ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On March 13, 2019, Intelligent Buying, Inc. ( INTB or the Company), entered into a Reorganization Agreement (the Reorganization Agreement) pursuant to which the Company agreed to acquire Jaguaring Company d/b/a Cannavolve (Cannavolve), a Washington corporation.
Cannavolve, based in Seattle, is a privately-owned accelerator serving the cannabis and hemp industry. Cannavolve has three operating divisions: Green Ambrosia Jamaica; Consumer Products Group; and Seattle Development Group. The business plan calls for (a) taking majority stakes, (b) acquiring companies in their entirety, and/or (c) conducting joint ventures within the global cannabis and hemp space. Cannavolves strategy is to develop these portfolio positions for the purpose of selling them or spinning them off as their own public companies, with the objective of maximizing shareholder value.
The material terms of the Reorganization Agreement are as follows:
(a)
There are currently 7,256,600 shares of INTB issued and outstanding, and that number will remain the same until completion of the Reorganization, except for (1) common shares issuable upon conversion of the 100,000 preferred shares to be issued to and owned by Principal Holdings, LLC, in exchange for its services in negotiating and structuring the Reorganization Agreement and the capitalization, and performing due diligence; and (2) up to 1,415,140 common shares issuable at $.05 per shares upon conversion of the $70,757 convertible promissory note (the Note), owed to PureEnergy714, a New Jersey limited liability company. No common shares may be issued to the holder of the Note until March 6, 2020.
(b)
Upon completion of the Reorganization, the 7,256,600 shares are to be held by the following persons:
INCLUDED IN CANNAVOLVEs 3,446,950 SHARES:
(1)
All current Cannavolve shareholders, both Class A and Class B Common.
(2)
All common shares issued upon conversion of all existing Cannavolve convertible notes.
(3)
All common shares issued to raise $100,000 in its Pre-Closing Offering, at a $10M post-offering valuation, i.e. 72,566 shares.
INCLUDED IN INTBs 3,446,950 shares:
(1)
INTBs currently issued and outstanding common shares, except those not Included In either Cannavolves or INTBs shares.
(2)
All common shares issued to raise $400,000 in its Pre-Closing Offering, at a $10M post-offering valuation, i.e., 290,264 shares.
NOT INCLUDED IN EITHER CANNAVOLVEs OR INTBs SHARES:
(1)
All INTB shares issuable upon conversion of the 100,000 preferred shares.
(2)
362,700 of INTBs 7,256,600 issued and outstanding common shares.
(3)
All shares issuable pursuant to the Convertible Note.
(c)
As of the Closing of the Reorganization, INTB will have five directors, two of whom will be Dante Jones and Eric Swaney, who currently are Cannavolves principal shareholders officers and directors; and three of the directors, as yet unnamed, will be designees of INTB.
(d)
Philip Romanzi, currently the Companys sole officer and director, is expected to resign as an officer and director, and to either cancel most of the 5,653,333 INTB shares his company Bagel Hole, Inc. (Bagel Hole) currently owns, or sell most of them to INTBs new management and others. As a result of the changes in management and ownership of the common shares and the preferred shares, upon completion of the Reorganization, there will be a change of control of INTB.
(e)
As a condition of the Closing, a total of $500,000 must be raised pursuant to a SEC Rule 506(c) offering, for which Cannavolves current management is responsible to raise $100,000; and INTB is responsible to raise the remaining $400,000.
(f)
As another condition of Closing both Cannavolve and INTB must provide audited financial statements in accordance with US GAAP. Currently, INTB has provided audited financial statements for the years ended December 31, 2016 and December 31, 2017, but is delinquent in filing its Forms 10-Q for the quarters ended June 30, 2018 and September 30, 2018. It is also expected that INTB will be required to file its From 10-K for the year ended December 31, 2018, with audited financial statements.
(g)
The Preferred Stock to be issued to Principal Holdings LLC will have voting power equal to the percentage of common shares that equals 51% of the total number of shares issued and outstanding, and which may be voted for any matter requiring 51% approval by shareholder vote of the common shares. The 100,000 shares of Preferred Stock are to be issued to and owned by Principal Holdings, LLC, whose control person is Danielle Doukas
.
In furtherance of its proposed reorganization with Cannavolve, on March 15, 2019, Bagel Hole loaned Cannavolve $235,414.71, pursuant to a promissory note (the Cannavolve Note). The Cannavolve Note bears interest at 10% per annum, is due on July 15, 2019, contains customary default provisions, and is to be automatically converted into restricted shares of INTB at the same price to be paid by other INTB investors in INTBs Rule 506(c) Pre-Closing Offering.
All references to the terms of the Reorganization Agreement and the Note are qualified in their entirety by reference to the Reorganization Agreement itself, and the Note, which are Exhibits to this Form 8-K.