Item 1.01 Entry into a Material Definitive
Agreement
The Merger
On November 16, 2017, we entered into an Agreement
of Merger and Plan of Reorganization (the “Merger Agreement”) with American Freight Xchange, Inc., a privately held
New York corporation (“American Freight”), and Shipzooka Acquisition Corp. (“Shipzooka Sub”), our newly
formed wholly-owned Nevada subsidiary. In connection with the closing of this merger transaction, Shipzooka Sub merged with and
into American Freight (the “Merger”) on December 5, 2017, with the filing of Articles of Merger with the Nevada Secretary
of State and Certificate of Merger with the New York Division of Corporations.
In addition, pursuant to the terms and conditions
of the Merger Agreement:
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All shares of American Freight common stock issued and outstanding immediately prior to the closing of the Merger was converted into the right to receive 1,000,000 shares of our Series C Preferred Stock.
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For a period of 12 months from the Closing Date of the Merger, we agreed that no new convertible instruments will be issued that would cause outstanding shares to be issued below a $20 million market cap. In addition, for the same period of time, we are permitted to issue up to and no more than 145 million shares of common stock or convertible securities that convert up to and no more than 145 million shares of common stock. Moreover, any such issuance can only be made to acquire another business entity and for no other reason. However, if we receive permission from the majority of the minority shareholders, then this restriction may be waived. In addition, the number of shares of common stock that we can issue depends on the number of shares exercised from outstanding warrants, as follows:
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If 75%-100% of the warrants are exercised then we can issue up to 145 million shares of common stock.
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If 50%-74% of the warrants are exercised then we can issue up to 133,750,000 shares of common stock.
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If 25%-49% of the warrants are exercised then we can issue up to 122,500,000 shares of common stock.
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If 0%-24% of the warrants are exercised then we can issue up to 111,250,000 shares of common stock.
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American Freight provided customary representations and warranties and closing conditions, including approval of the Merger by a unanimous vote of its board of directors and voting stockholders.
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The foregoing description of the Merger Agreement
does not purport to be complete and is qualified in its entirety by reference to the complete text of the Merger Agreement, which
is filed as Exhibit 2.1 hereto and incorporated herein by reference.
Spin-Out of Assets
At the same time as the Merger, we entered
into an Agreement of Conveyance, Transfer and Assignment of Assets (the “Conveyance Agreement”) with our prior officer
and director, Kashif Khan, along with shareholders Faeghen Niakab, and Parand Bioukzadeh and joint venture partner, Eddeb Management.
Pursuant to the Conveyance Agreement, we transferred all assets and business operations associated with our colored diamond business
and joint venture, Flawless Fund GP Inc., to the other parties to the agreement. In exchange, Mr. Khan, Mr. Niakab and Mr. Bioukzadeh
agreed to cancel 16,000,000 shares in our company and to assume up to $100,000 in liabilities relating to our former business.
The foregoing description of the Conveyance
Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Conveyance
Agreement, which is filed as Exhibit 2.2 hereto and incorporated herein by reference.
About American Freight Xchange, Inc.
We intend to carry on the business of American
Freight, as our primary line of business. We have relocated our principal executive offices to 170 Traders Blvd East, Mississaugua,
Ontario L4Z 1W7, and our telephone number is 905-501-7277
After the Merger, we intend to change our name to American Freight
Xchange, Inc.
American Freight Xchange, Inc. is an integrated
3PO and logistics company. We are engaged in the business of the fulfillment of e-commerce transportation and logistics for third
parties.
American Freight Xchange, Inc. manages the
entire “logistics process”. Our freight management program obtains the most effective combination of rates, carriers,
tracking and service points to pick up returned products from store and distribution center levels with centralized billing, auditing
and claims capabilities.
American Freight Xchange, Inc., through our
wholly owned subsidiary KRG Logistics, Inc. has the expertise to manage all the manufacturers and retailers shipping. Due to our
strategic placement in the supply chain relative to the manufacturers and retailers or distributors position, we are best suited
to offer these services. American Freight Xchange, Inc. customizes freight management and fulfillment programs that provide manufacturers
and retailers with the most cost-effective services from the moment the shipment authorization is issued to the time the product
is shipped and received.
Company is in development of an e-commerce freight exchange.