ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Asset Purchase Agreement
On October 11, 2018, Globe Photos, Inc. entered into a definitive
Asset Purchase Agreement (the “Purchase Agreement”) with Photo File, Inc., a New York corporation (the “Seller”)
and Charles Singer, its CEO and principal shareholder.
Pursuant to the Purchase Agreement, the Company acquired certain
assets (the “Assets”) and assumed certain liabilities (the “Assumed Liabilities”) related to Seller. The
Assets the Company purchased from Seller include:
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Accounts receivable on August 1, 2018 and thereafter;
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Inventory;
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Marketing materials;
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Applicable contracts, licenses and leases;
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Intellectual property;
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Personal property; and
We agreed to assume the Assumed Liabilities under the Purchase Agreement.
These include accounts payable on or after August 1, 2018, all liabilities under the assumed contracts, including a lease obligation
through March 31, 2020, and all liabilities associated with the Assets post-closing.
Pursuant to the Purchase Agreement, the Seller shall receive the
following consideration:
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$2,000,000 payable as follows: $850,000 was advanced at the execution of the Purchase Agreement, which is
secured through a pledge of 40% of the outstanding shares of Seller; $650,000 paid within 24 hours of the execution of the Agreement;
and a $500,000 contingency payment shall be paid to Seller within 72 hours of receiving written consent from the major sports leagues.
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A 10% interest in the Nevada subsidiary that we have formed to house the assets; and
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A royalty to Seller that commences upon the initial $6,000,000 in sales from the Nevada subsidiary.
The Purchase Agreement contains customary representations, warranties
and covenants.
The foregoing description of the Purchase Agreement does not purport
to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Purchase Agreement, which
is filed as Exhibit 2.1 hereto and incorporated herein by reference.
The Purchase Agreement has been included solely to provide investors
and security holders with information regarding its terms. It is not intended to be a source of financial, business or operational
information, or to provide any other factual information, about the Assets, the Company or Seller. The representations, warranties
and covenants contained in the Purchase Agreement are made only for purposes of the Purchase Agreement and are made as of specific
dates; are solely for the benefit of the parties (except as specifically set forth therein); may be subject to qualifications and
limitations agreed upon by the parties in connection with negotiating the terms of the Purchase Agreement, including being qualified
by confidential disclosures made for the purpose of allocating contractual risk between the parties, instead of establishing matters
as facts; and may be subject to standards of materiality and knowledge applicable to the contracting parties that differ from those
applicable to investors or security holders. Investors and security holders should not rely on the representations, warranties
and covenants or any description thereof as characterizations of the actual state of facts or condition of the Assets, the Company
or Seller. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after
the date of the Purchase Agreement, as applicable, which subsequent information may or may not be fully reflected in public disclosures.
About Photo File, Inc. (Photo File)
Founded in 1987, Photo File, Inc. was initially awarded a license
for photography by Major League Baseball and the MLB Players Association, becoming the first company to be given a license for
photography by any major sport in the U.S. It currently holds major sports licenses with the NFL, NBA, MLB, NHL and most major
colleges to produce licensed sports prints, lithographs and other related items. Photo File is also licensed by thousands of additional
individuals and organizations, including Muhammad Ali, Babe Ruth, Joe Namath, Vince Lombardi, and others. Photo File can produce
a full range of framed, unframed and matted products in sizes up to 30" x 40", plaques, as well as photo sculptures,
ceramic tiles, key chains and event covers.
Employee Base
Photo File currently employs 54 people, including the owner. This
staff is comprised of 51 full-time and 3 part-time employees.
Facilities and Equipment
Photo File’s 43,000 square foot leased facility, located in
Mount Kisco, NY, includes a printing lab, a graphics department, framing operation, and sales and marketing divisions.
Globe Photos and Photo File Opportunity
Photo File has current licenses with all the major U.S. professional
sports leagues and many major colleges to produce and sell officially licensed sports prints, lithographs and sports memorabilia.
Its physical assets include more than a million negatives and vintage sports prints, over 1,000 autographed lithographs and related
memorabilia, and high-volume printing and packaging equipment. With Photo File’s annual revenues of approximately $7 million,
this acquisition presents a tremendous opportunity to use Photo File’s existing sales and marketing organization to open
new distribution channels for Globe Photo’s product lines and take advantage of the growing market demand for pop culture
imagery and sports memorabilia.