hollister & Blacksmith, Inc. d/b/a
American Cannabis Consulting (the “Company” or “ACC”) was incorporated on March 5, 2013 under the laws
of the State of Colorado. ACC is based out of Denver, CO, and operates a fully integrated business model that features end-to-end
solutions for businesses operating in the cannabis industry in states and countries where cannabis is regulated and has been de-criminalized
for medical use and/or legalized for recreational use.
ACC provides its clients end-to-end
solutions based on its specialized knowledge of and experience with operating in regulated cannabis industries. ACC is both a
consulting and advisory service provider and a supplier of products and equipment to businesses operating in this unique industry.
The Company’s consultants and advisors providing services to clients consist of the Company’s two officers and directors
and three independent contractors.
The Company was incorporated on March
5, 2013 under the laws of the State of Colorado. Upon formation, each of the co-founders Ellis Smith and Corey Hollister were
issued 4,000 shares of common stock in exchange for $400. This constituted 100% of the issued and outstanding shares of the Company’s
common stock and voting rights. Mr. Smith and Mr. Hollister are the sole directors and officers of the Corporation.
Note 2. Summary of Significant Accounting
Policies
Basis of Accounting
The financial statements are prepared
in accordance with the accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Company
has elected a fiscal year ending on December 31.
Use of Estimates in Financial
Reporting
The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and
expenses during the periods presented. Actual results could differ from these estimates. Estimates and assumptions are reviewed
periodically and the effects of revisions are reflected in the financial statements in the period they are deemed to be necessary.
Significant estimates made in the accompanying financial statements include but are not limited to following: those related to
revenue recognition, allowance for doubtful accounts and unbilled services, lives and recoverability of equipment and other long-lived
assets, contingencies and litigation. The Company is subject to uncertainties, such as the impact of future events, economic,
environmental and political factors, and changes in the business climate; therefore, actual results may differ from those estimates.
When no estimate in a given range is deemed to be better than any other when estimating contingent liabilities, the low end of
the range is accrued. Accordingly, the accounting estimates used in the preparation of the Company's financial statements will
change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating
environment changes. Changes in estimates are made when circumstances warrant. Such changes and refinements in estimation methodologies
are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to
the financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are held in operating
accounts at a major financial institution. Our cash balances at December 31, 2013 do not exceed the deposit insurance limits for
the financial institutions.
Accounts Receivable
Accounts receivable are recorded at face
amounts less an allowance for doubtful accounts. On a periodic basis, we evaluate our accounts receivable and, if necessary, establish
the allowance for doubtful accounts by calculating and recording a specified percentage of the individual open receivable balances.
Specific allowances are also recorded based on historical experience, analysis of past due accounts, client creditworthiness and
other current available information. However, our actual experience may vary from our estimates. If the financial condition of
our clients were to deteriorate, resulting in their inability or unwillingness to pay our fees, we may need to record additional
allowances or write-offs in future periods. This risk is mitigated to the extent that we typically receive retainers from some
of our clients prior to performing significant services.
The provision for doubtful accounts
is recorded as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments.
To the extent the provision relates to a client's inability to make required payments on accounts receivables, the provision is
recorded in operating expenses.
Significant Clients and Customers
During 2013, there were three clients
that individually accounted for 10% or more of the Company’s total revenues, and 63% in aggregate of the Company’s
total revenues. At December 31, 2013, one client represented 100% of our gross accounts receivable balance.
Fixed Assets
Equipment is stated at cost. Maintenance
and repairs are expensed as incurred. Depreciation of owned equipment is provided using the straight-line method over the estimated
useful lives of the assets, ranging from two to seven years. Fixed assets are reviewed for impairment as discussed below under
“Accounting for the Impairment of Long-Lived Assets.” We did not capitalize any interest during 2013.
Accounting for the Impairment
of Long-Lived Assets
The Company evaluates long-lived assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset
to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds
the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair
value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the
assets. The Company did not record any impairment charges related to long-lived assets during 2013.
Revenue Recognition
Revenue is recognized in accordance
with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue
Recognition. The Company recognizes revenue when persuasive evidence of an arrangement exists, the related services are rendered
or delivery has occurred, the price is fixed or determinable and collectability is reasonably assured.
The Company primarily generates revenues
from professional services consulting agreements. These arrangements are generally entered into on a time basis, for a fixed-fee
or on a contingent fee basis. Generally, a prepayment or retainer is required prior to performing services.
Revenues from time based engagements
are recognized as the hours are incurred by the Company.
Revenues from fixed-fee engagements are recognized
under the completed or proportional performance methods. Management reviews arrangement to determine whether or not the fixed-fee
is for a final deliverable or act which is significant to the arrangement as a whole. If it is, revenue is recognized under the
completed performance method, in which revenue is recognize once the final act or deliverable is performed or delivered. Revenue
recognized under the proportional performance method is recognized as services are performed. Under this method, the Company estimates
the amount of completed work versus the total services to be provided under the arrangement or deliverable in order to determine
the amount of revenue to be recognized. Revenue recognition is affected by a number of factors that change the estimated amount
of work required to complete the deliverable, such as changes in scope, timing, awaiting notification of license award from local
government, and the level of client involvement. Losses, if any, on fixed-fee engagements are recognized in the period in which
the loss first becomes probable and reasonably estimable. To date, such losses have not been significant. The Company believes
if an engagement terminates prior to completion it can recover the costs incurred related to the services provided.
The Company has some arrangements for
which the revenues are contingent upon achieving a pre-determined deliverable or future outcome. Any contingent revenue for these
arrangements is not recognized until the contingency is resolved and collectability is reasonably assured.
The Company’s arrangements with
clients may include terms to deliver multiple services or deliverables. These contracts specifically identify the services to
be provided with the corresponding deliverable. The value for each deliverable is determined based on the prices charged when
each element is sold separately or by other vendor-specific objective evidence (“VSOE”). Revenues are recognized
in accordance with our accounting policies for the elements as described above. The elements qualify for separation when the
deliverables have value on a stand-alone basis and the value of the separate elements can be established by VSOE or an
estimated selling price. While assigning values and identifying separate elements requires judgment, generally selling prices
of the separate elements are readily identifiable as the Company also sells those elements individually outside of a multiple
services engagement. Contracts with multiple elements are typically fixed-fee or on time basis. Arrangements are typically
terminable by either party upon sufficient notice and do not include provisions for refunds relating to services
provided.
Differences between the timing of billings
and the recognition of revenue are recognized as either unbilled services or deferred revenue in the accompanying balance sheet.
Revenues recognized for services performed, but not yet billed to clients are recorded as unbilled services.
Reimbursable expenses, including those
relating to travel, other out-of-pocket expenses and any third-party costs, are included as a component of revenues. Typically,
an equivalent amount of reimbursable expenses are included in total direct client service costs. Reimbursable expenses related
to time and materials and fixed-fee engagements are recognized as revenue in the period in which the expense is incurred and collectability
is reasonably assured. Taxes collected from customers and remitted to governmental authorities are presented in the income statement
on a net basis.
Revenue from cultivation supply sales,
including the delivery fee, is recognized when an order has been obtained, the price is fixed and determinable, the product is
shipped, title has transferred and collectability is reasonably assured. Generally, our suppliers’ drop-ship orders to our
clients with origin terms. For any shipments with destination terms, the Company defers revenue until delivery to the customer.
To date, sales returns have not been significant, and as such, a sales return allowance has not been recorded.
Cost of Revenues
The Company’s policy is to recognize
cost of revenue in the same manner in conjunction with revenue recognition, when the costs are incurred. Cost of revenue includes
the costs directly attributable to revenue recognition and includes Compensation and fees for services, Travel and other expenses
for services and cost of supplies. Selling, general and administrative expenses are charged to expense as incurred.
Advertising
Advertising costs, which are included
as a component of selling and marketing expense, are expensed as incurred and have been insignificant.
Shipping and Handling Costs
For cultivation supply sales, shipping
and handling costs are included as a component of cost of revenues.
Income Taxes
The Company has elected to be treated
as an S corporation for income tax purposes as provided in Section 1361 of the Internal Revenue Code. In lieu of corporate income
taxes, the owners are taxed on their proportionate share of the respective Company’s taxable income. As of December 31,
2013, the Company had elected and maintained its status as an S Corporation. The Company believes it does not have any uncertain
tax positions. No provision or liability for federal or state income taxes has been included in the financial statements.
Earnings per Share
The Company reports earnings per share
in accordance with FASB ASC 260, Earnings per Share. This statement requires dual presentation of basic and diluted earnings
with a reconciliation of the numerator and denominator of the earnings per share computations. Basic earnings per share amounts
are based on the weighted average shares of common outstanding. If applicable, diluted earnings per share assume the conversion,
exercise or issuance of all common stock instruments such as options, warrants and convertible securities, unless the effect is
to reduce a loss or increase earnings per share. There were no adjustments to diluted earnings per share calculation as the Company
does not have any dilutive instruments.
Related Party Transactions
The Company follows FASB ASC subtopic 850-10,
Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850-10-20, related
parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required,
absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted
for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts
that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company;
f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating
policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate
interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties
or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that
one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include
disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar
items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated
or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s)
involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for
each of the periods for which income statements are presented, and such other information deemed necessary to an understanding
of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods
for which income statements are presented and the effects of any change in the method of establishing the terms from that used
in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if
not otherwise apparent, the terms and manner of settlement.
Note 3. Recent Accounting Pronouncements
In July 2013, the FASB issued Accounting
Standards Update (“ASU”) No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When
a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, to resolve the diversity in practice
in the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward
exists. The ASU is effective prospectively for fiscal years, and interim periods within those years, beginning after December
15, 2013 for all unrecognized tax benefits that exist at the effective date. Early adoption is permitted and retrospective application
is permitted. The Company has not elected early adoption or retrospective application of this ASU as it is not applicable to the
Company.
In February 2013, the FASB issued ASU
No. 2013-02, Comprehensive Income (Topic 220). The amendments do not change the current requirements for reporting net
income or other comprehensive income in financial statements. However, the amendments require an entity to provide information
about the amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only
if the amount reclassified is required under US GAPP to be reclassified to net income in its entirety in the same reporting period.
For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, and entity is required
to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amendments
in this update are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted.
Adoption of this update is not expected to have a material effect on the Company’s results of operations or financial condition.
Note 4. Accounts receivable
Accounts receivable was comprised of
the following amounts as of December 31, 2013:
| |
| 12/31/2013 | |
| |
| | |
Gross accounts receivable from customers | |
$ | 1,250 | |
| |
| -0- | |
Accounts receivable, net | |
$ | 1,250 | |
The Company did not recognize any bad
debt expense for the period ended December 31, 2013.
Note 5. Fixed Assets
Fixed assets for the year-ended December
31, 2013, consisted of office equipment and were $1,765, net of accumulated depreciation of $486.
Note 6. Related Party Transactions
From time to time, the Company’s
two founder shareholders paid for the Company’s operating expenses which were recorded in due to director. As of December
31, 2013, the balance due from the Company to the two founding shareholders was $3,006.
Note 7. Commitments and Contingent
Liabilities
As of December 31, 2013, the Company
has no outstanding commitments of contingent liabilities.
Note 8. Capital Stock
The Company is authorized to issue
12,000 common shares at $0.001 par value per share.
Upon the Company’s formation on March
5, 2013, the Company issued 4,000 shares of common stock to each of the co-founders Ellis Smith and Corey Hollister in exchange
of $400, which was recorded as a reduction to due from director.
As of December 31, 2013, the Company
has 8,000 common shares issued and outstanding.
Note 9. Segment Information
For the year ended December 31, 2013,
the Company does not operate in any material, separately reportable operating segments.
Note 10. Subsequent Events
On May 15, 2014, the Company entered into
an Agreement and Plan of Merger ("Merger Agreement") with Cannamerica Corp., a wholly-owned subsidiary of Brazil Interactive
Media, Inc. (“BIMI”), under which all of the outstanding shares of common stock of the Company will be acquired. The
effective time of the Merger shall be upon the filing of Certificates of Merger with the Secretaries of State of the States of
Delaware and Colorado, pursuant to applicable statutes. As of the date of this report, July 23, 2014, the documents making the
merger effective have not been filed.
EXHIBIT 99.2
HOLLISTER & BLACKSMITH, INC. |
D/B/A AMERICAN CANNABIS CONSULTING |
BALANCE SHEETS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013 |
|
| |
June 30, | |
December 31, |
| |
2014 | |
2013 |
| |
(unaudited) | |
(audited) |
| |
| | | |
| | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash and cash equivalents | |
$ | 302,187 | | |
$ | 17,597 | |
Prepaid expenses and other current assets | |
| 45,047 | | |
| 4,368 | |
Accounts receivable, net | |
| — | | |
| 1,250 | |
Total current assets | |
| 347,234 | | |
| 23,215 | |
| |
| | | |
| | |
PROPERTY AND EQUIPMENT, net | |
| 2,728 | | |
| 1,765 | |
| |
| | | |
| | |
Total assets | |
$ | 349,962 | | |
$ | 24,980 | |
| |
| | | |
| | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Deferred revenue | |
$ | 116,642 | | |
$ | 11,109 | |
Due to directors | |
| 3,006 | | |
| 3,006 | |
Accrued expenses | |
| 51,215 | | |
| 1,698 | |
Accrued payroll liabilities | |
| 2,834 | | |
| 636 | |
Accounts payable | |
| 46,579 | | |
| 152 | |
Total current liabilities | |
| 220,276 | | |
| 16,601 | |
| |
| | | |
| | |
DUE TO RELATED PARTIES | |
| 215,642 | | |
| — | |
| |
| | | |
| | |
Total liabilities | |
| 435,918 | | |
| 16,601 | |
| |
| | | |
| | |
| |
| | | |
| | |
SHAREHOLDERS’ EQUITY | |
| | | |
| | |
| |
| | | |
| | |
| |
| | | |
| | |
Common stock, $.001 par value; 12,000 shares authorized; 10,000 and 8,000 shares
issued and outstanding as of June 30, 2014 and December 31, 2013, respectively | |
| 10 | | |
| 8 | |
Additional paid in capital | |
| 990 | | |
| 792 | |
Retained earnings (loss) | |
| (86,956 | ) | |
| 7,579 | |
Total shareholders’ equity | |
| (85,956 | ) | |
| 8,379 | |
| |
| | | |
| | |
| |
| | | |
| | |
Total liabilities and shareholders’ equity | |
$ | 349,962 | | |
$ | 24,980 | |
The accompanying notes are an integral part
of these consolidated financial statements.
HOLLISTER & BLACKSMITH, INC.
D/B/A AMERICAN CANNABIS CONSULTING
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2014 AND 2013
| |
| |
| |
| |
From March 5, 2013 |
| |
Three Months | |
Three Months | |
Six Months | |
(Date of Inception) |
| |
Ended | |
Ended | |
Ended | |
through |
| |
June 30, 2014 | |
June 30, 2013 | |
June 30, 2014 | |
June 30, 2013 |
| |
(unaudited) | |
(unaudited) | |
(unaudited) | |
(unaudited) |
| |
| | | |
| | | |
| | | |
| | |
REVENUES | |
| | | |
| | | |
| | | |
| | |
Consulting and advisory | |
$ | 103,540 | | |
$ | 4,350 | | |
$ | 127,404 | | |
$ | 4,350 | |
Equipment & supplies | |
| 2,190 | | |
| — | | |
| 9,638 | | |
| — | |
Total revenues | |
$ | 105,730 | | |
$ | 4,350 | | |
$ | 137,042 | | |
$ | 4,350 | |
| |
| | | |
| | | |
| | | |
| | |
COST OF REVENUES | |
| | | |
| | | |
| | | |
| | |
Cost of consulting and advisory | |
| 55,464 | | |
| 575 | | |
| 74,889 | | |
| 575 | |
Cost of equipment & supplies | |
| 1,992 | | |
| 50 | | |
| 9,017 | | |
| 50 | |
Total cost of revenues | |
| 57,456 | | |
| 625 | | |
| 83,906 | | |
| 625 | |
| |
| | | |
| | | |
| | | |
| | |
GROSS PROFIT | |
| 48,274 | | |
| 3,725 | | |
| 53,136 | | |
| 3,725 | |
| |
| | | |
| | | |
| | | |
| | |
OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
General and administrative expenses | |
| 77,887 | | |
| 550 | | |
| 95,893 | | |
| 599 | |
Selling and marketing expenses | |
| 26,072 | | |
| 1,271 | | |
| 47,517 | | |
| 1,271 | |
Total operating expenses | |
| 103,959 | | |
| 1,821 | | |
| 143,410 | | |
| 1,870 | |
| |
| | | |
| | | |
| | | |
| | |
INCOME (LOSS) FROM OPERATIONS | |
| (55,685 | ) | |
| 1,904 | | |
| (90,274 | ) | |
| 1,855 | |
| |
| | | |
| | | |
| | | |
| | |
OTHER INCOME (EXPENSES) | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| (218 | ) | |
| — | | |
| (261 | ) | |
| — | |
Total other income (expenses) | |
| (218 | ) | |
| — | | |
| (261 | ) | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
NET INCOME (LOSS) | |
$ | (55,903 | ) | |
$ | 1,904 | | |
$ | (90,535 | ) | |
$ | 1,855 | |
| |
| | | |
| | | |
| | | |
| | |
Basic and fully diluted net income per common share | |
$ | (5.99 | ) | |
$ | 0.23 | | |
$ | (10.45 | ) | |
$ | 0.23 | |
Weighted average common shares outstanding | |
| 9,319 | | |
| 8,000 | | |
| 8,663 | | |
| 8,000 | |
The accompanying notes are an integral part
of these consolidated financial statements.
HOLLSTER & BLACKSMITH, INC. |
D/B/A AMERICAN CANNABIS CONSULTING |
STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013
|
|
| |
| |
| |
| |
| |
|
| |
Common Stock, $.001 Par, | |
| |
| |
Total |
| |
12,000 Shares Authorized | |
Additional | |
Retained | |
Shareholders’ |
| |
Shares | |
Amount | |
Paid in Capital | |
Earnings | |
Equity |
| |
| |
| |
| |
| |
|
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
BALANCE, March 5, 2013 (Date of Inception) | |
| — | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock | |
| 8,000 | | |
| 8 | | |
| 792 | | |
| — | | |
| 800 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
| — | | |
| — | | |
| — | | |
| 18,941 | | |
| 18,941 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Distributions | |
| — | | |
| — | | |
| — | | |
| (11,362 | ) | |
| (11,362 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
BALANCE, December 31, 2013 (audited) | |
| 8,000 | | |
$ | 8 | | |
$ | 792 | | |
$ | 7,579 | | |
$ | 8,379 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Net income (loss) | |
| — | | |
| — | | |
| — | | |
| (90,535 | ) | |
| (90,535 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock | |
| 2,000 | | |
| 2 | | |
| 198 | | |
| — | | |
| 200 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Distributions | |
| — | | |
| — | | |
| — | | |
| (4,000 | ) | |
| (4,000 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
BALANCE, June 30, 2014 (unaudited) | |
| 10,000 | | |
$ | 10 | | |
$ | 990 | | |
$ | (86,956 | ) | |
$ | (85,956 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
The accompanying notes are an integral part
of these consolidated financial statements.
HOLLISTER & BLACKSMITH, INC. |
D/B/A AMERICAN CANNABIS CONSULTING |
STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2014 AND 2013 |
| |
| |
From March 5, 2013 |
| |
For The Six Months Ended | |
(Date of Inception) through |
| |
June 30, 2014 | |
June 30, 2013 |
| |
(unaudited) | |
(unaudited) |
| |
| | | |
| | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
| | | |
| | |
Net income (loss) | |
$ | (90,535 | ) | |
$ | 1,855 | |
Adjustments to reconcile net income to net cash provided | |
| | | |
| | |
by operating activities | |
| | | |
| | |
Depreciation | |
| 287 | | |
| 194 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Restricted cash | |
| — | | |
| — | |
Prepaid expenses and other assets | |
| (11,479 | ) | |
| — | |
Accounts receivable | |
| 1,250 | | |
| — | |
Inventories | |
| (29,198 | ) | |
| | |
Deferred revenue | |
| 105,533 | | |
| — | |
Accrued expenses | |
| 49,515 | | |
| 251 | |
|
|
|
2,198 |
|
|
|
— |
|
Accounts payable |
|
|
46,427 |
|
|
|
— |
|
Net cash provided by operating activities |
|
|
73,998 |
|
|
|
2,300 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(1,250 |
) |
|
|
(2,250 |
) |
Net cash used in investing activities |
|
|
(1,250 |
) |
|
|
(2,250 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from short-term notes payable |
|
|
35,000 |
|
|
|
— |
|
Repayment of short-term notes payable |
|
|
(35,000 |
) |
|
|
— |
|
Due to BIMI |
|
|
215,642 |
|
|
|
— |
|
Due to (from) directors |
|
|
— |
|
|
|
750 |
|
Proceeds from issuance of common stock |
|
|
200 |
|
|
|
800 |
|
Distributions to owners |
|
|
(4,000 |
) |
|
|
(1,500 |
) |
Net cash used in financing activities |
|
|
211,842 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
284,590 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, beginning of period |
|
|
17,597 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, end of year |
|
$ |
302,187 |
|
|
$ |
100 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
Cash Paid during the period for interest |
|
$ |
261 |
|
|
$ |
|
|
Cash paid during the period for income taxes |
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part
of these consolidated financial statements.
Note 1. Organization and Description of Business
Hollister & Blacksmith, Inc. dba
American Cannabis Consulting (the “Company” or “ACC”) was incorporated on March 5, 2013 under the laws
of the State of Colorado. ACC is based out of Denver, CO, and operates a fully integrated business model that features end-to-end
solutions for businesses operating in the cannabis industry in states and countries where cannabis is regulatCed and has been de-criminalized
for medical use and/or legalized for recreational use.
ACC provides its clients end-to-end
solutions based on its specialized knowledge of and experience with operating in regulated cannabis industries. ACC is both a
consulting and advisory service provider and a supplier of products and equipment to businesses operating in this unique industry.
The Company’s consultants and advisors providing services to clients consist of the Company’s two officers and directors
and three independent contractors.
On May 15, 2014, the Company entered
into an Agreement and Plan of Merger ("Merger Agreement") with Cannamerica Corp., a wholly-owned subsidiary of Brazil
Interactive Media, Inc. (“BIMI”), at which point in time, effective immediately, the Company’s co-founder and
president, Corey Hollister, was named CEO of BIMI. Under the Agreement and Plan of Merger, all of the outstanding shares of common
stock of the Company will be acquired. The effective time of the Merger shall be upon the filing of Certificates of Merger with
the Secretaries of State of the States of Delaware and Colorado, pursuant to applicable statutes. As of the date of this report,
September 4, 2014, the documents making the merger effective have not been filed.
Note 2. Summary of Significant Accounting
Policies
Basis of Accounting
The financial statements are prepared
in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The Company
has elected a fiscal year ending on December 31.
Use of Estimates in Financial
Reporting
The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect amounts of assets and liabilities and
disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and
expenses during the periods presented. Actual results could differ from these estimates. Estimates and assumptions are reviewed
periodically and the effects of revisions are reflected in the financial statements in the period they are deemed to be necessary.
Significant estimates made in the accompanying financial statements include but are not limited to following: those related to
revenue recognition, allowance for doubtful accounts and unbilled services, lives and recoverability of equipment and other long-lived
assets, contingencies and litigation. The Company is subject to uncertainties, such as the impact of future events, economic,
environmental and political factors, and changes in the business climate; therefore, actual results may differ from those estimates.
When no estimate in a given range is deemed to be better than any other when estimating contingent liabilities, the low end of
the range is accrued. Accordingly, the accounting estimates used in the preparation of the Company's financial statements will
change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating
environment changes. Changes in estimates are made when circumstances warrant. Such changes and refinements in estimation methodologies
are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to
the financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are held in operating
accounts at a major financial institution. The Company’s cash balances at June 30, 2014 and December 31, 2013 did not exceed
the deposit insurance limits for the financial institutions.
Restricted Cash
Restricted cash is recorded at cost,
which approximates fair value. There was no restricted cash included in current assets on our balance sheets as of June 30, 2014
and December 31, 2013. Restricted cash previously related to remaining proceeds from a short-term note entered into on March 21,
2014 (see Note 7. Notes Payable) which restricted the use of its proceeds.
Prepaid Expenses and Other Current
Assets
Prepaid expenses and other current assets is
comprised of advance payments made to third parties for independent contractors’ services, general expenses and inventory
deposits. Prepaid services and general expenses are amortized over the applicable periods which approximate the life of the contract.
When the Company takes title to inventory for which deposits are made, the related amount is classified as inventory and recognized
as a cost of revenues (see “Cost of Revenues” below).
Accounts Receivable
Accounts receivable are recorded at
the net value of face amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts
receivable and, if necessary, establishes the allowance for doubtful accounts by calculating and recording a specified percentage
of the individual open receivable balances. Specific allowances are also recorded based on historical experience, analysis of
past due accounts, client creditworthiness and other current available information. However, the Company’s actual experience
may vary from its estimates. If the financial condition of its clients were to deteriorate, resulting in their inability or unwillingness
to pay the Company’s fees, it may need to record additional allowances or write-offs in future periods. This risk is mitigated
to the extent that the Company receives retainers from its clients prior to performing significant services.
The allowance for doubtful accounts
is recorded as a reduction in revenue to the extent the provision relates to fee adjustments and other discretionary pricing adjustments.
To the extent the provision relates to a client's inability to make required payments on accounts receivables, the provision is
recorded in operating expenses.
Significant Clients and Customers
For the three months ended June 30,
2014, three clients individually accounted for 10% or more and 65% in aggregate of the Company’s total revenues. For the
six months ended June 30, 2014, three clients individually accounted for 10% or more and 66% in aggregate of the Company’s
total revenues. The Company did not have any revenues during fiscal year 2013.
The Company did not have any outstanding
gross accounts receivables at June 30, 2014. At December 31, 2013, one client represented 100% of its gross accounts receivable
balance of $1,250.
Property and Equipment, net
Property and Equipment is stated at
net book value, cost less depreciation. Maintenance and repairs are expensed as incurred. Depreciation of owned equipment is provided
using the straight-line method over the estimated useful lives of the assets, ranging from two to seven years. Property and equipment
is reviewed for impairment as discussed below under “Accounting for the Impairment of Long-Lived Assets.” The Company
did not capitalize any interest as of June 30, 2014 or December 31, 2013.
Accounting for the Impairment of Long-Lived Assets
The Company evaluates long-lived assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset
to forecasted undiscounted net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds
the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair
value is determined based on discounted cash flows, appraised values or management's estimates, depending upon the nature of the
assets. The Company had not recorded any impairment charges related to long-lived assets as of June 30, 2014 or December 31, 2013.
Revenue Recognition
Revenue is recognized in accordance
with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605, Revenue
Recognition. The Company recognizes revenue when persuasive evidence of an arrangement exists, the related services are rendered
or delivery has occurred, the price is fixed or determinable and collectability is reasonably assured.
The Company primarily generates revenues
from professional services consulting agreements. These arrangements are generally entered into on a time basis, for a fixed-fee
or on a contingent fee basis. Generally, a prepayment or retainer is required prior to performing services.
Revenues from time-based engagements
are recognized as the hours are incurred by the Company.
Revenues from fixed-fee engagements are
recognized under the completed or proportional performance methods. Management reviews arrangement to determine whether or
not the fixed-fee is for a final deliverable or act which is significant to the arrangement as a whole. If it is, revenue is
recognized under the completed performance method, in which revenue is recognized once the final act or deliverable is
performed or delivered. Revenue recognized under the proportional performance method is recognized as services are performed.
Under this method, the Company estimates the amount of completed work in comparison to the total services to be provided
under the arrangement or deliverable in order to determine the amount of revenue to be recognized. Revenue recognition is
affected by a number of factors that change the estimated amount of work required to complete the deliverable, such as
changes in scope, timing, awaiting notification of license award from local government, and the level of client involvement.
Losses, if any, on fixed-fee engagements are recognized in the period in which the loss first becomes probable and reasonably
estimable. As of June 30, 2014 and December 31, 2013, such losses have not been significant. The Company believes if an
engagement terminates prior to completion it can recover the costs incurred related to the services provided.
The Company has some arrangements for
which revenues are contingent upon achieving a pre-determined deliverable or future outcome. Any contingent revenue for these
arrangements is not recognized until the contingency is resolved and collectability is reasonably assured.
The Company’s arrangements with
clients may include terms to deliver multiple services or deliverables. These contracts specifically identify the services to
be provided with the corresponding deliverable. The value for each deliverable is determined based on the prices charged when
each element is sold separately or by other vendor-specific objective evidence (“VSOE”). Revenues are recognized in
accordance with our accounting policies for the elements as described above. The elements qualify for separation when the deliverables
have value on a stand-alone basis and the value of the separate elements can be established by VSOE or an estimated selling price.
While assigning values and identifying separate elements requires judgment, generally selling prices of the separate elements
are readily identifiable as the Company also sells those elements individually outside of a multiple services engagement. Contracts
with multiple elements are typically fixed-fee or on time basis. Arrangements are typically terminable by either party upon sufficient
notice and do not include provisions for refunds relating to services provided.
Differences between the timing of billings and the recognition
of revenue are recognized as either unbilled services or deferred revenue in the accompanying balance sheet. Revenues recognized
for services performed, but not yet billed to clients are recorded as unbilled services.
Reimbursable expenses, including those
relating to travel, other out-of-pocket expenses and any third-party costs, are included as a component of revenues. Typically,
an equivalent amount of reimbursable expenses are included in total direct client service costs. Reimbursable expenses related
to time and materials and fixed-fee engagements are recognized as revenue in the period in which the expense is incurred and collectability
is reasonably assured. Taxes collected from customers and remitted to governmental authorities are presented in the statement
of operations on a net basis.
Revenue from supply and equipment sales,
including the delivery fee, is recognized when an order has been obtained, the price is fixed and determinable, the product is
shipped, title has transferred and collectability is reasonably assured. Generally, our suppliers’ drop-ship orders to our
clients with origin terms. For any shipments with destination terms, the Company defers revenue until delivery to the customer.
As of June 30, 2014 and December 31, 2013, sales returns had not been significant and as such, a sales return allowance had not
been recorded.
Cost of Revenues
The Company’s policy is to recognize
costs of revenue in the same manner in conjunction with revenue recognition. Cost of revenue includes the costs directly attributable
to revenue recognition and includes compensation and fees for services, travel and other expenses for services and cost of products
and equipment. Selling, general and administrative expenses are charged to expense as incurred.
Advertising
Advertising costs are included as a
component of selling and marketing expense and are expensed as incurred. During the three and six month periods ended June 30,
2014, these costs were $8,252 and $8,322, respectively. There were no such costs during fiscal 2013.
Shipping and Handling Costs
For supply and equipment sales, shipping
and handling costs are included as a component of cost of revenues.
Income Taxes
The Company has elected to be treated
as an S corporation for income tax purposes as provided in Section 1361 of the Internal Revenue Code. In lieu of corporate income
taxes, the owners are taxed on their proportionate share of the respective Company’s taxable income. As of June 30, 2014
and December 31, 2013, the Company had elected and maintained its status as an S Corporation.
The Company believes it does not have
any uncertain tax positions as of June 30, 2014 and December 31, 2013, and accordingly, no liability for federal or state income
taxes was included in the financial statements as of these dates, and no provision for federal or state income taxes has been
included in the financial statements during the six and three month periods ended June 30, 2014 and June 30, 2013.
Earnings per Share
The Company reports earnings per share
in accordance with FASB ASC 260, Earnings per Share. This statement requires dual presentation of basic and diluted earnings
with a reconciliation of the numerator and denominator of the earnings per share computations. Basic earnings per share amounts
are based on the weighted average shares of common stock outstanding. If applicable, diluted earnings per share assume the conversion,
exercise or issuance of all common stock instruments such as options, warrants and convertible securities, unless the effect is
to reduce a loss or increase earnings per share. There were no adjustments to the diluted earnings per share calculation as the
Company does not have any dilutive instruments during the periods presented.
Related Party Transactions
The Company follows FASB ASC subtopic
850-10, Related Party Disclosures, for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850-10-20, related
parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required,
absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted
for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and profit-sharing trusts
that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company;
f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating
policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate
interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties
or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that
one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements shall include
disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar
items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated
or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s)
involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for
each of the periods for which statements of operation are presented, and such other information deemed necessary to an understanding
of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods
for which statements of operations are presented and the effects of any change in the method of establishing the terms from that
used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and,
if not otherwise apparent, the terms and manner of settlement.
See Note 9 Related Party Transactions
for associated disclosures.
Note 3. Recent Accounting Pronouncements
In July 2013, the Financial Accounting
Standards Board (FASB) issued accounting standards update (“ASU”) No. 2013-11 “Income Taxes (Topic 740):
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward
Exists,” to resolve the diversity in practice in the presentation of unrecognized tax benefits when a net operating loss
carryforward, a similar tax loss, or a tax credit carryforward exists. Although permitted by the ASU, the Company did not elect
early adoption or retrospective application. As such, the ASU became effective prospectively for the Company as of its first quarter
of 2014. As of June 30, 2014, the Company did not have any unrecognized tax benefits that meet the conditions described by
the ASU; accordingly, the ASU did not have any impact on the Company’s results of operations or financial position.
In May 2014, the FASB issued ASU 2014-09,”Revenue
from Contracts with Customers (Topic 606)”, which supersedes the revenue recognition requirements in ASC 605, “Revenue
Recognition”. This ASU requires revenue to be recognized to reflect the consideration an entity expects to be entitled to
in exchange for the transfer of goods or services to customers in the appropriate period. This ASU also requires disclosures enabling
users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from
contracts with customers. Additionally, qualitative and quantitative disclosures about customer contracts, significant judgments
and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract are required. The Company will
be required to implement this guidance in the first quarter of fiscal year 2017, using one of two prescribed retrospective methods.
No early adoption is permitted. The Company has not yet determined the effect of adoption on the consolidated financial statements.
There have
been no other recent accounting pronouncements or changes in accounting pronouncements during the quarter ended June 30,
2014 that are of significance, or potential significance, to the Company.
Note 4. Prepaid Expenses and Other
Current Assets
Prepaid expenses and other current
assets were comprised of the following as of June 30, 2014 and December 31, 2013:
| |
June 30, 2014 | |
December 31, 2013 |
| |
(unaudited) | |
(audited) |
| |
| | | |
| | |
Finished goods inventories | |
$ | 29,198 | | |
$ | — | |
Prepaid expenses | |
| 9,657 | | |
| 4,368 | |
Deposits | |
| 5,990 | | |
| — | |
Other current assets | |
| 202 | | |
| — | |
Prepaid expenses and other current assets | |
$ | 45,047 | | |
$ | 4,368 | |
Note 5. Accounts receivable
Accounts receivable was comprised of
the following as of June 30, 2014 and December 31, 2013:
| |
June 30, 2014 | |
December 31, 2013 |
| |
(unaudited) | |
(audited) |
| |
| | | |
| | |
Gross accounts receivables | |
$ | — | | |
$ | 1,250 | |
Less allowance for doubtful accounts | |
| — | | |
| — | |
Accounts receivable, net | |
$ | — | | |
$ | 1,250 | |
The Company did not recognize any bad
debt expense for the three and six month periods ended June 30, 2014. The Company also did not recognize any bad debt expense
during fiscal 2013.
Note 6. Property and Equipment,
net
Property and equipment, net, was comprised
of the following as of June 30, 2014 and December 31, 2013:
| |
June 30, 2014 | |
December 31, 2013 |
| |
(unaudited) | |
(audited) |
| |
| | | |
| | |
Office equipment | |
$ | 2,250 | | |
$ | 2,250 | |
Machinery & Equipment | |
| 1,250 | | |
| — | |
PROPERTY AND EQUIPMENT, gross | |
$ | 3,500 | | |
$ | 2,250 | |
Less accumulated depreciation | |
| (772 | ) | |
| (485 | ) |
PROPERTY AND EQUIPMENT, net | |
$ | 2,728 | | |
$ | 1,765 | |
The Company recorded depreciation expense
of $141 and $287 during the three and six months ended June 30, 2014, respectively. The Company recorded depreciation expense
of $49 during the three months ended June 30, 2013 and $194 from the date of inception of March 5, 2013 through June 30, 2013.
Note 7. Notes Payable
On March 21, 2014, the Company entered
into a secured promissory note with Duchess Opportunity Fund, II, LP, in the amount of $35,000 which bears interest of 5% per
annum. This principal on the note was satisfied on May 15, 2014 by converting the note to a BIMI convertible debenture (see Note
9. Related Party Transactions). During the three and six months ended June 30, 2014, the Company recorded interest expense related
to this note of $217 and $261, respectively. The company recorded no interest expense from the date of inception of March 5, 2013
through June 30, 2013.
Note 8. Earnings (Loss) Per Share
The Company calculates basic loss per
share by dividing net loss by the weighted average number of shares of common stock outstanding. Shares issuable upon the satisfaction
of certain conditions, if any, are considered outstanding and included in the computation of basic loss per share. No such shares
existed for the three and six month periods ended June 30, 2014.
During the three and six months ended
June 30, 2014, the company had no antidilutive shares excludable from its earnings per share calculation.
Note 9. Related Party Transactions
From time to time, the Company purchases
inventory and equipment from Baroud Development Group, in which Anthony Baroud, the Company’s Vice President, is a owner.
During the three months ended June 30, 2014, total such transactions were $30,300.
In May 2014, the Company received $267,840
in financing from BIMI (see Note 1. Organization and Description of Business) which included converting the $35,000 note payable
(see Note 7. Notes Payable) to a BIMI convertible debenture. The Company additionally paid expenses and liabilities related to
BIMI in the amount of $87,198, which was offset against due to related party.
As of June 30, 2014, the Company recorded
$37,375 and $18,163 in accounts payables and accrued expenses which were offset by the funds received. BIMI has accounted for
these transactions as other current receivables.
Note 10. Commitments and Contingent
Liabilities
As of June 30, 2014 and December 31,
2013, the Company had no outstanding commitments or contingent liabilities meeting the criteria for recognition under its accounting
policies in accordance with US GAAP.
Note 11. Capital Stock
The Company is authorized to issue
12,000 common shares at $0.001 par value per share.
On May 2, 2014, the Company issued
1,500 shares of common stock in exchange for $150 to Anthony Baroud, who was named Vice President of the Company. On the same
date, the Company additionally issued 500 shares to two other individuals in exchange for $50. These transactions have been recorded
as other current assets as of June 30, 2014.
Upon the Company’s formation
on March 5, 2013, the Company issued 4,000 shares of common stock to each of the co-founders Ellis Smith and Corey Hollister in
exchange of $400, which was recorded as a reduction to due from directors.
As of June 30, 2014 and December 31,
2013, the Company had 10,000 and 8,000 common shares issued and outstanding, respectively.
Note 12. Segment Information
From the date of inception of March 5, 2013 through
June 30, 2014, the Company did not operate in any material, separately reportable operating segments.
EXHIBIT 99.3
American Cannabis Company, Inc. |
F/K/A Brazil Interactive Media, Inc. |
Unaudited Pro Forma Condensed Combined Balance Sheets |
AS OF JUNE 30, 2014 |
| |
| |
| |
| |
|
|
| |
Brazil Interactive Media, Inc. | |
Hollister & Blacksmith, Inc. d/b/a American Cannabis Consulting | |
Pro Forma Adjustment | |
|
Pro Forma Combined Total |
ASSETS | |
| | | |
| | | |
| | | |
|
| | |
CURRENT ASSETS | |
| | | |
| | | |
| | | |
|
| | |
Cash and cash equivalents | |
$ | — | | |
$ | 302,187 | | |
$ | — | | |
|
$ | 302,187 | |
Prepaid expenses and other current assets | |
| — | | |
| 45,047 | | |
| — | | |
|
| 45,047 | |
Due from related party | |
| 215,642 | | |
| | | |
| (215,642 | ) | B |
|
| — | |
Accounts receivable, net | |
| — | | |
| — | | |
| — | | |
|
| — | |
Total current assets | |
| 215,642 | | |
| 347,234 | | |
| (215,642 | ) | |
|
| 347,234 | |
PROPERTY AND EQUIPMENT, net | |
| — | | |
| 2,728 | | |
| — | | |
|
| 2,728 | |
Total assets | |
$ | 215,642 | | |
$ | 349,962 | | |
$ | (215,642 | ) | |
|
$ | 349,962 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | | |
| | | |
| | | |
|
| | |
CURRENT LIABILITIES | |
| | | |
| | | |
| | | |
|
| | |
Deferred revenue | |
$ | — | | |
$ | 116,642 | | |
$ | — | | |
|
$ | 116,642 | |
Due to directors | |
| — | | |
| 3,006 | | |
| — | | |
|
| 3,006 | |
Accrued expenses | |
| — | | |
| 51,215 | | |
| — | | |
|
| 51,215 | |
Accrued payroll liabilities | |
| — | | |
| 2,834 | | |
| — | | |
|
| 2,834 | |
Convertible note payable, net of discount | |
| 36,204 | | |
| — | | |
| — | | |
|
| 36,204 | |
Accounts payable | |
| 58,467 | | |
| 46,579 | | |
| — | | |
|
| 105,046 | |
Total current liabilities | |
| 94,671 | | |
| 220,276 | | |
| — | | |
|
| 314,947 | |
DUE TO RELATED PARTIES | |
| — | | |
| 215,642 | | |
| (215,642 | ) | B |
|
| — | |
Total liabilities | |
| 94,671 | | |
| 435,918 | | |
| (215,642 | ) | |
|
| 314,947 | |
SHAREHOLDERS’ EQUITY | |
| | | |
| | | |
| | | |
|
| | |
Preferred stock, $0.01 par value, 5,000,000 shares authorized; - 0- shares
issued and outstanding | |
| — | | |
| — | | |
| — | | |
|
| — | |
Common stock, $0.00001 par value, 100,000,000 shares authorized;
40,425,000 shares issued and outstanding | |
| 404 | | |
| 10 | | |
| (10 | ) | A |
|
| 404 | |
Additional paid in capital | |
| 7,414,647 | | |
| 990 | | |
| 10 | | A |
|
| 7,415,647 | |
Retained earnings (loss) | |
| (7,294,080 | ) | |
| (86,956 | ) | |
| | | |
|
| (7,381,036 | ) |
Total shareholders’ equity | |
| 120,971 | | |
| (85,956 | ) | |
| — | | |
|
| 35,015 | |
Total liabilities and shareholders’ equity | |
$ | 215,642 | | |
$ | 349,962 | | |
$ | (215,642 | ) | |
|
$ | 349,962 | |
(A) | | On May 15, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger
Agreement”), between the Company, Cannamerica, Inc., Delaware corporation and a wholly owned subsidiary of the Company (“Merger
Sub”), and Hollister & Blacksmith, Inc. d/b/a American Cannabis Consulting, Inc., a Colorado corporation (“ACC”).
Pursuant to the Merger Agreement, Merger Sub will be merged with and into ACC through a reverse triangular merger transaction
upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the General Corporation Law of the
State of Delaware. Pursuant to the transactions contemplated by the Merger Agreement, (i) each share of common stock of ACC will
be exchanged for shares of the Company based on a ratio of 3,171.0628 to one, (ii) ACC shall continue as the surviving corporation
after the transactions contemplated by the Merger Agreement, (iii) each share of common stock of Merger Sub will be converted
into and exchanged for one share of common stock of ACC and (iv) the Company shall change its name to “American Cannabis
Company, Inc.” ACC was incorporated as Hollister & Blacksmith, Inc. on March 5, 2013 under the laws of the State of
Colorado, and is based out of Denver, Colorado. On May 16, 2014, the Company entered into a Separation and Exchange Agreement
(the “Separation Agreement”), by and among the Company, BIMI, Inc., a Delaware corporation and wholly-owned subsidiary
of the Company, and Brazil Investment Holding, LLC (“Holdings”), a Delaware limited liability company and the majority
stockholder of the Company. Pursuant to the Separation Agreement, the Company agreed to distribute all shares of common stock
of BIMI, Inc. held by the Company in exchange for all of the common stock held by Holdings, thereby resulting in a complete separation
of BIMI, Inc. (the “Separation”). The Company and BIMI, Inc. each shall retain all assets and liabilities in its respective
name, and shall take any and all actions necessary so that (i) the Company will own or be liable for all existing Company assets
and liabilities and (ii) BIMI, Inc. will own or be liable for all existing BIMI, Inc. assets and liabilities, including all assets
and liabilities of BIMI Inc.’s subsidiaries. The Separation Agreement further provides that all intercompany
agreements by and between the Company, or any of its subsidiaries, and BIMI Inc., or any of its subsidiaries, are terminated except
for confidentiality, non-disclosure or release of liability agreements. The foregoing descriptions of the Merger Agreement
and Separation Agreement do not purport to be complete and are qualified in their entirety by the terms of the Merger Agreement,
which is filed as an exhibit to the Form 8-K filed by the Company with the Securities and Exchange Commission on May 15, 2014
and the terms of the Separation Agreement, which is filed as an exhibit to the Form 8-K filed by the Company with the Securities
and Exchange Commission on May 20, 2014. Further, additional information relevant to the transactions contemplated
by the Merger Agreement and Separation Agreement can be found in the Company’s Preliminary Information Statement
filed on Schedule 14C with the Securities and Exchange Commission on May 29, 20 14, as amended June 16, 2014 and July 29, 2014. |
(B) | | Elimination of Due to/From account between BRAZIL INTERACTIVE MEDIA, INC and HOLLISTER
& BLACKSMITH, INC. |
American Cannabis Company, Inc. |
F/K/A Brazil Interactive Media, Inc. |
UNAUDITED Pro Forma CONDENSED COMBINED Statement of Operations |
For The Six Months Ended June 30, 2014 |
| |
Brazil Interactive Media, Inc. | |
Hollister & Blacksmith, Inc. d/b/a American Cannabis Consulting | |
Pro Forma Adjustment | |
Pro Forma Combined Total |
REVENUES | |
| | | |
| | | |
| | | |
| | |
Consulting and advisory | |
$ | — | | |
$ | 127,404 | | |
$ | — | | |
$ | 127,404 | |
Equipment & supplies | |
| — | | |
| 9,638 | | |
| — | | |
| 9,638 | |
Total revenues | |
$ | — | | |
$ | 137,042 | | |
| | | |
$ | 137,042 | |
| |
| | | |
| | | |
| | | |
| | |
COST OF REVENUES | |
| | | |
| | | |
| | | |
| | |
Cost of consulting and advisory | |
| — | | |
| 74,889 | | |
| — | | |
| 74,889 | |
Cost of equipment & supplies | |
| — | | |
| 9,017 | | |
| — | | |
| 9,017 | |
Total cost of revenues | |
| — | | |
| 83,906 | | |
| — | | |
| 83,906 | |
| |
| | | |
| | | |
| | | |
| | |
GROSS PROFIT | |
| — | | |
| 53,136 | | |
| — | | |
| 53,136 | |
| |
| | | |
| | | |
| | | |
| | |
OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
General and administrative expenses | |
| 1,527,010 | | |
| 95,893 | | |
| — | | |
| 1,622,903 | |
Selling and marketing expenses | |
| — | | |
| 47,517 | | |
| — | | |
| 47,517 | |
Total operating expenses | |
| 1,527,010 | | |
| 143,410 | | |
| — | | |
| 1,670,420 | |
| |
| | | |
| | | |
| | | |
| | |
INCOME (LOSS) FROM OPERATIONS | |
| (1,527,010 | ) | |
| (90,274 | ) | |
| — | | |
| (1,617,284 | ) |
| |
| | | |
| | | |
| | | |
| | |
OTHER INCOME (EXPENSES) | |
| | | |
| | | |
| | | |
| | |
Gain on debt forgiveness | |
| 96,193 | | |
| | | |
| — | | |
| 96,193 | |
Interest expense | |
| (36,204 | ) | |
| (261 | ) | |
| — | | |
| (36,465 | ) |
Total other income (expenses) | |
| 59,989 | | |
| (261 | ) | |
| — | | |
| 59,728 | |
| |
| | | |
| | | |
| | | |
| | |
NET INCOME (LOSS) | |
$ | (1,467,021 | ) | |
$ | (90,535 | ) | |
$ | — | | |
$ | (1,557,556 | ) |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Basic and fully diluted net income per common share | |
| N/A | | |
| N/A | | |
$ | — | | |
$ | (0.04 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average common shares outstanding |
|
|
N/A |
|
|
|
N/A |
|
|
|
— |
|
|
|
44,213,023 |
|
AMERICAN CANNABIS COMPANY, INC. |
F/K/a Brazil Interactive Media, Inc. |
UNAUDITED Pro Forma CONDENSED COMBINED Statement of Operations |
For The Year Ended December 31, 2013 |
| |
| |
| |
| |
|
| |
Brazil Interactive Media, Inc. | |
Hollister & Blacksmith, Inc. d/b/a American Cannabis Consulting | |
Pro Forma Adjustment | |
Pro Forma Combined Total |
REVENUES | |
| | | |
| | | |
| | | |
| | |
Consulting and advisory | |
$ | — | | |
$ | 70,273 | | |
$ | — | | |
$ | 70,273 | |
Equipment & supplies | |
| — | | |
| 5,063 | | |
| — | | |
| 5,063 | |
Total revenues | |
$ | — | | |
$ | 75,336 | | |
| | | |
$ | 75,336 | |
| |
| | | |
| | | |
| | | |
| | |
COST OF REVENUES | |
| | | |
| | | |
| | | |
| | |
Cost of consulting and advisory | |
| — | | |
| 19,197 | | |
| — | | |
| 19,197 | |
Cost of equipment & supplies | |
| — | | |
| 4,060 | | |
| — | | |
| 4,060 | |
Total cost of revenues | |
| — | | |
| 23,257 | | |
| — | | |
| 23,257 | |
| |
| | | |
| | | |
| | | |
| | |
GROSS PROFIT | |
| — | | |
| 52,079 | | |
| — | | |
| 52,079 | |
| |
| | | |
| | | |
| | | |
| | |
OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
General and administrative expenses | |
| 3,144,536 | | |
| 13,530 | | |
| — | | |
| 3,158,066 | |
Selling and marketing expenses | |
| — | | |
| 19,608 | | |
| — | | |
| 19,608 | |
Total operating expenses | |
| 3,144,536 | | |
| 33,138 | | |
| — | | |
| 3,177,674 | |
| |
| | | |
| | | |
| | | |
| | |
INCOME (LOSS) FROM OPERATIONS | |
| (3,144,536 | ) | |
| 18,941 | | |
| — | | |
| (3,125,595 | ) |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
NET INCOME (LOSS) | |
$ | (3,144,536 | ) | |
$ | 18,941 | | |
$ | — | | |
$ | (3,125,595 | ) |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Basic and fully diluted net income per common share | |
| N/A | | |
| N/A | | |
$ | — | | |
$ | (0.16 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average common shares outstanding | |
| N/A | | |
| N/A | | |
| — | | |
| 19,059,940 | |
American Cannabis (QB) (USOTC:AMMJ)
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From May 2024 to Jun 2024
American Cannabis (QB) (USOTC:AMMJ)
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From Jun 2023 to Jun 2024