Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.

 

FORM 10

 

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

 

China Dongsheng International Inc.
(Exact name of registrant as specified in its charter)

 

Commission file number

 

Delaware   22-3137907

(State of incorporation

or organization)

 

(IRS Employer

Identification No.)

 

4005 West Reno Ave, Ste F

Las Vegas, NV 89118

(Address of Principal Executive Offices) (Zip Code)

 

702-595-2247

(Registrant’s telephone number, including area code)

 

Email: sanghaharp1964@gmail.com

 

Communication Copies to

Jeff Turner

JDT Legal

897 W Baxter Dr.

South Jordan, Utah 84095

Phone: 801.810.4465

Fax: 888.920.1297

jeff@jdt-legal.com

 

Securities to be Registered Under Section 12(g) of the Act:

 

Common Stock, Par Value $0.01

(Title of Class)

 

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large, accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large, accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
(Do not check if a smaller reporting company)   Emerging growth company

  

 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  

 

 

 

 

   

 

 

INDEX TO FORM 10

 

Description Page
     
Item 1. Business 1
Item 1A. Risk Factors 4
Item 2. Financial Information 14
Item 3. Properties 26
Item 4. Security Ownership of Certain Beneficial Owners and Management 28
Item 5. Directors and Executive Officers 29
Item 6. Executive Compensation 30
Item 7. Certain Relationship and Related Transactions, and Director Independence 31
Item 8. Legal Proceedings 31
Item 9. Market Price and Dividends on the Registrant’s Common Stock and Related Stockholder Matters 31
Item 10. Recent Sale of Unregistered Securities 33
Item 11. Description of Registrant’s Securities to be Registered 35
Item 12. Indemnification of Directors and Officers 36
Item 13. Financial Statements and Supplementary Data 37
Item 14. Changes in and Disagreements with Accountants and Accounting and Financial Disclosure 38
Item 15. Exhibits 38

 

 

 

 

 

 

 

 

 

 

 

 

 i 

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Registration Statement contains certain forward-looking statements. When used in this Registration Statement, statements which are not historical in nature, including words such as “believe,” “expect,” “may,” “will,” “should,” “expect,” “project,” “intend”, “plan”, “estimate”, “anticipate” or similar expressions are intended to identify forward-looking statements. They also include statements containing a projection of revenues, earnings or losses, capital expenditures, dividends, capital structure or other financial terms. All statements we make relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments.

 

The forward-looking statements in this Registration Statement are based upon our management’s beliefs, assumptions and expectations of our future operations and economic performance, taking into account the information currently available to them.

 

These statements are not statements of historical fact, and are subject to risks and uncertainties, some of which are not currently known to us, which may change over time and which may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. We derive most of our forward-looking statements from our current plans, expectations and forecasts, which are based upon certain assumptions and are subject to a number of risks and uncertainties that could significantly affect our future financial condition and results. While we believe that our assumptions are reasonable, we caution that it is difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. There may be other factors not presently known to us or which we currently consider to be immaterial that may cause our actual results to differ materially from the expectations expressed or implied in our forward-looking statements.

 

All forward-looking statements and projections attributable to us or persons acting on our behalf apply only as of the date of this Registration Statement and are expressly qualified in their entirety by the cautionary statements included in this Registration Statement. We undertake No obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating information presented herein.

 

 

 

 

 

 

 

 

 

 

 ii 

 

 

Item 1.Business.

 

Corporate History

China Dongsheng International, Inc. (“the Company” or “CDSG”) was incorporated under the laws of the State of Delaware in October 1991 under the name of PaperClip Software, Inc. (“Paperclip”). Paperclip was engaged in the development and distribution of computer software for document management and transport of electronic document packages with interoperability, security, and tracking capabilities.

On November 9, 2006, the Company acquired 100% of the issued and outstanding capital stock of American Sunrise international, Inc. (“ASI”), a Delaware corporation. For accounting purposes, the acquisition of ASI was accounted for as a reverse acquisition under the purchase method of accounting. Accordingly, ASI was treated as the surviving entity for accounting purposes. The acquisition of ASI resulted in a change of control for the Company. Post-acquisition of ASI, the Company was engaged in the manufacturing and distributing of nutritional supplements, beauty care products and other alternative health care products through its wholly owned subsidiary, Jilin Dongsheng Weiye Science & Technology Development Co., Ltd.

 

On January 20, 2021, the District Court of Clark County, Nevada entered an Order Granting Application for Appointment (the “Order”) of SSM Monopoly Corporation as Custodian of the Company. On December 7, 2021, the Custodian filed a Motion to Discharge Custodianship and Enter Final Order (the “Motion”). In the Motion, the Custodian petitioned the court to (i) approve the acts taken by the Custodian, including the appointment of management, cancellation of 9,011,469 shares and the conducting of a shareholder meeting, (ii) discharge SSM Monopoly as Custodian of the Company and (iii) return control to the Board of Directors. On January 6, 2022, the District Court of Clark County, Nevada issued the Order of Final Discharge.

On March 10, 2022, CDSG entered into a development agreement with Stallion Energy Group, Inc. (“Stallion”) of Houston Texas, for a working interest to develop oil production in Frio County, southwest Texas (“Stallion Project”). The drill-ready leasehold is located within an area of two oilfields in the San Antonio Oil and Gas district, with an estimated 100 million barrels and 400 billion cubic feet of gas produced. The multimillion-barrel potential of the project was identified through critical evaluation, mapping, and analysis of a large petrophysical database of well logs, mud logs and production analogues completed by a Texas-based team of petroleum engineers and geologists. The Company made an initial investment of $50,000 into the Stallion Project on March 18, 2022. There have been no further developments in the Stallion Project since the Company made its initial investment.

 

On March 17, 2022, CDSG entered into an agreement with American Lithium Minerals Inc., a Nevada corporation (“AMLM”), whereby CDSG acquired a 10% interest in 24 unpatented lode mining claims comprised of approximately 460 acres near Tonopah, Nevada, commonly known as the West End Lithium Project in exchange for $75,000. The Company has the right to increase its ownership to 50% by contributing a total payment of $1,000,000 for exploration and development costs over a three-year period.

 

On February 24, 2023, the Company entered into an Asset Acquisition Agreement (the “Agreement”) with Kilimanjaro Lithium, LTD (“KLL”) and Lawrence Stephenson, the founder of KLL. Pursuant to the terms of the Agreement, the Company acquired an 80% ownership interest in KLL and two prospecting licenses (“PLs”) authorizing exploration activities on Titan 1 and Titan 2 located in Tanzania (collectively hereinafter the “Titan Projects”) in exchange for 133,000,000 shares of Common stock and $350,000 cash. The Company may acquire an additional 20% interest in KLL at a rate of CDN$1,000,000 for each additional 5% interest. Any future production from KLL’s projects are subject to a 3% Net Smelter Return (“NSR”) payable to Lawrence Stephenson.

 

In August 2023, certain Company shareholders who control a majority shareholder vote, voted in favor of changing the Company name and ticker symbol to Titan Lithium, Inc. (OTC Pink: TTAN). The Company will be filing a FINRA corporate action request to change the name and symbol with FINRA concurrently with the filing of this Form 10. The Company will file amended articles of incorporation with the State of Delaware to reflect the name change once FINRA is prepared to process the corporate action request.

 

 

 

 1 

 

 

Our Current Business

 

Titan Projects (Tanzania)

 

On February 24, 2023, the Company entered into an Asset Acquisition with Kilimanjaro Lithium, LTD and Lawrence Stephenson (LS) the Founder of KLL. The Company entered into an Agreement in which it acquired the exclusive right to earn 100% of the legal right to obtain, prospect and exploit the Prospecting Licenses that contain the Titan Lithium Projects from KLL. As part of the sampling program designed to define the outer boundaries of our previously reported Titan 1 lithium anomaly, the Company’s technical team returned to the area to both extend old lines and sample additional lines such that the total surveyed area now covers a length of 11 miles (18km) north-south and 6.2 miles (10km) at its widest east-west (18 x 10 km). The initial transaction provided the Company an 80% ownership in the Properties in exchange for (a) One Hundred and Thirty-Three Million (133,000,000) shares of China Dongsheng International common stock issued to KLL. In addition, the Company will make a series of cash payments totaling Three Hundred and Fifty Thousand Dollars ($350,000) to Lawrence Stephenson of KLL as well as reimbursement payments of exploration expenses totaling Sixty-Five Thousand Dollars ($65,000) to Lawrence Stephenson for geological and geochemical work and the registration costs of the Prospecting Licenses (PLs) covering the Titan Projects. After receipt of shares, the title and ownership of and all the legal rights to the Prospecting Licenses (“PLs”) that contain the Titan Lithium Projects (the “Properties”) were transferred to KLL.

 

The Titan 1 (“T1”) project is centered over a vast flat-lying playa covered by a thin layer of alluvium overlying volcano-sedimentary basin fill and is depositionally very similar to the playas overlying mudstone-hosted lithium deposits found in the Southwest U.S. (i.e., the TLC project of American Lithium Corp. and the Thacker Pass of Lithium Americas Corp.). A previously recognized eastwest fault crossing the center of the T1 playa, which holds low to no Lithium, has been used to simplify and divide the work at Titan 1 into a large North and South Block. Geochemical coverage of the South Block encountered positive Lithium values in 85% of samples collected with the best two lines, occurring the in northeast and southwest of the Block, averaging a continuous 2.5 miles (4kms) of 1.88% LiO2 (8,700 ppm Li) and 4.3 miles (7kms) of 1.08% Li2O (5,000 ppm Li) respectively. The South Block anomaly, which has absorbed the earlier reported T1 ‘mid zone’ currently measures 10,900 acres (44 square kms) in size. The average grade of all lithium values in the South Block anomaly is 4,318 ppm Li or 0.93% Li2O Rigorous Quality control of the samples was maintained for collection and transportation to the laboratory. All samples were prepared and analyzed at the independent and ISO 9001 certified African Minerals and Geosciences Centre (AMGC) in Dar es Salaam.

 

Lithium Claystone Project (Nevada)

 

On March 17, 2022, CDSG entered into an Agreement with American Lithium Minerals Inc., a Nevada based publicly held corporation, whereby CDSG will have the right to earn up to a Sixty Percent (60%) interest in the West End Lithium Project near Tonopah Nevada. The initial investment of $ 25,000 was made on April 1, 2022, and subsequent investments of $ 50,000 were completed in March 2023. CDSG has the right to acquire an additional 50% of the project by committing to expend an additional $ 1,000,000 in exploration and development expenses over the following 3 years. The West End Lithium Project is located directly adjacent to the growing resource of the Tonopah Lithium Claims (“TLC”) Project of American Lithium Corp. The TLC Project is sedimentary hosted lithium claystone deposit and possesses a NI 43- 101 compliant initial resource of 5.37 million tons Lithium Carbonate Equivalent (“LCE”) in the Measured and Indicated category and 1.76 tons LCE in the Inferred category. The West End and TLC Projects are located just six miles northwest of the town of Tonopah, Nevada and just 200 miles by road from Tesla’s Nevada Gigafactory. relating to estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking.

 

Competition

 

The mining industry is intensely competitive. We compete with numerous individuals and companies, including many major mining companies, which have substantially greater technical, financial, and operational resources and staffs. Accordingly, there is a high degree of competition for access to funds. There are other competitors that have operations in the area and the presence of these competitors could adversely affect our ability to compete for financing and obtain the service providers, staff, or equipment necessary for the exploration and exploitation of our properties.

 

 

 

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Many of the mineral exploration companies with which we compete for financing and for the acquisition of mineral exploration properties have greater financial and technical resources than those available to us. Many of our competitors have been in business longer than us, have established more strategic partnerships and relationships than us, and have greater access to financial resources than we do. Accordingly, our competitors may be able to spend greater amounts of time and/or money on acquiring mineral exploration interests of merit or on exploring or developing their mineral exploration properties. This advantage could enable our competitors to acquire mineral exploration properties of greater quality and interest to prospective investors who may choose to finance their additional exploration and development. Because we compete with companies that have greater financial resources and larger technical staffs, we may be at a competitive disadvantage in acquiring desirable mineral properties, and certain properties that would otherwise be attractive to us for exploration or acquisition may be unavailable due to our relative lack of financial and technical resources. Such competition could adversely impact our ability to attain the financing necessary for us to acquire further mineral exploration interests or explore and develop our current or future mineral exploration properties.

 

General competitive conditions may be substantially affected by various forms of legislation and/or regulation introduced from time to time by the governments of the United States and other countries, as well as factors beyond our control, such as international political conditions, fluctuations in market prices, and fluctuations in overall levels of supply and demand for mineral exploration and mineral products.

 

In the face of competition, we may not be successful in acquiring, exploring or developing profitable mineral properties or interests, and we cannot give any assurance that suitable properties or interests will be available for our acquisition, exploration or development. Despite this, we intend to compete successfully in the mineral exploration industry by: (i) keeping our costs low; (ii) relying on the strength of our management’s contacts; and (iii) using our size and experience to our advantage by adapting quickly to changing market conditions or responding swiftly to potential opportunities.

 

Compliance with Government Regulation

 

Mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in United States, as well as other jurisdictions, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters.

 

With respect to the regulation of mineral exploration and processing, legislation and regulations in various jurisdictions establish performance standards, air and water quality emission standards and other design or operational requirements for various aspects of the operations, including health and safety standards. Legislation and regulations also establish requirements for decommissioning, reclamation and rehabilitation of mineral exploration properties following the cessation of operations and may require that some former mineral properties be managed for long periods of time.

 

Our current and future mineral exploration activities will be subject to various levels of federal, state, local and foreign laws and regulations relating to protection of the environment.

 

Compliance with applicable laws and regulations may involve feasibility studies on the surface impact of our proposed operations, costs associated with minimizing surface impact, water treatment and protection, reclamation activities, including rehabilitation of various sites, on-going efforts at alleviating the mining impact on wildlife and permits or bonds as may be required to ensure our compliance with applicable laws and regulations. It is possible that the costs and delays associated with such compliance could become so prohibitive that we may decide to not proceed with exploration, development, or mining operations on any of our mineral properties.

 

We will secure all state, federal, local, and foreign permits necessary for our exploration activities, and will file applications for the required permits to conduct our exploration programs, as necessary. It is difficult to estimate the cost of compliance with environmental laws and regulations because the full nature and extent of our proposed activities cannot definitively be determined at this time.

 

 

 

 3 

 

 

Industry

 

The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as a smelter, roads and a point for shipping, government regulation, and market prices.

 

Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable.

 

Worldwide lithium production increased by an estimated 21% in 2021 in response to increased lithium demand for electric cars, and lithium is a key metal used in the batteries that power electric cars. The Company believes the growing demand for Lithium-ion batteries will continue to drive demand for lithium products, and that the domestic market for lithium products will be under-supplied for years to come. This situation should position the Company well if the Company is able to raise the required capital to continue its exploration efforts and successfully identify a commercially viable lithium deposit.

 

Long-term supply is uncertain as the major lithium producers are brine projects which cannot easily increase capacity (risk collapse of water table), and hard rock lithium mining operations are relatively expensive and time-intensive, which can be cost prohibitive. Even if we are eventually able to discover a mineral reserve on one or more of our properties, there can be no assurance that we will be able to develop our properties into producing mines to extract those resources. Both mineral exploration and development involve a high degree of risk, and few properties which are explored are ultimately developed into producing mines.

 

Subsidiaries

 

Titan Lithium, Inc. (Nevada)

Kilimanjaro Lithium Limited (2.21.23) (Tanzania)

 

Employees

 

As of the date of this Information Statement, the Company has 8 employees, all of which are employed on a full-time basis. There is no collective agreement between the Company and its employees. The employment relationship between employees and the Company is standard for the industry.

 

Corporate Information

 

Our corporate offices are located at 4005 West Reno Ave, Ste F, Las Vegas, NV 89118.

 

Item 1A.Risk Factors.

 

You should carefully consider the risks described below together with all of the other information included in this registration statement before making an investment decision with regard to our securities. The statements contained in or incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment. In addition to other information in this registration statement and in other filings we make with the Securities and Exchange Commission, the following risk factors should be carefully considered in evaluating our business as they may have a significant impact on our business, operating results and financial condition. If any of the following risks occurs, our business, financial condition, results of operations and future prospects could be materially and adversely affected. Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be considered as a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods.

 

 

 

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Risks Related to the Company and Its Business

 

We are dependent upon management, key personnel, and consultants to execute our business plan.

 

Our success is heavily dependent upon the continued active participation of our current management team, especially our current executive officer. Loss of this individual could have a material adverse effect upon our business, financial condition, or results of operations. Further, our success and the achievement of our growth plans depends on our ability to recruit, hire, train, and retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in our industry, and the loss of any of such persons, or an inability to attract, retain, and motivate any additional highly skilled employees required for the expansion of our activities, could have a materially adverse effect on our business. If we are unable to attract and retain the necessary personnel, consultants, and advisors, it could have a material adverse effect on our business, financial condition, or operations.

 

Although we are dependent upon certain key personnel, we do not have any key man life insurance policies on any such people.

 

We are dependent upon management in order to conduct our operations and execute our business plan; however, we have not purchased any insurance policies with respect to those individuals in the event of their death or disability. Therefore, should any of those key personnel, management, or founders die or become disabled, we will not receive any compensation that would assist with any such person’s absence. The loss of any such person could negatively affect our business and operations.

 

Changes in employment laws or regulations could harm our performance.

 

Various federal and state labor laws govern the Company’s relationship with our employees and affect operating costs, including labor laws of non-USA jurisdictions. These laws may include minimum wage requirements, overtime pay, healthcare reform and the implementation of various federal and state healthcare laws, unemployment tax rates, workers’ compensation rates, citizenship requirements, union membership and sales taxes. A number of factors could adversely affect our operating results, including additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, changing regulations from the National Labor Relations Board and increased employee litigation including claims relating to the Fair Labor Standards Act.

 

Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.

 

Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications, and delays encountered in connection with the exploration of mineral properties. Potential problems include, but are not limited to, unanticipated problems relating to exploration, environmental permitting difficulties and delays, and additional costs and expenses that may exceed our current estimates. The expenditures we plan to make in the exploration of our mineral claims may not result in the discovery of commercially viable mineral deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts.

 

If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our claims. If this happens, our business will likely fail.

 

Because of the speculative nature of exploration of mineral properties, we may never discover a commercially exploitable quantity of minerals, our business may fail, and investors may lose their entire investment.

 

We plan to conduct mineral exploration activities on our mineral properties. The search for valuable minerals as a business is extremely risky. We can provide investors with No assurance that exploration on our properties will establish the existence of commercially exploitable mineral reserves on our property. Potential problems that may prevent us from discovering any mineral reserves on our property include, but are not limited to, unanticipated problems relating to exploration, environmental permitting difficulties and delays, and additional costs and expenses. If we are unable to establish the presence of commercially exploitable mineral reserves on our properties, our ability to fund future exploration activities will be impeded, we will not be able to operate profitably, and investors may lose all of their investment in our company.

 

 

 

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The nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses that could materially and adversely affect our operations.

 

Exploration for minerals is highly speculative and involves greater risk than many other businesses. Many exploration programs do not result in the discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality to be profitably mined. Few properties that are explored are ultimately advanced to the stage of producing mines.

 

Our exploration efforts are, and any future development or mining operations we may elect to conduct will be, subject to all the operating hazards and risks normally incident to exploring for and developing mineral properties, including, without limitation:

 

·Economically insufficient mineralized material;
·Fluctuations in production costs that may make mining uneconomical;
·Labor disputes;
·Unanticipated variations in grade and other geologic problems;
·Environmental hazards;
·Water conditions;
·Troublesome surface or underground conditions;
·Industrial accidents;
·Metallurgical and other processing problems;
·Mechanical and equipment performance problems;
·Failure of pit walls or dams;
·Unusual or unexpected rock formations;
·Personal injury fire, flooding, cave-ins, and landslides; and
·Decrease in reserves due to lower prices of lithium and other commodities.

 

Mineral operations are subject to applicable law and government regulation. Even if we discover a mineral resource in a commercially exploitable quantity, these laws and regulations could restrict or prohibit the exploitation of that mineral resource. If we cannot exploit any mineral resource that we might discover on our properties, our business may fail

 

Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that we will be able to obtain or maintain any of the permits required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs. If we cannot accomplish these objectives, our business could fail.

 

We believe that we are in compliance with all material laws and regulations that currently apply to our activities but there can be no assurance that we can continue to remain in compliance. Current laws and regulations could be amended and we might not be able to comply with them, as amended. Further, there can be no assurance that we will be able to obtain or maintain all permits necessary for our future operations, or that we will be able to obtain them on reasonable terms. To the extent such approvals are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or development of our mineral properties.

 

 

 

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The potential profitability of mineral ventures depends in part upon factors beyond the control of the Company. Even if we are able to discover and exploit hard-rock lithium deposits, we may never become commercially viable and may be forced to cease operations.

 

The commercial feasibility of mineral properties is dependent upon many factors beyond our control, including the existence and size of mineral deposits in the properties we explore, the proximity and capacity of processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production, and environmental regulation. These factors cannot be accurately predicted and any one or more of these factors may result in our company not receiving an adequate return on invested capital.

 

These factors may have material and negative effects on our financial performance and our ability to continue operations. Our business plan of exploring, mining and developing prospective lithium assets is sensitive to a number of industry-specific and global issues and events, including, without limitation:

 

·Changing regulatory environment – Changes in the regulatory environment may have an adverse impact on our ability to explore and develop our mineral properties.
·Geographic considerations – Our operations outside the United States are subject to special risks and restrictions, including changes in local political or economic conditions, fluctuations in currency values, exchange control regulations, import or export licensing requirements, import and trade restrictions, and other domestic and foreign governmental practices and policies affecting U.S. companies doing business in foreign countries.
·Economic and political change – Our business could be adversely affected by economic and political changes in the markets where we compete, including, without limitation: inflation rates, recessions, trade restrictions, foreign ownership restrictions and economic embargoes imposed by the United States or any of the foreign countries in which we do business; changes in applicable laws, taxation, and regulations, and in the interpretation, application and enforcement of such laws, taxation, and regulations; restrictions imposed by the United States government or foreign governments through exchange controls or taxation policy; nationalization or expropriation of property, undeveloped property rights, and legal systems or political instability; and other external factors over which we have no control. Economic and political conditions within the United States and foreign jurisdictions, or strained relations between countries, may result in fluctuations in demand, price volatility, supply disruptions, or loss of property.
·Climate conditions – Adverse weather conditions may impact our ability to efficiently conduct exploration activities on our mineral properties and ultimately extract lithium from any lithium deposits we discover. The nature of these events makes them difficult to predict.
·Fluctuating commodity prices – Our operating results could be significantly affected by commodity costs, including costs of raw materials. We may not be able to raise our prices or improve our productivity to sufficiently offset future increases in commodity pricing, and increases in commodity prices may negatively affect our financial condition and results of operations

 

Mineralized material is based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated.

 

Unless otherwise indicated, mineralized material presented in our filings with securities regulatory authorities, including the SEC, press releases, and other public statements that may be made from time to time, are based upon estimates made by our consultants.

 

When making determinations about whether to advance any of our projects to development, we must rely upon such estimated calculations as to the mineralized material on our properties. Until mineralized material is actually mined and processed, it must be considered an estimate only. These estimates are imprecise and depend on geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. We cannot assure investors that these mineralized material estimates will be accurate or that this mineralized material can be mined or processed profitably. Any material changes in estimates of mineralized material will affect the economic viability of placing a property into production and such property’s return on capital. There can be No assurance that minerals recovered in small scale tests will be recovered at production scale. The mineralized material estimates have been determined and valued based on assumed future prices, cut-off grades, and operating costs that may prove inaccurate. Extended declines in market prices for lithium and other alkali metals may render portions of our mineralized material uneconomical, which may adversely affect the commercial viability of one or more of our properties and could have a material adverse effect on our results of operations or financial condition.

 

 

 

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Mineral exploration and development activities are subject to comprehensive regulation, which may cause substantial delays or require capital outlays in excess of those anticipated, causing an adverse effect on our company.

 

Mineral exploration and development activities are subject to various laws, regulations and policies governing prospecting, mine development, mineral production, removal and transport of natural resources, as well as discharge of materials into the environment. Mining activities are also subject to various regulations regarding taxation, import and export, labor standards, occupational health standards, safety standards, waste disposal, toxic substances, land use, water use, environmental protection, and other matters.

 

Permits from various foreign, federal, state, provincial and local governmental authorities are required for mining operations to be conducted, and No assurance can be given that such permits will be successfully obtained. Environmental and other legal standards imposed by governmental authorities may be changed, and any such change may prevent us from conducting planned activities, or increase our costs of doing so, which could have material adverse effects on our business. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, causing an adverse effect on our business operations.

 

Additionally, we may be subject to liability for pollution or other environmental damages, which we may not be able to insure against due to prohibitive premium costs and other financial and practical considerations. Any laws, regulations, or policies of any government body or regulatory agency may be changed, applied, or interpreted in a manner which will alter and negatively affect our ability to carry on our business. We cannot assure you that new rules and regulations will not be enacted, or that existing rules and regulations will not be applied in a manner which could limit or curtail our exploration or development activities on our properties.

 

Mineral exploration and development is subject to extraordinary operating risks. We do not currently insure against these risks. In the event of a cave-in or similar occurrence, our liability may exceed our resources, which would have an adverse impact on our company.

 

Mineral exploration, development and production involves many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Our operations will be subject to all the hazards and risks inherent in the exploration for mineral resources and, if we discover a mineral resource in commercially exploitable quantity, our operations could be subject to all of the hazards and risks inherent in the development and production of resources, including liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure. Any such event could result in work stoppages and damage to property, including damage to the environment. We do not currently maintain any insurance coverage against these operating hazards. The payment of any liabilities that arise from any such occurrence would have a material adverse impact on our company.

 

Mineral prices are subject to dramatic and unpredictable fluctuations.

 

We expect to derive revenues, if any, either from the sale of our mineral resource properties or from the extraction and sale of lithium and/or associated byproducts. The price of those commodities has fluctuated widely in recent years, and is affected by numerous factors beyond our control, including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods. The effect of these factors on the price of base and precious metals, and therefore the economic viability of any of our exploration properties and projects, cannot accurately be predicted.

 

The mining industry is highly competitive and there is no assurance that we will continue to be successful in acquiring mineral claims. If we cannot continue to acquire properties to explore for mineral resources, we may be required to reduce or cease operations.

 

The mineral exploration, development, and production industry is largely un-integrated. We compete with other exploration companies looking for mineral resource properties. While we compete with other exploration companies in the effort to locate and acquire mineral resource properties, we will not compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible. Readily available markets exist worldwide for the sale of mineral products. Therefore, we will likely be able to sell any mineral products that we identify and produce.

 

 

 

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In identifying and acquiring mineral resource properties, we compete with many companies possessing greater financial resources and technical facilities. This competition could adversely affect our ability to acquire suitable prospects for exploration in the future. Accordingly, there can be no assurance that we will acquire any interest in additional mineral resource properties that might yield reserves or result in commercial mining operations.

 

All our properties are in the exploration stage. Even though we have geologists reports that conclude that there is a big amount of lithium in our properties, there is no guarantee that we can establish the existence of any mineral resource on any of our properties in commercially exploitable quantities.

 

Even if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that we will be able to develop our properties into producing mines and extract those resources. Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.

 

The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable.

 

If we establish the existence of a mineral resource on any of our properties in a commercially exploitable quantity, we will require additional capital in order to develop the property into a producing mine. If we cannot raise this additional capital, we will not be able to exploit the resource, and our business could fail.

 

If we do discover mineral resources in commercially exploitable quantities on any of our properties, we will be required to expend substantial sums of money to establish the extent of the resource, develop processes to extract it and develop extraction and processing facilities and infrastructure. Although we may derive substantial benefits from the discovery of a major deposit, there can be no assurance that such a resource will be large enough to justify commercial operations, nor can there be any assurance that we will be able to raise the funds required for development on a timely basis. If we cannot raise the necessary capital or complete the necessary facilities and infrastructure, our business may fail.

 

We are not subject to Sarbanes-Oxley regulations and lack the financial controls and safeguards required of public companies.

 

We have not been subject to Sarbanes-Oxley throughout our operating history and therefore have not previously developed the internal infrastructure necessary to complete an attestation of our financial controls pursuant to Section 404 of the Sarbanes-Oxley Act of 2002. We expect to incur substantial expenses and diversion of management's time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements. 

 

Our Chairman of the Board of Directors owns preferred stock having voting control of the Company, we have engaged in transactions with related persons, and conflicts of interest may arise as a result.

 

Our Chairman of the Board of Directors, Harpreet Sangha, controls 10,000,000 shares, or 100%, of our Series A Preferred Stock, with such shares having super-voting rights. By virtue of such stock ownership, Mr. Sangah is able to generally exercise control over our affairs, including the election and removal of members of our board of directors, amending our Articles of Incorporation and Bylaws, and adopting measures that could delay or prevent a change of control. Such concentration of ownership and control could have the effect of delaying, deterring or preventing a change in control of the Company that might otherwise be beneficial to stockholders.

 

Additionally, we have engaged in transactions with Mr. Sangha and other officers and directors of the Company. There can be no assurance that conflicts of interest will not arise with respect to our officers and directors, or that such conflicts will be resolved in a manner favorable to the Company.

 

 

 

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There is no guarantee that we will have sufficient cash flow from our business to pay our indebtedness or that we will not incur additional debt.

 

Holders of convertible notes issued by us may convert such notes at their option prior to the scheduled maturities of the respective convertible notes under certain circumstances pursuant to the terms of such notes. Upon conversion of the applicable convertible notes, we will be obligated to deliver cash and/or shares pursuant to the terms of such notes. Moreover, holders of such convertible notes may have the right to require us to repurchase their notes upon the occurrence of a fundamental change pursuant to the terms of such notes.

 

Our ability to make scheduled payments of the principal and interest on our indebtedness when due, to make payments upon conversion or repurchase demands with respect to our convertible notes, or to refinance our indebtedness as we may need or desire, depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control. Our business may not generate cash flow from future operations sufficient to satisfy our obligations under our existing indebtedness and any future indebtedness we may incur, and to make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing, or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance existing or future indebtedness will depend on the capital markets and our financial condition at such time. In addition, our ability to make payments may be limited by law, by regulatory authority, or by agreements governing our future indebtedness. We may not be able to engage in these activities on desirable terms or at all, which may result in a default on our existing or future indebtedness and harm our business, financial condition and operating results.

 

Our indebtedness could adversely affect our financial condition or operations, and our ability to raise additional capital financing on favorable terms.

 

As of March 31, 2023, we had total outstanding debt of $547,121. Our indebtedness and the terms of the instruments governing such indebtedness could have significant consequences such as:

 

·Increasing our vulnerability to general adverse economic and industry conditions;  
·Limiting our ability to fund future working capital, capital expenditures costs and other general corporate requirements;  
·Requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;  
·Limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;  
·Placing us at a competitive disadvantage compared to our competitors that have less debt; and  
·Limiting, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or engage in various transactions that might otherwise be beneficial to us.  

 

We will likely need to raise additional capital through debt and/or equity financing. There can be no assurance that adequate debt and equity financing will be available on satisfactory terms. Any such failure to service our debt or an inability to obtain further financing could have a negative effect on our business and operations.  

 

Additional financing may not be available to us when we need or want it, nor may it be available on satisfactory terms.  

 

We have limited capital and there is no assurance that our current capital is sufficient to implement our business plan. We will likely require additional debt and/or equity financing to pursue our growth and business strategy, including enhancements to our operations infrastructure and improving our ability to respond to competitive pressures. There can be no assurance that adequate debt and/or equity financing will be available or offered on satisfactory terms. Any failure to obtain further financing could have a materially adverse effect on our business, financial condition, and operating results.

 

 

 

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Other Risks

 

We may not realize the anticipated benefits of past or future acquisitions, and integration of these acquisitions may disrupt our business and management.

 

We have made several acquisitions in the last several years, and in the future, we may acquire additional companies, project pipelines, products, or technologies or enter into join ventures or other strategic initiatives. We may not realize the anticipated benefits of an acquisition and each acquisition has numerous risks. These risks include the following:  

 

·difficulty in assimilating the operations and personnel of the acquired company;  
·difficulty in effectively integrating the acquired technologies or products with our current products and technologies;  
·difficulty in achieving profitable commercial scale from acquired technologies;  
·difficulty in maintaining controls, procedures, and policies during the transition and integration;  
·disruption of our ongoing business and distraction of our management and associates from other opportunities and challenges due to integration issues;  
·difficulty integrating the acquired company’s accounting, management information, and other administrative systems;  
·inability to retain key technical and managerial personnel of the acquired business.  

 

Risks Related to the Ownership of Our Common Stock

 

If we are subject to Securities and Exchange Commission regulations relating to low-priced stocks, the market for our common stock could be adversely affected.

 

The SEC has adopted regulations concerning low-priced or “penny” stocks. The regulations generally define “penny stock” to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. If our shares are offered at a market price less than $5.00 per share, and do not qualify for any exemption from the penny stock regulations, our shares may become subject to these additional regulations relating to low-price stocks.

 

The penny stock regulations require that broker-dealer who recommend penny stocks to persons other than institutional accredited investors make a special suitability determination for the purchase, receive the purchaser’s written agreement to the transaction prior to the sale and provide the purchaser with risk disclosure documents that identify risks associated with investing in penny stocks. Furthermore, the broker-dealer must obtain a signed and dated acknowledgment form the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before effecting a transaction in penny stock. These requirements have historically resulted in reducing the level of trading activity in securities that become subject to the penny stock rules.

 

The additional burdens imposed upon broker-dealers by these penny stock requirements may discourage broker-dealers from effecting transactions in the common stock, which could severely limit the market liquidity of our common stock and our shareholders’ ability to sell our common stock in the secondary market.  

 

The trading price of our common stock is likely to continue to be volatile.

 

The trading price of our common stock has been highly volatile and could continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control. The stock market in general has experienced, and likely will continue to experience, substantial price and volume fluctuations that are often unrelated or disproportionate to the operating performances of companies. Our common stock may be traded by short sellers which may put pressure on the supply and demand for our company stock, further influencing volatility in its market price. Public perception and other factors outside of our control may additionally impact our stock price and volatility. The market price of our common stock will likely fluctuate significantly in response to the following or other factors, again some of which are beyond are control:

 

 

 

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·Significant delays in our supply channel;  
·Inability to raise additional capital or do so on favorable terms, if necessary, to maintain or grow our operations;  
·Additions or departures of key personnel;  
·Future sales of our common stock; 
·Stock market price and volume fluctuations attributable to inconsistent trading volume levels of our stock;  
·Commencement of or involvement in litigation; and  
·Our inability to effectively manage our current and future operations.  

 

Our largest stockholders have significant control over us and their interests may conflict with or differ from interests of other stockholders.

 

Our largest stockholders are Verde Capital, LTD (Harpreet Sangha) and Lawrence Stephenson (collectively, the “Significant Stockholders”). As a result, the Significant Stockholders have substantial influence over all matters requiring stockholder approval, including the election of our directors and the approval of significant corporate transactions such as mergers, tender offers, and the sale of all or substantially all of our assets. The interests of the Significant Stockholders could conflict with or differ from interests of other stockholders. For example, the concentration of ownership held by the Significant Stockholders could delay, defer or prevent a change of control of our company or impede a merger, takeover, or other business combination which a majority of stockholders may view favorably.

 

We may fail to meet our publicly announced guidance or other expectations about our business, which could cause our stock price to decline.

 

From time-to-time we may provide guidance regarding our expected financial and business performance. Correctly identifying key factors affecting business conditions and predicting future events is inherently an uncertain process, and our guidance may not ultimately be accurate. Our guidance is based on certain assumptions such as those relating to sales volumes (which generally are not linear throughout a given period), average sales prices, supplier and commodity costs, and planned cost reductions. If our guidance varies from actual results due to our assumptions not being met or the impact on our financial performance that could occur as a result of various risks and uncertainties, the market value of our common stock could decline significantly.

 

Transactions relating to our convertible notes may dilute the ownership interest of existing stockholders, or may otherwise depress the price of our common stock.

 

The conversion of some or all of the convertible notes issued by us or our subsidiaries would dilute the ownership interests of existing stockholders to the extent we deliver shares upon conversion of any of such notes by their holders, and we may be required to deliver a significant number of shares. Any sales in the public market of the common stock issuable upon such conversion could adversely affect their prevailing market prices. In addition, the existence of the convertible senior notes may encourage short selling by market participants because the conversion of such notes could be used to satisfy short positions, or the anticipated conversion of such notes into shares of our common stock could depress the price of our common stock.

 

We do not anticipate paying any dividends on our common stock.

 

We do not anticipate paying any dividends on our common stock for the foreseeable future. Rather, we intend to retain any future earnings for use in the operation and expansion of our business.

 

 

 

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General Risk Factors

 

Unanticipated changes in our tax provisions, the adoption of a new U.S. tax legislation, or exposure to additional income tax liabilities could affect our profitability.

 

We are subject to income taxes, and are therefore subject to potential tax examinations, in the United States. Tax authorities may disagree with our tax positions and assess additional taxes. We regularly assess the likely outcome of these examinations in order to determine the appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these potential examinations, and the amounts ultimately paid upon resolution of examinations could be materially different from the amount previously included in our income tax expense and therefore, could have a material impact on our tax provision, net income, and cash flows. In addition, our future effective tax rate could be adversely affected by changes to our operating structure, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, and the discovery of new information in the course of our tax return preparation process. In addition, recently announced proposals for new U.S. tax legislation could have a material effect on the results of our operations, if enacted.

 

We are susceptible to changes in employment laws and regulations or to changes in employment classifications by government agencies.

 

As we expand our operations, we may become subject to additional federal and state employment laws. Therefore, we may be required to allocate resources, including management’s time, to establishing a policy pursuant to which we evaluate any changes in federal and state laws to ensure our compliance with these requirements. In addition, other factors beyond our control, including increases in minimum wage requirements, overtime pay, healthcare reform, and other laws and regulations affecting employees, independent contractors, and other third-party service providers, could have a material adverse effect on our business, financial condition, and results of operation.

 

We depend on third-party providers for internet, other communication infrastructures and data management systems upon which our operations critically rely.

 

We rely on third-party service providers for substantially all of our communication and information technology systems, including for product data management, procurement, inventory management, operations planning and execution, sales, service and logistics, financial, tax and regulatory compliance systems. We rely on our third-party service providers to protect our systems and databases against intellectual property theft, data breaches, sabotage and other external or internal cyber-attacks or misappropriation. No assurances can be made that third-party service providers will protect against those and other risks. Any disruption, either temporary or permanent, to our communication and technology systems would likely have a significant adverse material effect on our business, financial condition and operating results.

 

Our operations could be adversely affected by events outside of our control, such as natural disasters, wars, or health epidemics.

 

We may be impacted by natural disasters, wars, health epidemics, or other events outside of our control. If major disasters such as earthquakes, floods, fires, or other events occur, or our information system or communications breaks down or operates improperly, our headquarters and/or exploration operations on our various mining properties may be seriously damaged, or we may have to stop or delay our operations. In addition, the global COVID-19 pandemic has impacted economic markets, manufacturing operations, supply chains, employment and consumer behavior in nearly every geographic region and industry across the world, and we have been, and may in the future be, adversely affected as a result. We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results and financial condition.

 

 

 

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Item 2.Financial Information.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Fiscal Year End

 

We have included with this offering circular audited financial statements for the fiscal years ended September 30, 2022, and September 30, 2021, and unaudited financial statements for the six months ended March 31, 2023.

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements. These forward-looking statements generally are identified by the words believes, project, expects, anticipates, estimates, intends, strategy, plan, may, will, would, will be, will continue, will likely result, and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

 

Business Development Plan

 

General Business Plan

 

We are a U.S. based mineral exploration and mining company in the pursuit of lithium, a critical battery metal, which will be a major pillar for lowering carbon emissions leading to a zero-carbon future. Our current focus is on developing our two lithium-in-clay projects located in northern Tanzania and our West End Lithium project located near Tonopah, Nevada. We intend to explore and develop these projects with the aim of producing and selling lithium carbonate, a key ingredient for the battery supply chain. Lithium is essential for batteries in electric vehicles and demand is expected to outstrip supply.

 

Our largest mineral projects and properties are in Tanzania and, as of the date of this prospectus, our mineral rights portfolio for battery metals includes approximately 72,344 acres (293 km2) for lithium in two Prospecting Licenses, Titan One and Titan Two. We believe that we hold one of the largest portfolios of lithium mineral exploration properties in Tanzania, a well-established jurisdiction for the mining industry.

 

We also are developing a lithium-in-clay project located in Nevada. The project is strategically located nearby Tonopah close to the center of lithium exploration activities in the U.S. Nevada was ranked as the top mining jurisdiction in the world for 2022 and we believe this project to be a potential future lithium producer as it is lays directly within the confines of a growing lithium resource.

 

Titan One Lithium Project

 

Our Titan One Lithium Project is currently our largest endeavor and primary focus. The project is in northeastern Tanzania, within the Pangani Rift Valley (“PRV”), a geologic feature which extends for more than 850 kilometers in a roughly north-south fashion originating south of Mount Kilimanjaro.

 

Our current property position at Titan 1 covers approximately 115 square miles (298 km2) which is centered over a large sparsely vegetated playa very similar to those located within the Southwest U.S. The Titan 1 Property is situated to the west of Tanzanian Highway B1 in northeastern Tanzania, approximately sixty-five miles southeast of the Kilimanjaro International Airport and 18.5 miles southwest of the town of Same, Same District, Kilimanjaro Region. See Figure 1.

 

 

 

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Titan Two Lithium Project

 

The Titan 2 Property is situated approximately thirty-six miles south of the Kilimanjaro International Airport and 18.5 miles northeast of the town of Landanai, Simanjiro District Manyara Region. See Figure 1.

 

The Titan 2 PL covers approximately 13,220 acres (53.5 km2) which centers over a dry lakebed with no outflow.

 

 

 

Figure 1. Approximate locations of Titan 1 and Titan 2 Prospecting Licenses.

 

 

 

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Adjacent Projects

At present, other mining and exploration activity in the region includes privately held gypsum and magnesite mining activity currently in production. Several lithium exploration projects, held by publicly traded companies, are also under way in Tanzania, however, the focus of those efforts is located far to the southwest of our project and are targeting hard-rock pegmatites. We believe our portfolio of exploration rights in the region represents one of the largest lithium property position in Tanzania, and with the location of Tanzania offering shipping to Europe, North America, India, and China, we believe we have a potential strategic advantage over other mining and exploration companies active in the sector.

 

Infrastructure and Access

Although our project sits well south of Mount Kilimanjaro, the infrastructure connecting the Dar es Salaam commercial center to the Mt. Kilimanjaro region is excellent. Our project sits in a corridor with access to hydroelectric power and water supplies, a well-established road, and a rail network with direct access to commercial ports. Basic goods and services, industrial suppliers, and a skilled and semi-skilled labor force are also readily available from the surrounding communities where we operate.

 

The Titan 1 Property is accessible from the Tanzanian Highway B1, and by gravel roads to the north end and the south end of the property. The center area of the Property can be easily accessed with a 4-wheel drive truck.

 

The Titan 2 Property is accessed from the town of Landanai which is located on the recently upgraded Meremani – Simanjiro gravel highway, then by driving along approximately 12.5 miles of dirt road to the northeast of the town to Titan 2. There is no difficulty accessing the full area of Titan 2 with a 4-wheel drive truck.

 

Geology

The Tanzanian projects occur in basins that are local “traps” for all the erosion debris from the surrounding areas with Titan 1 covering the main flat playa basin within the Northwest-Southeast striking PRV and Titan 2 covering an internal drainage system in the western shoulder of the PRV. Within the PRV a small river flows out to the Indian Ocean from the Mount Kilimanjaro region. In the past, drainage was more likely restricted to the south by mountains. The Titan 2 basin is arheic with no outward drainage. It is likely that is has always been an internal drainage basin.

 

There are no outcrops of the underlaying sedimentary and volcanic strata located in the basin or on the Property. The playa sediments conform to the expected sediments that are the weathered detritus of the region. The Properties are entirely covered by alluvium related to the main rift valley. The main playa areas are flat and consist of fine silt size sediments. Some boulders are present around the edge of the playa reflecting the geology of the surrounding mountains.

 

There is no other information on these basins. However, both conform to a dry restrictive basin model that would be conducive to the development of brines and sediments that could contain lithium.

 

Exploration

Until the recent sampling efforts discovered lithium in the region, there has been no reported lithium in the deposited volcano-sedimentary units derived from the adjacent tertiary volcanics of the East African Rift volcanism with Tanzania.

 

Since initiating our exploration program in the first months of 2023, our team has focused on evaluating the lithium potential of the areas by examining the geochemical constituents in the alluvium cover of the Titan projects. This is a methodology that has been high effective in playa basins within the southwestern U.S. Soil samples are collected into cloth bags from the B Soil Horizon which occurs just under any organics found in the soil.

 

Typically, soil geochemical samples are taken by methodical regular spaced sampling which efficiently assists in defining the size of potential exploration target. Grades that have been returned from soil sampling of metallic ore bodies are characteristically a fraction of the underlying metal content.

 

 

 

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Results from our Phase one exploration program have demonstrated the existence of strong lithium-in-soil results over large areas within the project boundaries which indicate the need for further exploration work. All soil samples were located, collected, catalogued, and transported in the presence of a Qualified Person. The samples were then prepared and analyzed at the independent, and ISO 9001 certified, African Minerals and Geosciences Centre (AMGC) in Dar es Salaam.

 

Elemental sample results from the Titan projects have returned results unparalleled in size and grade of lithium. Anomalous lithium results in Nevada basins are typically on the order of 50 to 400ppm, sometimes reaching 1,000 ppm Li. Whereas results from both Titan 1 and Titan 2 have returned lithium values ranging from 500 to over 9,000 ppm Li, with values in some regions well over 10,000 ppm Li or 1% lithium.

 

At the time of this filing, the average value for our large positive Lithium in-soil anomalies stands at 25 square miles, or 16,000 acres, averaging 4,376 ppm Li for Titan 1. The Titan 2 project’s anomalous area covers 1,500 acres and averages 4,044 ppm Li.

 

For a comparative scale, the Thacker Pass, the largest recorded Lithium-in-clay deposit, has an open pit design containing a 40-year life-of-mine plan with an average of 3,160 ppm Lithium and covers an area of 1,093 acres.

Work on the Titan projects is on-going and the extent of the lithium-in-soil has not yet been fully defined. After this Phase One exploration program, we intend to begin more intense examination of the area by geophysics, trenching and drilling.

 

The West End Lithium Project

 

The West End Lithium (“WEL”) Project is located directly within the Tonopah Lithium Claims (“TLC”) Claim. The TLC Project is a sedimentary hosted lithium claystone deposit located six miles northwest of the town of Tonopah, Nevada (see Figure 2).

 

 

 

Figure 2. The location of the West End Claim Block

 

 

 

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Geology

The WEL claim block geology is identical to that of the surrounding TLC project which has been the subject of extensive work. Lithium at the TLC project is held within relatively near-surface gently dipping claystone. Exploration and drilling continue to expand the project along a roughly northwest-southeast trend (see Figure 3).

 

 

 

Figure 3. WEL Claim group (grey E-shape) with the TLC project resource boundaries.

 

 

 

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Exploration

To date we have not drilled on the WEL claim block. However, all geologic investigative work suggests the project is underlain by the same geologic formations which host the lithium mineralization at the TLC project. Thus, we believe the WEL claim block will be able to generate lithium-in-clay resources.

 

Adjacent Projects

We are greatly encouraged by the results of the TLC drilling efforts project which has cored mineralized sections both to the north, south, and east of the WEL claims.

 

As of January 17, 2023, the work at the TLC project has produced NI 43-101 compliant resources of:

 

·Measured Resource - 4.2 Mt Lithium Carbonate Equivalent (“LCE”) (860 Mt @ 924 ppm Li)
·Indicated Resource – 4.63 Mt LCE (1192 Mt @ 727 ppm Li)
·Measured + Indicated Resource – 8.83 Mt LCE (2052 Mt @ 809 ppm Li)
·Inferred Resource – 1.86 Mt LCE (486 Mt @ 713 ppm Li)
·The resources are calculated employing a cut-off of 500 ppm Li.

 

On February 1, 2023, American Lithium announced a Preliminary Economic Assessment (“PEA”) for the TLC project which demonstrated robust economics and the potential to become a substantial, long-life producer of low-cost lithium carbonate producer.

 

The PEA base case envisions an initial 4.4 million tonnes per annum (“Mtpa”) processing throughput expanding to 8.8Mtpa.

 

TLC PEA Base Case – Li only production:

 

·Pre-tax Net Present Value (“NPV”) $3.64 billion at $20,000/tonne (“t”) LCE
·After-tax NPV8% $3.26 billion at $20,000/t LCE
·Pre-tax Internal Rate of Return (“IRR”) of 28.8%
·After-tax IRR of 27.5%
·PEA mine and processing plan produces 1.46 Mt LCE LOM over forty years.
·Pre-tax initial capital payback period 3.6 years; after-tax payback 3.8 years
·Average LOM annual pre-tax cash flow: $435 million; annual after-tax cash flow: $396 million
·Initial Capital Costs (“Capex”) estimated at $819 million.
·Total Capex estimated at $1,431 million; Sustaining Capital estimated at $792 million.
·Operating cost (“Opex”) estimated at $7443/t LCE inclusive of power credits.

 

Metallurgical Testing

In parallel with our planned Phase 2 program for the Titan project, which will include a first pass drilling campaign, we will initiate preliminary recovery and metallurgical testing program to determine the potential for producing commercial grade lithium concentrate from the alluvium that covers much of our Titan area.

 

To date, samples from the alluvium have been of high-grade nature and the Company has confidence there is a quantifiable lithium resource within this easily collectible material that may be commercially viable. Bulk samples will be submitted to an internationally accredited independent analytical laboratory for various testing to determine effective and environmentally friendly methodologies for Lithium extraction.

 

 

 

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For our Titan drill program, we core the underlying geologic stratum. We plan to conduct metallurgical testing on an ongoing basis so we can rapidly understand both the potential lithium mineral resources as well as their optimum recovery methods.

 

Environmental, Social and Governance

We are deeply committed to Environmental, Social, and Corporate Governance (“ESG”) causes. We have mapped out a plan in these important matters and our efforts are effective in the communities in which we operate. Management has operated in Tanzania previously and in the last few months, we have constantly engaged with the local people within the areas in which we operate. We also have built an excellent relationship with the governing bodies and plan to coordinate a baseline environmental survey this fall.

 

Lithium Market

Lithium is on the list of the thirty-five minerals considered critical to the economic and national security of the United States as first published by the U.S. Department of the Interior on May 18, 2018. In June 2021, the U.S. Department of Energy published a report titled “National Blueprint for Lithium Batteries 2021-2030” (the “NBLB Report”) which was developed by the Federal Consortium for Advanced Batteries (“FCAB”), a collaboration by the U.S. Departments of Energy, Defense, Commerce, and State. According to the NBLB Report, one of the main goals of this U.S. government effort is to “secure U.S. access to raw materials for lithium batteries.”

 

Soon after the publication of the NBLB Report, the United States, Canada, Australia, Finland, France, Germany, Japan, South Korea, Sweden, the United Kingdom, and the European Commission established the Minerals Security Partnership (“MSP”) aimed at securing the supply of critical minerals deemed essential for the transition to clean energy and other technologies. The MSP specifically covers such minerals as lithium, nickel, and cobalt, recognizing demand is projected to expand significantly in the coming decades.

 

Jose Fernandez, Under Secretary for Economic Growth, Energy and the Environment at the State Department, commented after publication of the MSP, “Massive amounts of these minerals will be needed to meet the United States' emissions reduction goals” and that the U.S. will require “six times more lithium by 2050 than today in order to meet the clean energy goals.”

 

The NBLB Report succinctly summarizes the U.S. government’s views on the need for lithium and the expected growth of the lithium battery market.

 

Electric Vehicle Demand

The growth in electric vehicles (“EVs”) will generate the greatest need for lithium-based batteries. The NBLB Report states: “Bloomberg projects worldwide sales of 56 million passenger electric vehicles in 2040, of which 17% (about 9.6 million EVs) will be in the U.S. market.”

 

The following graph shows the actual and estimated global annual sales of passenger EVs, including both Battery Electric Vehicles (“BEVs”) and Plug-in Hybrid Electric Vehicles (“PHEVs”).

 

 

 

 20 

 

 

 

 

Figure 4. Source: NBLB Report (defined above). Original Source: Bloomberg NEF Long-Term Electric Vehicle Outlook 2019.

 

The 2021 Bloomberg Long-Term Electric Vehicle Outlook report stated: “The outlook for EV adoption is getting much brighter, due to a combination of more policy support, further improvements in battery density and cost, more charging infrastructure being built, and rising commitments from automakers. Passenger EV sales are set to increase sharply in the next few years, rising from 3.1 million in 2020 to 14 million in 2025. Globally, this represents around 16% of passenger vehicle sales in 2025, but some countries achieve much higher shares. In Germany, for example, EVs represent 40% of total sales by 2025, while China – the world’s largest auto market – hits 25%.”

 

In fact, real world sales of EVs have already surpassed the NBLB Report’s predictions. The April 2023 edition of the International Energy Agency’s (“IEA”) annual Global Electric Vehicle Outlook shows that more than ten million electric cars were sold worldwide in 2022 rather than the five million predicted by the NBLB Report. The IEA further states that sales are expected to grow by another 35% in 2023 to reach fourteen million, double the number predicted by the NBLB Report in 2021. This projected growth means that EVs share of the overall car market rose from around 4% in 2020 to 14% in 2022 and is set to attain 18% in 2023.

 

Grid Storage Demand

Regarding the lithium battery growth derived from grid storage demands, the NBLB Report states: “In addition to the EV market, grid storage uses of advanced batteries are also anticipated to grow, with Bloomberg projecting total global deployment to reach over 1,095 GW by 2040, growing substantially from 9 GW in 2018;” and “Bloomberg forecasts 3.2 million EV sales in the U.S. for 2028, and over 200 GW of lithium-ion battery-based grid storage deployed globally by 2028. With an average EV battery capacity of 100 kWh, 320 GWh of domestic lithium-ion battery production capacity will be needed just to meet passenger EV demand. Benchmark Mineral Intelligence forecasts U.S. lithium-ion battery production capacity of 148 GWh by 2028 less than 50% of projected demand.” 

 

 

 

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Growth in Lithium Prices

Directly relevant to our goal to produce lithium carbonate for sale, the chart below indicates the price of lithium carbonate over the last 12 years (Figure 5).

 

 

 

Figure 5. Average Annual Lithium Carbonate Price over 12-year period. Source: Statista website. Current price is over 40,000 USD/t.

 

Several of the advanced Lithium-in-Clay deposits, such as the Thacker Pass, TLC, and the Sonora Deposit have cash costs for Lithium Carbonate production from clays in the order of 3,500 to 7,400 per ton, thus making the production of lithium carbonate products from clays very profitable.

As of the date of this filing, the current Lithium Carbonate price is approximately $42,400 USD/ton.

 

Developments Potentially Affecting Lithium Demand 

Many consumer-driven factors are contributing to the demand for lithium in portable electronics and Electric Vehicles. However, government mandates across some U.S. States as well as entire countries are hastening a global decarbonization drive away from gas powered vehicles and accelerating demand for lithium.

In California, which has a car market only slightly smaller than that of France, Italy, and Britain, approved the Advanced Clean Cars II in 2022. This act establishes a year-by-year roadmap so that by 2035 100% of new cars and light trucks sold in California will be zero-emission vehicles, including plug-in hybrid electric vehicles. 

 

 

 

 22 

 

 

Huge vehicle marketplaces like China, Europe and India have all enacted policies towards adopting low to zero emission vehicles in the coming 15 years. Examples of such policies are as follows:

 

·April 2021 – China imposes a mandate on automakers requiring that electric vehicles make up 40% of all sales by 2030.
·June 2022 - the European Union Parliament voted to ban the sale of new diesel and gasoline cars and vans starting in 2035.
·India – 20 of 28 states have now adopted EV policies that strongly set targets for the adoption of electrification across multiple vehicle classes.

 

Current Predictions

Benchmark Mineral Intelligence, a well-respected global consulting firm specializing in the battery supply chain market, predicts that:

 

·Demand for lithium-ion batteries is set to grow six-fold by 2032 as global automakers scale up production of EVs.
·A huge raw material deficit in Lithium, nickel, and cobalt is on the horizon as new mines are slow to come online to supply the increase in demand.
·$920 billion USD in investment dollars is required by 2030 to meet the world’s requirements of battery components. The world requires seventy-four new lithium mines with an average size of 45,000 tonnes by 2035.

 

Summary of Our Opportunity

 

Since initiating exploration on our portfolio of projects, we have confirmed the widespread presence of lithium across the targeted playas.

 

Economic indicators appear very favorable to maintaining the long-term demand and price of lithium carbonate. Assessment work completed on the most advanced of the clay hosted lithium deposits worldwide predict extremely favorable processing economics.

 

At the Titan Projects, due to their size, high grades and favorable geologic locations, our team of technical experts sees excellent opportunities for rapidly progressing the lithium anomalies into world class lithium-in-clay development projects.

 

Results of Operations

 

Six months ended March 31, 2023, and March 31, 2022

 

   Six Months Ended         
   March 31,   March 31,         
   2023   2022   $ Change   % Change 
                 
Revenues  $   $   $     
Cost of Sales                
Gross Profit                
                     
Operating Expenses:                    
Professional Fees   88,522    12,550    75,972    605.35% 
Rent Expenses       12,000        -100.00% 
General & Administrative Expense   68,231    63,215    5,016    7.93% 
Total Operating Expenses   156,753    87,765    68,988    78.61% 
                     
Income (Loss) from Operations  $(156,753)  $(87,765)  $(68,988)   78.61% 
                     
Other Expense   (9,972)   40,720    (50,692)   -124.49% 
Total Other Expense   (9,972)   40,720    (50,692)   -124.49% 
Net Income (Loss)  $(166,725)  $(47,045)  $(119,680)   254.39% 

 

 

 

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The Company had no revenues for the relevant periods.

 

The Company had operating expenses of $156,753 and $87,765 for the six months ended March 31, 2023, and 2022, respectively. The change was primarily driven by increases in legal and auditor fees.

 

Net Income was ($166,725) and ($47,045) for the six months ended March 31, 2023, and 2022, respectively. Again, increased professional fee expenses were the primary force behind the decreased Net Income.

 

Liquidity and Capital Resources

 

Net cash provided in operating activities was $33,894 and $92,184 for the six months ended March 31, 2023, and 2022, respectively.

 

Net cash provided by investing activities was $(153,000) and $(91,200) for the six months ended March 31, 2023, and 2022, respectively.

 

Net cash provided by financing activities was $136,687 and $35,361 for the six months ended March 31, 2023, and 2022, respectively.

 

As of March 31, 2023, the Company had $32,859 in cash to fund its operations.

 

Year ended September 30, 2022, and September 30, 2021

 

   Year ended         
   September 30,   September 30,         
   2022   2021   $ Change   % Change 
                 
Revenues  $   $   $     
Cost of Sales                
Gross Profit                
                     
Operating Expenses:                    
Professional Fees   40,974    5,000    35,974    719.48% 
Rent Expenses   12,000             
General & Administrative Expense   77,634    10,000    67,634    676.34% 
Total Operating Expenses   130,608    15,000    115,608    770.72% 
                     
Income (Loss) from Operations  $(130,608)  $(15,000)  $(115,608)   770.72% 
                     
Other Expense   40,720         40,720     
Accretion Expense   (5,192)       (5,192)    
Total Other Expense   35,528        35,528     
                     
Net Income (Loss)  $(95,080)  $(15,000)  $(80,080)   533.87% 

 

The Company had no revenues for the relevant periods.

 

 

 

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For the years ended September 30, 2022, and 2021, the Company had operating expenses of $130,608 and $15,000, respectively. The change was driven by increased legal and auditor fees, and increased general and administrative expenses.

 

For the years ended September 30, 2022, and 2021, the Company generated net losses of $(95,080) and $(15,000), respectively.

 

Liquidity and Capital Resources

 

Net cash used in operating activities was $90,421 and $(10,000) for the years ended September 30, 2022, and 2021, respectively.

 

Net cash provided by investing activities was $(128,200) and $-0- for the years ended September 30, 2022, and 2021, respectively.

 

Net cash provided by financing activities was $42,631 and $10,000 for the years ended September 30, 2022, and 2021, respectively.

 

As of September 30, 2022, the Company had $4,852 in cash to fund its operations.

 

Off-Balance Sheet Arrangements

 

As of March 31, 2023, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company had an accumulated deficit of $(1,322,171) at March 31, 2023, an accumulated deficit of $(1,322,171) at September 30, 2022, and an accumulated deficit of $(1,227,092) at September 30, 2021.  The Company had net loss of $(166,725) for the six months ended March 31, 2023, a net loss of $(95,079) for the year ended September 30, 2022, and a net loss of $(15,000) for the year ended September 30, 2021. The Company's ability to continue as a going concern is dependent upon its ability to repay or settle its current indebtedness, generate positive cash flow from operations, and/or raise capital through equity and debt financing or other means on desirable terms.  If the Company is unable to obtain additional funds when they are required or if the funds cannot be obtained on favorable terms, management may be required to restructure the Company or cease operations.  The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

Critical Accounting Policies

 

We have identified the policies in the attached financial statements as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operation where such policies affect our reported and expected financial results. Note that our preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates. For more information, see "Note 2 – Summary of Significant Accounting Policies" in the attached financial statements.

 

 

 

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Additional Company Matters

 

The Company has not filed for bankruptcy protection.

 

On January 20, 2021, the District Court of Clark County, Nevada entered an Order Granting Application for Appointment (the “Order”) of SSM Monopoly Corporation as Custodian of the Company. On December 7, 2021, the Custodian filed a Motion to Discharge Custodianship and Enter Final Order (the “Motion”). In the Motion, the Custodian petitioned the court to (i) approve the acts taken by the Custodian, including the appointment of management, cancellation of 9,011,469 shares and the conducting of a shareholder meeting, (ii) discharge SSM Monopoly as Custodian of the Company and (iii) return control to the Board of Directors. On January 6, 2022, the District Court of Clark County, Nevada issued the Order of Final Discharge.

nor has it ever been involved in receivership or similar proceedings.

 

We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to our business. Should such litigation ever ensue, it may have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.

 

We are not presently a party to any legal proceedings.

 

Subsequent Material Events

 

The Company evaluated subsequent events that have occurred after the balance sheet date of March 31, 2023, and up through the date of this Registration Statement. There are two types of subsequent events: (i) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements, and (ii) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. The Company has determined that there are no additional events that would require adjustment to or disclosure in the attached financial statements.

 

Item 3.Properties.

 

Principal Executive Office

 

Our principal executive office is located at 4005 West Reno Ave, STE F, Las Vegas, NV 89118. This property is owned by management and is leased to the Company at no cost. We believe these facilities are adequate for our current needs, and that alternate facilities on similar terms would be readily available, if needed.

 

Mineral Properties

 

Titan Projects (Tanzania)

 

Titan 1 (Prospecting License PL22468/2022) comprises approximately 298 km2, or 115 square miles, and is located west of Tanzanian Highway B1 in eastern Tanzania, approximately 30 kilometers southwest of the town of Same, Same District, Kilimanjaro Region. A central point in Titan 1 is located at the following coordinates: Latitude 4o 16’ 0” S and Longitude 37o 33’ 30” E. (Figure 1)

 

Titan 2 (Prospecting License PL23071/2023) comprises approximately 53 km2, or 20 square miles, and is located approximately 30 kilometers northeast of the town of Landanai, Simanjiro District, Manyara Region A central point in Titan 2 is located at the following coordinates: Latitude 3o 56’ 30” S and Longitude 3o 16’ 20” E. (Figure 1)

 

 

 

 26 

 

 

 

 

Topography & Geology

Topography in the area is moderate with flat basins represented by dry lake flats. The area of the Titan Projects is a hot equatorial climate. There are no known historical lithium exploration efforts in this area.

 

The geology of the surrounding mountains is predominantly comprised of metasedimentary rocks of the eastern Usagaran Belt. Titan 1 and Titan 2, both basins, have been local “traps” where playa sediments host the erosion debris from the surrounding areas. The Titan Projects are covered entirely by alluvium with no outcrops.

 

Initial Exploration

Lithium mineralization with values consistently above 3,000 ppm has been identified on the Titan Projects. Titan 1 had 94 soil samples taken, while Titan 2 had 22 samples taken. Of the samples taken, 22 from Titan 1 and 4 from Titan 2 have lithium values in excess of 0.30%. The highest concentrated samples were 2.24% at Titan 1 and 0.92% at Titan 2. Based on these findings, the Company is preparing for a Phase I exploration program with an estimated cost of $170,000. If Phase I is successful, the Company will pursue a dependent Phase II exploration program with a cost of approximately $1,140,000 to engage in deeper drilling and exploration to determine the overall viability of the Titan Projects. We estimate the total cost of Phase I and Phase II (including overhead) to be approximately $1,710,000.

 

 

 

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Prospecting Licenses

A Prospecting License (“PL”) in Tanzania grants exclusive exploration rights over the area of the PL for a period of four (4) years with annual renewal fees due each year on the anniversary date of the PL.

 

Surface rights are not part of a PL and must be negotiated with the lawful occupiers of land. Surface rights in respect of the Titan Projects are currently held by the local Masai and other Tanzanian nationals. To date, the Company has not commenced negotiations with the surface right owners. There are no known environmental liabilities to which the Titan Projects are subject.

 

All exploration is permitted by the PL up to and including bulk testing. A specific mining license must be obtained prior to engaging in actual mining operations and extractions. The application for a mining license must be accompanied by a comprehensive environmental study and report. However, no additional permits will be required to complete our Phase I and Phase II exploration program.

 

West End Lithium Project (Tonopah, Nevada)

 

The West End Lithium Project (“WEL”) comprises 24 unpatented lode mining claims over approximately 460 acres of land located 6 miles northwest of Tonopah, Nevada. WEL is accessible by exiting onto Gabbs Pole Line Road from Highway 6. WEL runs adjacent to the Tonopah Lithium Project which hosts lithium carbonate equivalent (LCE) measured resources, indicated resources, and inferred resources. Initial exploration efforts on the WEL claims suggest WEL is underlain by the same Miocene claystone rock sequence underlying the Tonopah Lithium Project. We are in the process of formalizing and organizing exploration plans for the WEL claims.

 

Item 4.Security Ownership of Certain Beneficial Owners and Management.

 

The following table sets forth information regarding beneficial ownership of our Stock as of the date of this filing.

 

Beneficial ownership and percentage ownership are determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to Shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose.

 

Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each Shareholder named in the following table possesses sole voting and investment power over their Shares of Stock. Percentage of beneficial ownership before the offering is based on 231,463,772 Shares of Common Stock outstanding and 10,000,000 of Preferred Stock as of the date of this filing.

 

Name & Address Position

Number of

Shares

Share

Type

Percent

Name of

Control Person

Verde Capital, LLC* Controlling Shareholder 10,000,000 Series A 100% Harpreet Sangha
Caren Currier* CFO 5,000,000 Common 2.16%  
Craig Alford* CEO, Board Member 43,000,000 Common 18.57%  
Lawrence Stephenson* 5% Owner 38,000,000 Common 16.41%  
Harpreet Sangha* Chairman, Board Member 10,000,000 Common 4.32%  

 

* The mailing address for these individuals/entities is: c/o China Dongsheng International, Inc., 4005 West Reno Ave, Suite F, Las Vegas, NV 89118.

 

 

 

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Item 5.Directors and Executive Officers.

 

The following table sets forth information regarding our executive officers, directors and significant employees, including their ages as of the date of this Offering Circular:

 

Name   Position   Age   Director or Officer Since
Craig Alford   CEO, Board Member   61   April 16, 2022
Harpreet Sangha   Chairman of the Board   59   December 8, 2021
Caren Currier   Chief Financial Officer   60   December 8, 2021

 

Craig Alford, CEO/Director

 

Mr. Craig Alford holds both an Honors Bachelor of Science and a Master of Science in Geology. He is a registered Professional Geoscientist and is a Qualified Person, as defined in National Instrument 43-101. Mr. Alford’s experience began with Falconbridge Copper in the early 1980’s and has since worked continuously in the industry holding exploration and leadership positions worldwide within a broad spectrum of mineralized, geographical and political environments.

 

Mr. Alford has designed and implemented a variety of geologic programs and provided management for mineral projects throughout North and South America, SE Asia, China, Central Asia, Russia, Australia and Africa. Craig has held a variety of positions for junior to senior mining companies and has helped raise millions of dollars in capital.

 

Craig has been responsible for budgeting and the expenditure of hundreds of millions of dollars, negotiations with heads of state, helped in assisting mining tax policies and has developed economic analysis for large M&A transactions. Mr. Alford’s tenure as Deputy General Manager with the Zijin Mining Group resulted in large investments in Pretium Resources, Kyrgyzstan’s Taldybulak Gold Mine, Norton Gold Fields in Australia, Barrick Gold's Porgera mine and Ivanhoe's Kamoa Copper Project

 

During this crucial time for the battery metal sector, Mr. Alford is presently involved in a number of lithium exploration projects and extraction methodologies key to the industry.

 

Harpreet Sangha, Chairman of the Board

 

Harpreet S. Sangha was born on March 4th, 1964. He attended college in Vancouver. For the last five years (08/2018 to present) Mr. Sangha has been Chairman and Director of Barrel Energy Inc. He has also been Chairman and Director of China Dongsheng International Inc from 12/2021 to present. During the last five years, Mr. Sangha has been actively involved in research projects as well as business projects related to green energy and battery metals. His research involved accessing and interpreting data collected by the United States Geological Survey (USGS). Mr. Sangha has access to multiple jurisdictions (i.e., India and Africa) in seeking out new opportunities in the green energy space including academic, public, and private research institutes.

 

Caren Currier, Chief Financial Officer

 

Caren is a native Californian residing in Texas, graduated from Mount San Antonio College with 3.75 GPA in Business Management. Being the business minded person, Caren has owned and operated her consulting business for 20 years and previously worked in the family construction and auto wrecking yard business. She has over 25 years of accounting experience, including serving as the Controller/CFO for the previous management of Zalemark Holding Company. Caren will overlook budget variance analysis, managing cash flow, inventory analysis, and is proficient in taking defunct companies and bringing them current.

 

 

 

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Item 6.Executive Compensation.

 

Compensation of Directors and Executive Officers

 

Name & Position Year

Salary

($)

Bonus

($)

Stock Awards

($)

Option Awards

($)

Non-Equity Incentive Plan Compensation

($)

All Other Compensation ($)

Total

($)

Craig Alford, Principal Executive Officer/Director 2023  36,000           36,000
2022  36,000           36,000
2021  0           -
2020  0           -
                 
Harpreet Sangha, Chairman of the Board of Directors 2023  46,856           -
2022  46,856           -
2021  0           -
2020  0           -
                 
Caren Currier, Principal Financial Officer 2023  12,000           12,000
2022  6,000           6,000
2021  0           -
2020  0           -

 

Outstanding Equity Awards at the End of the Fiscal Year

 

We do not have any equity compensation plans and therefore no equity awards are outstanding as of September 30, 2022, or March 31, 2023.

 

Bonuses and Deferred Compensation

 

We do not have a deferred compensation or retirement plan. All decisions regarding compensation, including the payment of bonuses, are determined by our Board of Directors.

 

Options and Stock Appreciation Rights

 

As of September 30, 2022, and March 31, 2023, no options have been issued.

 

Payment of Post-Termination Compensation

 

We do not have change-in-control agreements with our directors or executive officers.

 

Employment Agreements

 

Currently, the Company does not have employment agreements in place with any officers or key employees.

 

 

 

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Director Agreements

 

The Company does not currently have any agreements nor compensation with members of the Board of Directors as of the date of this filing.

 

Board of Directors

 

Our directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified. Our officers are elected by and serve at the discretion of the Board of Directors.

 

Item 7.Certain Relationships and Related Transactions, and Director Independence.

 

None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 10% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the six months ended March 31, 2023, or the year ended September 30, 2022 or in any proposed transaction, which has materially affected or will affect the Company.

 

Nevertheless, our Chairman and Board Member Harpreet Sangha owns 10,000,000 shares of Preferred Stock, which represent 100% of this type of share.

 

Item 8.Legal Proceedings.

 

At this time, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect

 

Item 9.Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.

 

Market Information

 

Our common stock is qualified for quotation on the OTC Markets-OTC Pink under the symbol “CDSG”. The following table sets forth the range of the high and low bid prices per share of our common stock for each quarter of our fiscal year as reported in the over-the-counter markets. These quotations represent interdealer prices, without retail markup, markdown or commission, and may not represent actual transactions. There currently is a minimal liquid trading market for our common stock. There can be no assurance that a significant active trading market in our common stock will develop, or if such a market develops, that it will be sustained.

 

 

 

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   2023 
   High   Low 
First Quarter (through March 31)  $0.1922   $0.17 

 

   2022 
   High   Low 
First Quarter (through March 31)  $0.349   $0.215 
Second Quarter (through June 30)   0.162    0.137 
Third Quarter (through September 30)   0.05    0.036 
Fourth Quarter (through December 31)   0.063    0.0425 

 

   2021 
   High   Low 
First Quarter (through March 31)  $0.1   $0.04 
Second Quarter (through June 30)   0.25    0.1325 
Third Quarter (through September 30)   0.75    0.75 
Fourth Quarter (through December 31)   0.4899    0.4899 

 

The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer’s securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state. Further, our shares may be subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the “penny stock” rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.

 

The SEC generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be a penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the SEC; authorized for quotation on The NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the issuer’s net tangible assets; or exempted from the definition by the SEC. Broker-dealers who sell penny stocks to persons other than established customers and accredited investors (generally persons with assets in excess of $1,000,000 or annual income exceeding $200,000 by an individual, or $300,000 together with his or her spouse), are subject to additional sales practice requirements.

 

For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and must have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the securities. Finally, monthly statements must be sent to clients disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealers to trade and/or maintain a market in our common stock and may affect the ability of stockholders to sell their shares.

 

As of July 31, 2023, out of a total of 500,000,000 shares authorized, 147,494,772 shares are issued as restricted securities and can only be sold or otherwise transferred pursuant to a registration statement under the Securities Act or pursuant to an available exemption from registration. Of such restricted shares, 141,000,000 (95.5%) shares are held by affiliates (directors, officers and 10% holders), with the balance of 6,494,772 (4.5%) shares being held by non-affiliates.

 

 

 

 32 

 

 

In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who has beneficially owned restricted shares of a reporting company for at least six months, including any person who may be deemed to be an “affiliate” of the company (as the term “affiliate” is defined under the Securities Act), is entitled to sell, within any three-month period, an amount of shares that does not exceed the greater of (i) the average weekly trading volume in the company’s common stock, as reported through the automated quotation system of a registered securities association, during the four calendar weeks preceding such sale or (ii) 1% of the shares then outstanding. In order for a stockholder to rely on Rule 144, adequate current public information with respect to the company must be available. A person who is not deemed to be an affiliate of the company and has not been an affiliate for the most recent three months, and who has held restricted shares for at least one year is entitled to sell such shares without regard to the various resale limitations under Rule 144. Under Rule 144, the requirements of paragraphs (c), (e), (f), and (h) of such Rule do not apply to restricted securities sold for the account of a person who is not an affiliate of an issuer at the time of the sale and has not been an affiliate during the preceding three months, provided the securities have been beneficially owned by the seller for a period of at least one year prior to their sale. For purposes of this registration statement, a controlling stockholder is considered to be a person who owns 10% or more of the company’s total outstanding shares, or is otherwise an affiliate of the Company. No individual person owning shares that are considered to be not restricted owns more than 10% of the Company’s total outstanding shares.

 

Holders

 

As of March 31, 2023, we had 86 shareholders of common stock per transfer agent’s shareholder list.

 

Dividends

 

The Company has not paid any cash dividends to date and does not anticipate or contemplate paying any dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the growth of the Registrant’s business.

 

Equity Compensation Plan Information

 

The Company has not yet adopted an equity compensation plan as of March 31, 2023, or subsequently through the filing of this registration statement.

 

Item 10.Recent Sales of Unregistered SecuritieS.

 

All of the securities discussed below were issued in reliance on the exemption under Section 4(a)(2) of the Securities Act. All issuances are for common stock unless stated otherwise.

 

On June 10, 2021, we issued 3,000,000 shares of Common Stock to EROP Enterprises, LLC, an entity controlled by Vince Sbarra, for a debt conversion.

 

On January 22, 2022, we issued 2,000,000 shares of Common Stock to Aaron Henry for cash.

 

On January 22, 2022, we issued 2,000,000 shares of Common Stock to Erik Olson for cash.

 

On January 22, 2022, we issued 2,000,000 shares of Common Stock to David Elmore for cash.

 

On January 28, 2022, we issued 1,670,000 shares of Common Stock to EROP Enterprises, LLC, an entity controlled by Vince Sbarra for a debt conversion.

 

On February 9, 2022, we issued 3,000,000 shares of Common Stock to Craig Alford as compensation for services rendered.

 

 

 

 33 

 

 

On February 11, 2022, we issued 5,000,000 shares of Common Stock to Fourth Street Fund, LP, an entity controlled by Lisa Mannion for a debt conversion.

 

On February 16, 2022, we issued 2,600,000 shares of Common Stock to EROP Enterprises, LLC, an entity controlled by Vince Sbarra for a debt conversion.

 

On March 7, 2022, we issued 3,150,000 shares of Common Stock to EROP Enterprises, LLC, an entity controlled by Vince Sbarra for a debt conversion.

 

On March 10, 2022, we issued 5,000,000 shares of Common Stock to Henning Mager for a debt conversion.

 

On June 30, 2022, we issued 3,000,000 shares of Common Stock to EROP Enterprises, LLC, an entity controlled by Vince Sbarra for a debt conversion.

 

On August 15, 2022, we issued 7,000,000 shares of Common Stock to Henning Mager for a debt conversion.

 

On August 17, 2022, we issued 2,600,000 shares of Common Stock to EROP Enterprises, LLC, an entity controlled by Vince Sbarra for a debt conversion.

 

On September 13, 2022, we issued 8,000,000 shares of Common Stock to Henning Mager for a debt conversion.

 

On November 21, 2022, we issued 2,000,000 shares of Common Stock to EROP Enterprises, LLC, an entity controlled by Vince Sbarra for a debt conversion.

 

On February 20, 2023, we issued 8,000,000 shares of Common Stock to Henning Mager for a debt conversion.

 

On February 27, 2023, we issued 133,000,000 shares of Common Stock to Lawrence Stephenson for consideration under an acquisition.

 

On February 28, 2023, we issued 20,000,000 shares of Common Stock to Henning Mager for a debt conversion.

 

On March 1, 2023, we issued 14,500,000 shares of Common Stock to EROP Enterprises, LLC, an entity controlled by Vince Sbarra for a debt conversion.

 

Item 11.Description of Registrant’s Securities to be Registered.

 

The following is a summary of the rights of our Common Stock. This summary does not purport to be complete and is qualified in its entirety by the provisions of our articles of incorporation, bylaws, and the Certificates of Designation (as defined below) of our preferred stock, copies of which are filed as exhibits to the registration statement, and to the applicable provisions of Delaware law. The Company is authorized by its Certificate of Incorporation to issue an aggregate of 500,000,000 shares of common stock, $0.00001 par value per share (the “Common Stock”), and 10,000,000 shares of Series A Preferred Stock. As of March 31, 2023, the Company had 231,463,772 shares of Common Stock issued and outstanding.

 

Common Stock

 

Dividend Rights

 

Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our Common Stock may receive dividends out of funds legally available if our Board, at its discretion, determines to issue dividends and then only at the times and in the amounts that our Board may determine. We have not paid any dividends on our Common Stock and do not contemplate doing so in the foreseeable future.

 

Voting Rights

 

Each stockholder is entitled to one vote for each share of common stock held by such stockholders.

 

 

 

 34 

 

 

Preferred Stock in General

 

The preferred stock of the Company may be issued from time to time by the Board of Directors in one or more series. The description of shares of each series of preferred stock will be set forth in resolutions adopted by the Board of Directors and a Certificate of Designation to be filed as required by Delaware law prior to issuance of any shares of the series. The Certificate of Designation will set the number of shares to be included in each series of preferred stock and set the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distribution, qualifications, or terms and conditions of redemption relating to the shares of each series. However, the Board of Directors is not authorized to change the right of the common stock to vote one vote per share on all matters submitted for shareholder action. The authority of the Board of Directors with respect to each series of preferred stock includes, but is not limited to, setting or changing the following:

 

·The number of shares constituting such series and the distinctive designation of such series; 

 

·The dividend rate on the shares of such series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of such series;

 

·Whether such series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; 

 

·Whether such series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine; 

 

·Whether or not the shares of such series shall be redeemable, and, if so, the terms and conditions of such redemption, including the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates;

 

·Whether such series shall have a sinking fund for the redemption or purchase of shares of such series, and, if so, the terms and amount of such sinking fund;

 

·The rights of the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of such series;

 

·Any other relative rights, preferences and limitations of such series. 

 

The Company is authorized to issue up to 10,000,000 shares of Class A preferred stock, par value $0.01, and 5,000,000 shares of Class B preferred stock, par value $0.01. As of the date of this filing, there are 10,000,000 shares of Class A preferred stock issued and outstanding and -0- shares of Class B preferred stock issued and outstanding. The rights and preferences of each class of preferred stock are described below.

 

 

 

 35 

 

 

Class A Preferred Stock:

·Each share of Class A Preferred Stock has voting rights equal to the result of: (i) 1.5 multiplied by the addition of: (A) the number of shares of Common Stock issued and outstanding at the time of such vote; and (B) the number of votes in the aggregate of any outstanding shares of any class of preferred stock of the Corporation (other than the Series A Preferred Stock), if any, at the time of such vote; divided by (ii) the total number of shares of Series A Preferred Stock issued and outstanding at the time of such vote, at each meeting of shareholders of the Corporation with respect to any and all matters presented to the shareholders of the Corporation for their action or consideration, including the election of directors.
·Each share of Class A Preferred Stock is convertible into a number of shares of Common Stock equal to the result of: (i) 1.5 multiplied by the addition of: (A) the number of shares of Common Stock issued and outstanding at the time of such vote; and (B) the number of votes in the aggregate of any outstanding shares of any class of preferred stock of the Corporation (other than the Series A Preferred Stock), if any, at the time of such vote; divided by (ii) the total number of shares of Series A Preferred Stock issued and outstanding at the time of such vote, at each meeting of shareholders of the Corporation with respect to any and all matters presented to the shareholders of the Corporation for their action or consideration, including the election of directors.
·Holders are entitled, in the event of any voluntary liquidation or dissolution, to receive payment or distribution of preferential amount before any payments or distributions are received by any class of common stock. 
·Holders are not entitled to receive dividends.
·Class A shares are non-dilutable.

 

Transfer Agent and Registrar

 

The transfer agent and registrar for our Common Stock is Olde Monmouth Stock Transfer with an address at 200 Memorial Parkway Atlantic Highlands, NJ 07716. Their phone number is (732) 872-2727.

 

Item 12.Indemnification of Directors and Officers.

 

Our articles provide to the fullest extent permitted by Delaware Law that our directors or officers shall not be personally liable to the Company or our stockholders for damages for breach of such directors’ or officers’ fiduciary duty. The effect of this provision of our articles is to eliminate our rights and the rights of our stockholders (through stockholders’ derivative suits on behalf of the Company) to recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except under certain situations defined by statute. We believe that the indemnification provisions in our articles are necessary to attract and retain qualified persons as directors and officers.

 

Delaware corporate law provides that a corporation may indemnify a director, officer, employee or agent made a party to an action by reason of that fact that he was a director, officer employee or agent of the corporation or was serving at the request of the corporation against expenses actually and reasonably incurred by him in connection with such action if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation and with respect to any criminal action, had no reasonable cause to believe his conduct was unlawful.

 

 

 

 36 

 

 

ITEM 13.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

    Page
Consolidated Financial Statements (unaudited) for the 6-Months Ended March 31, 2023    
Consolidated Balance Sheets as of March 31, 2023 and 2022   F-1
Consolidated Statements of Operations as of March 31, 2023 and 2022   F-2
Consolidated Statements of Changes in Shareholders’ Equity as of March 31, 2023 and 2022   F-3
Consolidated Statements of Cash Flows as of March 31, 2023 and 2022   F-4
Notes to the Consolidated Financial Statements   F-5

 

 

    Page
Consolidated Financial Statements (audited) for the 12-Months Ended September 30, 2022 and 2021
Report of Independent Registered Public Accounting Firm   F-11
Balance Sheets as of September 30, 2022 and 2021   F-12
Statements of Operations as of September 30, 2022 and 2021   F-13
Statements of Changes in Shareholders’ Equity as of September 30, 2022 and 2021   F-14
Statements of Cash Flows as of September 30, 2022 and 2021   F-15
Notes to the Consolidated Financial Statements   F-16

 

 

 

 

 

 

 

 

 

 

 

 

 

 37 

 

 

CHINA DONGSHENG INTERNATIONAL, INC.

BALANCE SHEETS

 

 

 

   March 31, 2023   March 31, 2022 
ASSETS          
Current Assets:          
Cash  $32,859   $39,728 
Accounts receivables   35,000    35,000 
Investment   228,000    91,200 
Total Assets  $295,859   $165,928 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
Current Liabilities:          
Due to related party  $18,080   $17,500 
Accrued expense   13,000    5,000 
Accounts payable   63,387     
Derivative Liability        
Note payable – EROP Enterprise   452,654    270,229 
Notes payable – convertible net of discount        
Total Liabilities   547,121    292,729 
           
Stockholders' Deficit:          
Common stock, $0.001 par value; 500,000,000 shares authorized, 231,464,000 & 67,177,000 shares issued as of March 31, 2023, and 2022 respectively   231,464    67,177 
Preferred stock, $0.001 par value; 10,000,000 shares authorized, and issued as of March 31, 2023, and 2022 respectively   10,000    10,000 
Additional paid-in capital   1,084,546    1,084,546 
Accumulated deficit   (1,322,171)   (1,227,092)
Net loss   (255,100)   (61,433)
Total Stockholders’ Deficit   (251,262)   (126,802)
           
Total Liabilities and Stockholders' Deficit  $295,859   $165,928 

  

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 F-1 

 

 

CHINA DONGSHENG INTERNATIONAL, INC.

STATEMENTS OF OPERATIONS

 

 

   For the Periods Ended 
   March 31, 
   2023   2022 
Revenue  $   $ 
           
Operating Expenses:          
Professional fee   88,522    12,550 
Rent expenses       12,000 
General & administrative expenses   68,231    63,215 
Total operating expenses   156,753    87,765 
           
Loss from operations   (156,753)   (87,765)
           
Other Income / (Expense)   (9,972)   40,720 
           
Net income / (loss)  $(166,725)  $(47,045)
           
Basic and diluted loss per share  $(0.00)  $(0.00)
           
Basic and diluted weighted average shares   231,464,000    67,177,000 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 

 F-2 

 

 

CHINA DONGSHENG INTERNATIONAL, INC.

STATEMENTS OF CHANGES IN EQUITY (DEFICIT) AS OF MARCH 31, 2023 AND 2022

 

 

 

 
  

Preferred

Shares

   Amount  

Common

Stock
Shares

   Amount   Additional Paid-in Capital   Accumulated Deficit   Total 
Balance at September 30, 2021   10,000,000   $10,000    31,756,927   $31,756   $1,084,546   $(1,222,092)  $(95,790)
Net Loss                       (14,388)   (14,388)
Balance at December 31, 2021   10,000,000   $10,000    31,756,927   $31,756   $1,084,546   $(1,236,480)  $(110,178)
Net Loss           35,420,000    35,421        (47,045)   (11,624)
Balance at March 31, 2022   10,000,000    10,000    67,176,927   $67,177   $1,084,546   $(1,283,525)  $(121,802)
Net Loss                       (11,261)   (11,261)
Balance at June 30, 2022   10,000,000    10,000    67,176,927   $67,177   $1,084,546   $(1,294,786)  $(133,063)
Net Loss           7,000,000    7,000        (12,194)   (5,194)
Balance at September 30, 2022   10,000,000    10,000    74,176,927   $74,177   $1,084,546   $(1,306,980)  $(138,257)
Net Loss           20,600,000    20,600        (103,375)   (82,775)
Balance at December 31, 2022   10,000,000    10,000    94,776,927   $94,777   $1,084,546   $(1,410,355)  $(221,032)
Net Loss           136,686,845    136,687        (166,917)   (30,230)
Balance at March 31, 2023   10,000,000    10,000    231,463,772   $231,464   $1,084,546   $(1,577,272)  $(251,262)

 

 


The accompanying notes are an integral part of these financial statements.

 

 

 

 

 

 

 

 

 

 

 

 F-3 

 

 

CHINA DONGSHENG INTERNATIONAL INC. (CDSG)

STATEMENTS OF CASH FLOWS

 

 

   For the Periods Ended 
   March 31, 
   2023   2022 
Cash flows from operating activities:          
           
Net loss  $(166,725)  $(47,045)
Adjustments to reconcile net loss to net cash used in operating activities:          
Changes in assets and liabilities:          
(Increase)/ Decrease in account receivables        
Increase / (Decrease) in accrued expense/Accts Payable   38,388     
Increase / (Decrease) in note payables   162,233    139,229 
Increase / (Decrease) in due to related party        
           
Net cash used in operating activities   33,894    92,184 
           
Cash flows from investing activities:          
(Increase)/decrease in investments   (153,000)   (91,200)
Net cash used in investing activities   (153,000)   (91,200)
           
Cash flows from financing activities:          
Common stock issued   136,687    35,361 
Net cash used in financing activities   136,687    35,361 
           
Net increase (decrease) in cash   17,581    36,615 
           
Cash, beginning of period   15,278    3,113 
           
Cash, end of year  $32,859   $39,728 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 F-4 

 

 

CHINA DONGSHENG INTERNATIONAL, INC.

Notes to the Financial Statements

March 31, 2023, and 2022

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

CHINA DONGSHENG INTERNATIONAL, INC (the “Company”) through its wholly owned subsidiary Titan Lithium Inc., is a lithium explorer and developer with operations in Nevada, USA and The United Republic of Tanzania.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.

 

Concentrations of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company’s cash is deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount.

 

Cash and Cash Equivalents

The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. There were $4,852.00, and $0.00 in cash and cash equivalents for the periods ended March 31, 2023, and 2022.

 

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic No. 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described below:

 

Level 1:    Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

 

Level 2:    Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates.

 

Level 3:    Level 3 inputs are unobservable inputs.

 

 

 

 F-5 

 

 

The following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

 

The methods and assumptions used to estimate the fair values of each class of financial instruments are as follows: Accounts Receivable, and Accounts Payable. The items are generally short-term in nature, and accordingly, the carrying amounts reported on the consolidated balance sheets are reasonable approximations of their fair values.

 

The carrying amounts of Notes Payable approximate the fair value as the notes bear interest rates that are consistent with current market rates.

 

Income Taxes

We follow ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

 

We adopted ASC 740-10-25 (“ASC 740-10-25”) with regard to uncertainty income taxes.  ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures.  We had no material adjustments to our liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25.

 

Basic EPS is calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Company’s common stock outstanding during the period. Diluted EPS is calculated based on the net income (loss) available to common stockholders and the weighted average number of shares of common stock outstanding during the period, adjusted for the effects of all potential dilutive common stock issuances related to options, warrants, restricted stock units and convertible preferred stock. The dilutive effect of our share-based awards and warrants is computed using the treasury stock method, which assumes all share- based awards and warrants are exercised and the hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. The incremental shares (i.e., the difference between shares assumed to be issued versus purchased), to the extent they would have been dilutive, are included in the denominator of the diluted EPS calculation. The dilutive effect of our convertible preferred stock is computed using the if-converted method, which assumes conversion at the beginning of the year. However, when a net loss exists, no potential common stock equivalents are included in the computation of the diluted per-share amount because the computation would result in an anti-dilutive per-share amount.

 

Potentially dilutive securities excluded from the computation of basic and diluted net loss per share for the period ended March 31, 2023 and 2022 were as follows:

 

Total  March 31, 2023   March 31, 2022 
Convertible debt  202,654    20,229 
Total   202,654    20,229 

 

 

 

 F-6 

 

 

Recent Accounting Pronouncements

The Company has implemented all applicable accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

NOTE 3 – GOING CONCERN

 

The accompanying financial statements have been prepared assuming the company will continue as a going concern, the Company has continuously incurred a net loss of $(166,917) for the period ended March 31, 2023, and an accumulated deficit of $(1,577,272) on March 31, 2023. The continuation of the Company as a going concern through March 31, 2023, is dependent upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due.

 

These factors raise substantial doubt about the company ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of the uncertainty.

 

NOTE 4 – INCOME TAXES

 

The Company’s deferred tax assets relate to net operating losses that may be carried forward to future years. At March 31, 2023, the Company has available net operating losses of $(166,917) and $nil for federal and state income taxes, respectively.

 

No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will not be utilized. Accordingly, the potential tax benefits of the loss carry-forward are offset by a valuation allowance of the same amount. The Company’s increase in valuation allowance of NIL during the year ended December 31, 2022, was recorded to offset the deferred tax benefit of the Company’s tax loss for the year.

 

The Company’s decrease in valuation of $NIL during the period ended March 31, 2023, was recorded to offset the deferred tax expense incurred during the period ended March 31, 2023, which was attributable to the change in the federal statutory rate which impacted the deferred tax asset associated with the Company’s net operating losses that can be utilized to offset future taxable income of the Company.

 

Net deferred tax assets consist of the following components as of:

 

   March 31, 2023   March 31, 20221 
Federal income tax benefit attributable to:          
Current Operations  $   $ 
Less: valuation allowance        
Net provision for Federal income taxes  $   $ 

 

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the fiscal years ending, due to the following:

 

   March 31, 2023   March 31, 2022 
Deferred tax asset attributable to:          
Net operating loss carryover  $   $ 
Less: valuation allowance        
Net deferred tax asset  $   $ 

 

 

 

 F-7 

 

 

As of March 31, 2023, and 2022, the Company does not believe that it has taken any tax positions that would require the recording of any additional tax liability, nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next twelve months. The Company’s income tax returns are subject to examination by the appropriate taxing jurisdictions. As of March 31, 2023, the Company’s income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.

 

NOTE 5 – CONVERTIBLE NOTE PAYABLE AND DERIVATIVE LIABILITIES

 

The company had a convertible note dated January 15, 2015, with Sterling Global in the amount of $96,000. The note has a conversion price of $0.00005. This note was sold and transferred 100% to EROP Enterprises, LLC as of September 29, 2021. On March 11, 2022, EROP Enterprises sold $ 5,000 of this Note to a third party. On March 15, 2022, EROP Enterprises informed the Company of its decision to cancel $ 75,000 of principal from the Note. After this cancellation, EROP Enterprises, LLC retained $ 15,229 of principal remaining on the note.

 

On March 18, 2022, the Company lent $ 35,000 to a shareholder in the form of a 2% 60-day promissory note. The promissory note has been extended to March 31, 2024.

 

On April 5, 2022, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured 8% convertible note payable for $5,000 (“April 5, 2022, Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion. The Note maturity has been extended to April 5, 2024.

 

On June 30, 2022, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured 8% convertible note payable for $5,000 (“June 30, 2022 Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion.

 

On August 5, 2022, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured 8% convertible note payable for $10,000 (“August 5, 2022 Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion.

 

On January 27, 2023, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured 8% convertible note payable for $15,000 (“January 27, 2023 Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion.

 

On February 13, 2023, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured 8% convertible note payable for $20,000 (“February 13, 2023 Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion

 

On March 21, 2023, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured 8% convertible note payable for $50,000 (“March 21, 2023 Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion.

 

On March 30, 2023, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured 8% convertible note payable for $50,000 (“March 30, 2023 Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion

 

Total principal due at March 31, 2023 was $170,274 with an unamortized discount of $9,973 resulting in a balance of $160,301 at March 31, 2023. The Company had conversions of $3,600 in principal and $0 in accrued interest during the period ended March 31, 2023 resulting in the issuance of 54,020,000 shares. Total principal due on March 31, 2022 was $96,000. There were no conversions during the period ended March 31, 2022. Interest expense during the period ended March 31, 2023 and 2022 was $4,348, $0, respectively.

 

Due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options embedded in the Convertible Promissory Notes, the options are classified as derivative liabilities and recorded at fair value.

 

 

 

 F-8 

 

 

Derivative Liability:

 

The initial fair value of the bifurcated derivative in excess of the net proceeds from the notes payable in the amount of $20,594 was recognized as loss on derivative liability for the period ended March 31, 2023.

 

The initial fair value of the bifurcated derivative in excess of the net proceeds from the notes payable in the amount of $0 was recognized as loss on derivative liability for the period ended March 31, 2022.

 

Estimated fair value of the derivative value for the conversion options using the Black-Scholes option-pricing model for the notes payable was $9,921 and $0 at March 31, 2023 and March 31, 2022, respectively. For the period ended March 31, 2023, the loss on derivative liability was $10,129,235 and for the period ended March 31, 2022, the loss on derivative was $0, respectively.

 

The following table summarizes the derivative liabilities included in the consolidated balance sheet at March 31, 2023:

 

   March 31, 2022 
Beginning Balance  $ 
Day one loss on fair value    
Loss on change in fair value    
Write off due to conversion    
Ending Balance  $ 

 

Convertible Notes Payable:

 

   March 31, 2023   September 30, 2022 
Jan 15, 2015 Note  $18,229   $18,229 
April 8, 2022 Note   5,000    5,000 
June 30, 2022 Note   5,000    5,000 
August 5, 2022 Note   10,000    10,000 
January 27, 2023 Note   15,000     
February 13, 2023 Note   20,000     
March 21, 2023 Note   50,000     
March 30, 2023 Note   50,000     
Subtotal  $173,229   $38,229 
Discount on Debt        
Total  $   $38,229 

 

Pursuant to ASC 815, “Derivatives and Hedging,” the Company recognized the fair value of the embedded conversion feature of all the notes. At inception, respectively, the initial fair value of the derivative liability was determined using the Black Scholes option pricing model with a quoted market price of $0.10 to $0.65, no conversions, expected volatility of 74% to 495%, no expected dividends, an expected term of one year and a risk-free interest rate of 4.3%.

 

During the period ended March 31, 2023 and 2022, the Company recorded amortization of debt discount of $9,921 and $0, respectively.

 

 

 

 F-9 

 

 

NOTE 6 – SUBSEQUENT EVENTS

 

As of April 17th, 2023, the Company has now completed 2 years of PCAOB qualified year end financial statements. Subsequent to the filing of these audited statements, CDSG will be filing a Registration Statement on Form 10 (“Form 10”) before the end of this month with the U.S. Securities and Exchange Commission (SEC) to register its common stock under the Securities Exchange Act of 1934, as amended, (the 1934 Act). The Form 10 filing provides information on the company’s strategy and its historical financial data. Upon its effectiveness, the Company will be subject to the reporting requirements of the 1934 Act, which will include quarterly, annual and current reports, as well as proxy statements, to be filed with the SEC.

 

On April 14, 2023, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured 8% convertible note payable for $20,000 (“March 30, 2023 Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 F-10 

 

 

 

 

Report of Independent Registered Public Accounting Firm

To the shareholders and the board of directors of

China Dongsheng International, Inc.

 

Opinion on the Financial Statements

We have audited the accompanying balance sheets of China Dongsheng International Inc. (the "Company") as of September 30, 2022, and 2021, and the related statements of operations, changes in shareholders' equity and cash flows, for the year ended September 30, 2022, and the related notes collectively referred to as the "financial statements.

 

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2022, and 2021, and the results of its operations and its cash flows for the year ended September 30, 2022, in conformity with U.S. generally accepted accounting principles.

 

Going Concern

The accompanying financial statements have been prepared assuming the company will continue as a going concern as disclosed in Note 3 to the financial statement, the Company has continuously incurred a net loss of $(95,079) for the year ended September 30, 2022, and an accumulated deficit of $(1,322,171) at September 30, 2022. The continuation of the Company as a going concern through September 30, 2022, is dependent upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due.

 

These factors raise substantial doubt about the company ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of the uncertainty.

 

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting 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.

 

/s/ OLAYINKA OYEBOLA & CO.

OLAYINKA OYEBOLA & CO.

(Chartered Accountants)

 

We have served as the Company's auditor since March 2022.

April 21st, 2023.

Lagos Nigeria

 

 

 

 F-11 

 

 

CHINA DONGSHENG INTERNATIONAL, INC.

BALANCE SHEETS

 

 

   September 30, 2022   September 30, 2021 
ASSETS          
Current Assets:          
Cash  $4,852   $ 
Accounts receivables   35,000     
Investment   128,200     
Total Assets  $168,052   $ 
           
LIABILITIES AND STOCKHOLDERS' DEFICIT          
Current Liabilities:          
Due to related party  $18,080   $ 
Accrued expense   13,000    5,000 
Note payable – EROP Enterprise   35,229    96,000 
Nonconvertible note payables   250,000     
Discount on Debt   5,192     
Convertible notes payables        
Total Liabilities   321,501    101,000 
           
Stockholders' Deficit:          
Common stock, $0.001 par value; 500,000,000 shares authorized, 84,776,927 and 31,756,927 shares issued as of September 30, 2022, and 2021 respectively   84,776    31,756 
Preferred stock, $0.001 par value; 10,000,000 shares authorized, . and issued as of September 30, 2022, and 2021 respectively   10,000    10,000 
Additional paid-in capital   1,073,947    1,084,336 
Accumulated deficit   (1,322,171)   (1,227,092)
Total Stockholders’ Deficit   (153,448)   (101,000)
           
Total Liabilities and Stockholders' Deficit  $168,052   $ 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 F-12 

 

 

CHINA DONGSHENG INTERNATIONAL, INC.

STATEMENTS OF OPERATONS

 

 

   For the Years Ended 
   September 30, 
   2022   2021 
Revenue  $   $ 
           
Operating Expenses:          
Professional fee   40,974    5,000 
Rent expenses   12,000     
General & administrative expenses   77,634    10,000 
Total operating expenses   130,608    15,000 
           
Loss from operations   (130,608)   (15,000)
           
Other Income / (Expense)   40,720     
Accretion Expense   (5,192)    
Net (loss)  $(95,079)  $(15,000)
           
Basic and diluted loss per share  $(0.00)  $(0.00)
           
Basic and diluted weighted average shares   74,177,000    31,546,000 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 F-13 

 

 

CHINA DONGSHENG INTERNATIONAL

STATEMENTS OF CHANGES IN EQUITY (DEFICIT) FOR THE YEAR ENDED SEPTEMBER 30, 2022, AND 2021

 

 

   Common Stock   Preferred Stock   Additional Paid   Retained     
   Shares   Amount   Shares   Amount   in Capital   Earnings   Total 
Balance, October 31, 2020   31,756,927   $31,756    10,000,000   $10,000   $1,084,336   $(1,212,092)  $(86,000)
Net income                       (15,000)   (15,000)
Balance, September 30, 2021   31,756,927    31,756    10,000,000    10,000    1,084,336    (1,227,092)   (101,000)
                                    
Balance, October 31, 2021   31,756,927    31,756    10,000,000    10,000    1,084,336    (1,227,092)   (101,000)
Common stock issued during the year   53,020,000    53,020            (10,389)       42,631 
Net income                       (95,079)   (95,079)
Balance, September 30, 2022   84,776,927   $84,776    10,000,000   $10,000   $1,073,947   $(1,322171)  $(153,448)

 

 


The accompanying notes are an integral part of these financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 F-14 

 

 

CHINA DONGSHENG INTERNATIONAL INC. (CDSG)

STATEMENTS OF CASH FLOWS

 

 

   For the Years Ended 
   September 30, 
   2022   2021 
Cash flows from operating activities:          
Net loss  $(95,079)  $(15,000)
Adjustments to reconcile net loss to net cash used in operating activities:          
Changes in assets and liabilities:          
(Increase)/ Decrease in account receivables   (35,000)    
Increase / (Decrease) in accrued expense   8,000    5,000 
Increase / (Decrease) in note payables   194,421     
Increase / (Decrease) in due to related party   18,080     
Net cash used in operating activities   90,421    (10,000)
           
Cash flows from investing activities:          
(Increase)/decrease in investments   (128,200)    
Net cash used in investing activities   (128,200)    
           
Cash flows from financing activities:          
Common stock issued   42,631    10,000 
Net cash used in financing activities   42,631    10,000 
           
Net increase (decrease) in cash   4,852     
           
Cash, beginning of year        
           
Cash, end of year  $4,852   $ 

 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 F-15 

 

 

CHINA DONGSHENG INTERNATIONAL, INC.

Notes to the Financial Statements

September 30, 2022, and 2021

 

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

 

CHINA DONGSHENG INTERNATIONAL, INC (the “Company”) through its wholly owned subsidiary Titan Lithium Inc., is a lithium explorer and developer with operations in Nevada, USA and The United Republic of Tanzania.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

 

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.

 

Concentrations of Credit Risk

Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and accounts receivable. The Company’s cash is deposited with major financial institutions. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount.

 

Cash and Cash Equivalents

The Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less as cash and cash equivalents. The carrying amount of financial instruments included in cash and cash equivalents approximates fair value because of the short maturities for the instruments held. There were $4,852.00, and $0.00 in cash and cash equivalents for the years ended September 30, 2022, and 2021.

 

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic No. 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as described below:

 

Level 1:    Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

 

Level 2:    Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar assets, quoted prices in markets that are not considered to be active, and observable inputs other than quoted prices such as interest rates.

 

Level 3:    Level 3 inputs are unobservable inputs.

 

 

 

 F-16 

 

 

The following required disclosure of the estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The methods and assumptions used to estimate the fair values of each class of financial instruments are as follows: Accounts Receivable, and Accounts Payable. The items are generally short-term in nature, and accordingly, the carrying amounts reported on the consolidated balance sheets are reasonable approximations of their fair values.

 

The carrying amounts of Notes Payable approximate the fair value as the notes bear interest rates that are consistent with current market rates.

 

Income Taxes

We follow ASC 740-10-30, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

 

We adopted ASC 740-10-25 (“ASC 740-10-25”) with regard to uncertainty income taxes.  ASC 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.  Under ASC 740-10-25, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25 also provides guidance on derecognition, classification, interest and penalties on income taxes, and accounting in interim periods and requires increased disclosures.  We had no material adjustments to our liabilities for unrecognized income tax benefits according to the provisions of ASC 740-10-25.

 

Net income (loss) per common share

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. For the years ended September 30, 2022 and 2021, the diluted loss per share is the same as the basic loss per shares as the inclusion of any potentially dilutive shares would result in anti- dilution due to the net loss incurred by the Company

 

Recent Accounting Pronouncements

The Company has implemented all applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

 

 

 F-17 

 

 

NOTE 3 – GOING CONCERN

 

The accompanying financial statements have been prepared assuming the company will continue as a going concern, the Company has continuously incurred a net loss of $(89,888) for the year ended September 30, 2022, and an accumulated deficit of $(1,316,980) at September 30, 2022. The continuation of the Company as a going concern through September 30, 2022, is dependent upon improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due.

These factors raise substantial doubt about the company ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of the uncertainty.

 

NOTE 4 – INCOME TAXES

 

The Company’s deferred tax assets relate to net operating losses that may be carried forward to future years. At September 30, 2022, the Company has available net operating losses of $(89,888) and $nil for federal and state income taxes, respectively.

 

No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will not be utilized. Accordingly, the potential tax benefits of the loss carry-forward are offset by a valuation allowance of the same amount. The Company’s increase in valuation allowance of 16,817 during the year ended December 31, 2022, was recorded to offset the deferred tax benefit of the Company’s tax loss for the year.

 

The Company’s decrease in valuation of $NIL during the year ended September 30, 2022, was recorded to offset the deferred tax expense incurred during the year ended September 30, 2022, which was attributable to the change in the federal statutory rate which impacted the deferred tax asset associated with the Company’s net operating losses that can be utilized to offset future taxable income of the Company.

 

Net deferred tax assets consist of the following components as of:

 

  

September 30,

2022

  

September 30,

2021

 
Federal income tax benefit attributable to:          
Current Operations  $19,967   $3,150 
Less: valuation allowance   (19,967)   (3,150)
Net provision for Federal income taxes  $   $ 

 

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the fiscal years ending, due to the following:

 

  

September 30,

2022

  

September 30,

2021

 
Deferred tax asset attributable to:          
Net operating loss carryover  $1,322,171   $1,227,092 
Less: valuation allowance   (277,656)   (257,689)
Net deferred tax asset  $1,044,515   $969,403 

 

As of September 30, 2022, and 2021, the Company does not believe that it has taken any tax positions that would require the recording of any additional tax liability, nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next twelve months. The Company’s income tax returns are subject to examination by the appropriate taxing jurisdictions. As of September 30, 2022, the Company’s income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.

 

 

 

 F-18 

 

 

NOTE 5 – CONVERTIBLE NOTE PAYABLE AND DERIVATIVE LIABILITIES

 

The company had a convertible note dated January 15, 2015, with Sterling Global in the amount of $96,000. The note has a conversion price of $0.00005. This note was sold and transferred 100% to EROP Enterprises, LLC as of September 29, 2021. On March 11, 2022, EROP Enterprises sold $ 5,000 of this Note to a third party. On March 15, 2022, EROP Enterprises informed the Company of its decision to cancel $75,000 of principal from the Note. After this cancellation, EROP Enterprises, LLC, retained $ 15,229 of the principal remaining on the note.

 

On March 18, 2022, the Company lent $ 35,000 to a shareholder in the form of a 2% 60-day promissory note. The promissory note has been extended to March 31, 2023.

 

On April 5, 2022, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured convertible note payable for $5,000 (“April 5, 2022, Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion.

 

On June 30, 2022, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured convertible note payable for $5,000 (“June 30, 2022, Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion.

 

On August 5, 2022, the Company and EROP Enterprises, LLC (“EROP”), a shareholder of the Company, entered into an unsecured convertible note payable for $10,000 (“August 5, 2022, Note”) with a conversion price of the lesser of (i) $ .04 or 70% of the lowest closing bid over the 5 days prior to conversion.

 

Total principal due at September 30, 2022 was $38,299 with an unamortized discount of $14,808 resulting in a balance of $5,192 at September 30, 2022. The Company had conversions of $2,701 in principal and $0 in accrued interest during the year ended September 30, 2022, resulting in the issuance of 53,020,000 shares. Total principal due on September 30, 2021, was $96,000. There were no conversions during the year ended September 30, 2021. Interest expense during the year ended September 30, 2022, and 2021 was $4,348, $0, respectively.

 

Due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options embedded in the Convertible Promissory Notes, the options are classified as derivative liabilities and recorded at fair value.

 

Derivative Liability:

 

The initial fair value of the bifurcated derivative in excess of the net proceeds from the notes payable in the amount of $20,594 was recognized as loss on derivative liability for the year ended September 30, 2022.

 

The initial fair value of the bifurcated derivative in excess of the net proceeds from the notes payable in the amount of $0 was recognized as loss on derivative liability for the year ended September 30, 2021.

 

Estimated fair value of the derivative value for the conversion options using the Black-Scholes option-pricing model for the note’s payable was $9,954,729 and $0at September 30, 2022 and September 30, 2021, respectively. For the year ended September 30, 2022, the loss on derivative liability was $10,129,235 and for the year ended September 30, 2021, the loss on derivative was $0, respectively.

 

 

 

 F-19 

 

 

The following table summarizes the derivative liabilities included in the consolidated balance sheet at September 30, 2022:

 

  

September 30,

2022

 
Beginning Balance  $ 
Day one loss on fair value   40,594 
Loss on change in fair value   10,129,235 
Write off due to conversion   (215,100)
Ending Balance  $9,954,729 

 

Convertible Notes Payable:

 

  

September 30,

2022

  

September 30,

2021

 
Jan 15, 2015 Note  $15,299   $96,000 
April 8, 2022 Note   5,000     
June 30, 2022 Note   5,000     
August 5, 2022 Note   10,000     
Subtotal  $35,299   $96,000 
Discount on Debt   (14,808)    
Total  $20,491   $96,000 

 

Pursuant to ASC 815, “Derivatives and Hedging,” the Company recognized the fair value of the embedded conversion feature of all the notes. At inception, respectively, the initial fair value of the derivative liability was determined using the Black Scholes option pricing model with a quoted market price of $0.10 to $0.65, no conversions, expected volatility of 74% to 495%, no expected dividends, an expected term of one year and a risk-free interest rate of 4.3%.

 

During the year ended September 30, 2022, and 2021, the Company recorded amortization of debt discount of $5,192 and $0, respectively.

 

NOTE 6 – SUBSEQUENT EVENTS

 

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were issued and has determined that it has the following material subsequent events to disclose in these financial statements.

 

In March and April 2022, the Company made investments totaling $ 53,200 into a publicly traded company operated by its CEO and Chairman. The investment was in the form of 10% Secured Convertible Notes. On December 15, 2022, the Company sold the three Notes totaling $ 53,200 at face value to EROP Enterprises, LLC.

 

 

 

 F-20 

 

 

Item 14.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 

On November 20, 2021, we appointed Olayinka Oyebola & Co as our new independent auditors.

 

There has never been any disagreement with any independent registered public accounting firm that has worked for the Company regarding accounting and financial disclosure.

 

Item 15.Financial Statements and Exhibits.

 

(a) Financial Statements appearing in Item 13 above:

 

·Unaudited financial statements for the six months ended March 31, 2023
·Audited financial statements for the years ended September 30, 2022, and 2021

 

(b) Exhibits

 

      Incorporated by Reference

Exhibit

No.

Description Filed Herewith (*)

Filing

Type

Date

Filed

3.1 Articles of Incorporation *    
3.2 Bylaws *    
4 Series A Certificate of Designation *    
10.1 Asset Acquisition Agreement with Kilimanjaro Lithium Ltd. dated February 24, 2023 *    
21 Subsidiaries of Registrant *    
96 Technical Report Summary *    

 

 

 

 

 

 

 

 

 

 38 

 

 

SIGNATURES

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

China Dongsheng International, Inc.

 

By: /s/ Craig S. Alford

Name: Craig S. Alford

Title: Chief Executive Officer

Date: August 4, 2023

 

 

 

 

 

Signature   Title   Date
         
/s/ Craig Alford   Chief Executive Officer   August 4, 2023
Craig Alford   (Principal Executive Officer    
         
/s/ Caren D. Currier   Chief Financial Officer   August 4, 2023
Caren D. Currier   (Principal Financial Officer)    
         
/s/ Harpreet Sangha   Chairman of the Board   August 4, 2023
Harpreet Sangha        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 39 

 

Exhibit 3.1

STATE OF DELAWARE CERTIFICATE FOR REVIVAL OF CHARTER The corporation organized under the laws of the State of Delaware, the charter of which was voided for non - payment of taxes and/or for failure to file a complete annual report, now desires to procure a revival of its charter pursuant to Section 312 of the General Corporation Law of the State of Delaware, and hereby certifies as follows : 1. The name of the corporation is China Dongsheng International, Inc. and, if different, the name under which the corporation was originally incorporated 2. The Registered Office of the corporation in the State of Delaware is located at (street), County of New Castle -------- - 251 Little Falls Drive in the City of Wilmington Zip Code 19801 The name of the Registered Agent at such address upon ----------- - whom process against this Corporation may be served is The Prentice - Hall Corporation System , Inc. 3. The date of filing of the Corporation's original Certificate of Incorporation in Delaware was 03/1111992 4. The corporation desiring to be revived and so rev1vmg its certificate of incorporation was organized under the laws of this State . 5. The corporation was duly organized and carri . ed on the business authorized by its A.D. 2008 charter until the 12th day of March at which time its charter became inoperative and void for non - payment of taxes and/or failure to file a complete annual report and the certificate for revival is filed by authority of the duly elected wrectors of the corporation in accordance with the laws of the State of Delaware . By: CaYe,yy C IA.¥'YW Authorized Officer Name: Caren Currier Print or Type State or Delaware Setretary of State DM.1loo or Corponllons Delivered 12:18 PM 04/30 i 202 1 FILED 12:18 PM04/30/2021 SR 20211S32596 · FUe umber 2290721

 1 

 

CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF PAPERCLIP SOFI'WARE, INC. It is hereby certified that: 1. The name of the corporation (the "Corporation") is Paperclip Software, Inc. 2. The original Certificate if Incorporation was filed on March 11, 1992 and a CertHicate of Amendment of Certificate of Incorporation was filed on June 13, 2000. 3. The Certificate of Incorporation of the Corporation is hereby amended by striking out Article Fi r st and the first sentence of Article Fourth and replacing it with the following new Article and sentence, respectively : FJRST: The name of the corporation is China Dongsheng International, lnc . (the "Corporation") . FOURTH : The totaJ number of shares of cap i ta l stock wh i ch the Corporation shall have authority to issue is 110 , 000 , 000 shares, of which 100 , 000 , 000 shares are designated as Common Stock, par value $ 0 . 00001 per share, and 10 , 000 , 000 shares are designated as Prefen - ed S t ock, par value $ 0 . 01 per share . 4 . The amendment of the certificate of incorporation herein certified has been duly adopted and w 1 itten consent has been given in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware . Signed on March 9, 2007 PAPERCLIP SOFTWARE, INC. By: Is/ A ido11g Yu Aidong Yu Chief Executive Officer State of Delaware Secreta..ty of State Division o£Corporations Delivered 05:14 PM 03/12/2007 FILED 05:12 PM 03/12/2007 SRV 070302500 - 2290721 FILE

 2 

 

St4te of De14W4re Secretazy 0£ State Division of Corporations Delive . red 06: 08 PM 11/14/2006 FILED 06: 08 PM 11/14/2006 SRV 061044383 - 2,290721 FILE SERIES B CONVERTIBLE PREFERRED STOCK CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF PAPERCUP SOFTWARE, INC. Paperclip Software, Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY : Pursuant to authority expressly granted and vested In the Board of Directors of the Corporation by the provisions of the Corporation's Certificate of Incorporation, as amended, and Section 141 (f) of the Delaware General Corporations Law, the Board of Directors adopted the following resolution on November 6 , 2006 authorizing a class of the Company's previously authorized 10 , 000 , 000 shares of preferred stock, par value $ . 01 per share, and providing for the designations, preferences and relative, participating, optional or other rights, and the qualifications, limitations or restrictions thereof, of 4 , 000 , 000 shares of Series B Convertible Preferred Stock of the Company, as follows : RESOLVED, Pursuant to Company's Certificate of incorporation and Section 151 (g} of the Delaware Business Corporation Act, Company hereby designates a class of preferred shares which are a part of the Company's authorized capital, but as of the date of this resolution, have yet to be designated as Series B Convertible Preferred S 1 ock whereby each share of Series B Convertible Preferred Stock Is convertlble into five hundred ( 500 ) shares of common stock and carries all the same rights as common stock, except for the 1 : 500 conversion and the following : (1) Voting . On all matters submitted to the shareholders, each holder of shares of Serles B Convertible Preferred Stock is entitled to one vote for each share of common stock Into which Series A Preferred Stock is then convertible, as provided in Section 2 . For example, each share of Series B Convertible Preferred Stock Is entitled to five hundred ( 500 ) votes . (2) Automatic Conversion . Each share of Serles B Convertible Preferred Stock will automatically convert, without any action on the part of the holder, upon the increase of the Company's authorized common stock to an appropriate amount to satisfy full conversion of all Series B Convertible Preferred Stock shares, Into five hundred ( 500 ) shares of Common Stock (the • conversion Shares"} . (3) Ratchet Provision; Adjustments for Converalona Certain and Issuances . In the event the Company, shall, at any time after November 9 , 2006 , issue any additional shares of common stock, then the conversion rate for the Series 8 Convertible Preferred Stock will be adjusted so that the number of shares of Common

 3 

 

. Stoc ' k issuable upon such conversion of the Serles 8 Convertible Preferred Stock shall be Increased in proportion to such Increase In outstanding shares of common stock. (4) lesuance of Certificates ; Time Conversion Effected . As - soon as commercially practicable after the Increase of the · Company's authorized common stock to an appropriate amount to satisfy full conversion of all Series B Convertible Preferred Stock shares into Common Stock, the Company shall cause to be issued and delivered, to the Holder, registered in such name or names as the Holder may direct, a certificate or certificates for the number of whole shares of Common Stock into which the Series B Convertible Preferred Stock has been converted . In the alternative, If the Company's Transfer Agent is a participant in the electronic book transfer program, the Transfer Agent shall credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its deslgnee's balance account with The Depository Trust Corporation . Such conversion shall be deemed to have been effected, and the • conversion Date" shall be deemed to have occurred, on the date which such shares are Issued . The rights of the Holder of the Series B Convertible Preferred Stock shall cease, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be Issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby, on the Conversion Date . Issuance of shares of Common Stock issuable upon conversion that are requested to be registered In a name other than that of the registered Holder shall be subject to compijance with all applicable federal and s t ate securities laws . (5) Fractional Shares . The Company shall not, nor shall it cause the Transfer Agent to, Issue any fraction of a share of common Stock upon any conversion . All shares of Common Stock (including fractions thereof) issuable upon conversion of shares of Series B Convertible Preferred Stock by the Holder shall be aggregated for purposes of determining whether the conversion would result in the issuance of a fraction of a share of Common Stock . If, after such aggregatron, the Issuance would result In the issuance of a fraction of a share of Common Stock, the Company shall round, or cause the Transfer Aaent to round, such fraction of a share of Common Stock up to the nearest whole share . (6) No Relsauance of SfrlH B Convertible Preferred Stock . Shares of Series B Convertible Preferred Stock that are converted Into shares of Common Stock as provided herein shall not be reissued . (7) Vote to Change the Terms of or Issue Serles A Super Preferred Stock . The affinnative vote at a meeting duly called for such purpose, or the written consent without a meeting, of the holders of not less than fifty - one percent { 51 % ) of the then outstanding shares of Series B Convertible Preferred Stock shall be required for (I) any change to the Corporation's Certificate of Incorporation that would amend, alter, change or repeal any of the preferences, limitations or relative rights of the Series B Convertible Preferred Stock, or (ii) any issuance of additional shares of Series B Convertible Preferred Stock .

 4 

 

(8) Notices. In case at any time; a. the Company shall offer for subscription pro rata to the holders of Its Common Stock any additional shares of stock of any class or other rights ; or b. there shall be any Organic Change; then, in any one or more of such cases, the Company shall give, by first class mall, postage prepaid, or by facsimile or by recognized overnight delivery service to non - U . S . residents, addressed 10 the Registered Holders of the Series B Convertible Preferred Stock at the address of each such Holder as shown on the books of the Company, ( 1 ) at least twenty ( 20 ) Trading Days prior written notice of the date on which the books of the Corporation shall close or a record shall be taken for such subscription rights or for determining rights to vote in respect of any such Organic Change and (ii) in the case of any such Organic Change, at least twenty ( 20 ) Trading Days' prior written notice ot the date when the same shall take place . Such notice In accordance witt, the foregoing clause (I) shall also specify, In the case of any such subscription rights, the date on which the holders of Common Stock shall be entitled thereto, and such notice In accordance with clause Oi) shall also specify the date on which the holders of Common Stock shall be entitled to exchange their Common Stock for securities or other property deliverable upon such Organic Change . (9) Record Owner . The Company may deem the person in whose name shares of Serles B Convertible Preferred Stock shall be registered upon the registry books of the Company to be, and may treat him as, the absolute owner of the Series B Convertible Preferred Stock for the purposes of conversion and for all other purposes, and the Company shall not be affected by any notice to the contrary . All such payments and such conversion shall be valid and effective to satisfy and discharge the liabilities arising under this Certificate of Designations to the extent of the sum or sums so paid or the conversion so made . (10) Bealater . The Company shall maintain a transfer agent, which may be the transfer agent for the Common Stock or the Corporation itself, for the registration of the Series B Convertible Preferred Stock . Upon any transfer of shares of Serles B Convertible Preferred Stock in accordance with the provisions hereof, the Company shall register or cause the transfer agent to register such transfer on the Stock Register . IN WITNESS WHEREOF, the Corporation has caused this Certificate to be executed by its Chief Executive Officer on November 6, 2006. /s/ WIiiiam Weiss William Weiss Chief Executive Officer

 5 

 

SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 11/02/2000 001553615 - 2290721 PAPERCLIP SOFTWARE, INC. SERIES A PREFERRED STOCK CERTIFICATE OF DESIGNATION Pursuant to Section 151 of the General Cmporation Law of the State of Delaware PaperC 1 ip Software, Inc . (the "Corporat i on 11 ), a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify that pursuant to the authority vested in the Board of Directors of the Corporation by its Certificate of Incorporation , as amended, and pursuant to the provisions of Section 151 of the General Corporation Law of the State of Delaware, said Board of Directors, b y unanimous written consent, adopted the following resolution which remains in full force and effect as of the date her e of : RESOLVED, that pursuan t to the authority vested in the Board of Directors of the · Corporation (the "Board of Directors") by its Certificate of Incorporation, as amended (hereinafter referred to as the "Certificate of Incorporation") , the Board of Directors does hereby create, authorize and provide for the issuance of Series A Preferred Stock 1 par value 5.01 per share, consisting of 3,649,543 shares, having the following designations, preferences and relative and other special rights, qualifications, limitations and restrictions: 1. Designation. The designation of such series is "Series A Preferred Stock" (hereinafter in t his Certificate of Designation called the " Series A PreferTed Stock") and the number of share constituting such series shall be 3 , 649 , 543 , which number may be decrea&ed (but not increased) by the Board of Directors without a vote of stockholders : provided . howe ¥$ (r, that such number may not be decreased below the number of then currently outstanding shares of Series A Preferred Stock, plus shares issuable upon the exercise of any then outstanding options, warrants or rights to acquire Series A Preferred Stock . AU capitalized terms used in this Certificate of Designation and not otherwise defined shall have the meaning given to snch terms in Section 14 hereof . 2. Dividends . (a) The holders of shares of Series A Preferred Stoel( shall be entitled to receive when, as and if dividends on the Common Stock are declared by the Board of Directors out of funds legally available for the purpose . The holders of the Series A Preferred Stock shall be enti t led to such dividends paid on the Common Stock on an as converted basis . FINAL Certificate of designation.doc - I -

 6 

 

(b) Without the consent of the holders of the Requisite Percentage of Serie s A Preferred Stock and, except as otherwise may be provided in tbis Certificate of Designation, so long as any shares of Series A Preferred Stock are outstanding, the Corporation shall not declare, pay or set apan for payment any dividends or make any other distribution on or redeem any Junior Securities and will not permit any Subsidiary or other affiliate to redeem, purchase or otherwise acquire for value, or set apart for any sinking or other analogous fund for the redemption or purchase of, any Junior Securities . 3 . Liquidation Preference. (a) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, either voluntarily or involuntarily, each holder of Series A Preferred Stock shall be entitled, after provision for the payment of the Corporation's debts and other liabilities 1 to be paid in cash in full, before any distribution is made on any Junior Securities, an amount in cash (the "Liquidation Amount") equal to the Series A Preference Am . aunt . I( upon any such liquidation, dissolution or other winding u - p of the affairs of the Corporation, the net assets of the Corporation distributable among the holders of al l outstanding Series A Preferred Stock shall be insufficient to permit the payment of the Series A Preference Amount in full ; then the entire nel assets of the Corporation remaining after the provision for the payment of the Corporation's debts and other liabilities shall be distributed among the holders of the Series A Preferred Stock ratably in proportion to the full preferential amounts to which they would otherwise be respectively entitled on , . ccount of their Series A Prefen - ed Stock . Upon any such liquidation, dissolution or winding up of the Corporation, after the holders of Series A Preferred Stock shall have been paid in full the preferential amounts to which they shall be entitled to receive n a couut of their Series A Preferred Stock, the remaining net assets of the Corporation shall be distributed to the other stockholders of the Corporation as their respective interests may appear . (b) Consolidation . Merger . etc . A consolidation or merger of the Corporation with or into any other corporation or corporations (a "merger"), or a Sale of the Corporation, or the effectuation by the Corporation of a transaction or a series of related transactions in which more than fifty percent ( 50 % ) of the voting power of the Corporation is disposed of (a "reorganization") (except in the case of a Qualified Public Offering) shall be deemed to constitute a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 3 . Any reorganization of the Corporation required by any court or administrative body in order to comply with any provision of law shall be deemed to be an involuntary liquidation, dissolution or winding up of the Corporation unless the preferences, qualifications, limitations, restrictions and special or relative rights granted to or imposed upon the holders of Serir ;: s A Preferred Stock are not adversely affected by such reorganization . Notwithstanding the foregoing, a consolidation, merger, Sale of the Corporation or reorganization shall not be deemed a liquidation, dissolution or winding up of the Corporation for the purposes of this Section 3 if the holders of the Requisite Percentage of the Series A PrefeITed Stock either waive in writing the provisions of the preceding two sentences, as applicable, or vote in favor of such merger or reorganization . · (c) Ho 1 ders of Series A Prefe 1 Tcd Stock shall not be entitled to any additional distribution in the event of any liquidation, dissolution or winding up of the affairs of the Corporation in excess of the Series A Preference Amount . flNAL Certlfi1:1te of designation.doc - 2.

 7 

 

4 . Voting . Except as otherwise required by law or as provided herein and subject to the rights of any class or series of capital stock of the Corporation that hereafter may be issued in compliance with the tem,s of this Certificate of Designation, the shares of the Series A Preferred Stock shall vote together with the shares of the . Corporation's Common Stock at any annual or special meeting of stockholders of the Corporation, or may act by written consent in the same manner u the Corporation's Common $ tock 1 upon the followirig basis : each holder of shares of Series A Preferred Stock shalt be entitled to one vote for ea £ h share of Common Stock into which Series A Preferred Stock held by such holder on the record date fixed for such meeting, or on the effective date of $ Uch written consent could be converted . s. Special Approval Rights. (a) Restricted ActiQns . The affirmati v e vote of the holders of the Requisite Percentage of Series A Preferred Stock, acting by written consent or voting separately as a single class in person or by proxy, at a special or annual meeting of stockholders called for the purpose, shall be necessary to authorize the Corporation to take any of the following actions (herein, each a "Restricted Action') : (A) authorize, or increase or pennit any Subsidiary to authorize or increase, the authorized number of shares of, or issue additional shares of Series A Preferred Stock or any class or series of the Corporation's or any Subsidiary's capital stock or options, warrants or other rights to acquire any such capital stock ranking with respect to liquidation preference, dividends o . r voting rights , senior in right to, or on a parity with, the Series A Preferred Stock , .. , (B) amend, repeal or change, directly or indirectly . any of the provisions of the Certificate of Incorporation of the Corporation, as amended, or the By - laws of the Corporation in any manner that would alter or change the powers, preferences or special rights of the shares of Series A Preferred Stock ; (C) authorize or effect, or pennit any Subsidiary to · authorize or effect> the sale, lease, license, abandonment or other disposition of all or any substantial portion of the assets of the Corporation or any Subsidiary ; (D) authorize or effect, or permit any Subsidiary to authorize or effect, the merger or consolidation of the Corporation or any Subsidiary with any other Person ; (E) authorize or effect, or permit any Subsidiary to authorize or effect, the liquidation (whether complete or partial), dissolution or winding up of the Corporation or any Subsidiary ; and (F) authorize the Corporation to enter into any transaction, including , without limitation, the purchase, sale or exchange of property or assets or the rendering or accepting or any service with or to any Affiliate of the Corporation, or to amend any agreement between the Corporation and such Affiliates, or waive any substantial right thereof, except in the ordinary course of business and pursuant to the reasonable requirements of its business and upon tenns not less favorable to the Corporation than it could obtain in a comparable ann ' s length transaction with a . third party other than such Affiliate . FIN Al . , Certificate of design 11 ion . doc

 8 

 

(b) Approval. The approval rights of the holders of shares of Series A Preferred Stock to authorize the Corporation to take any of the Restricted Actions as provided in this Section 5 may be exercised at any annual meeting of stockholders, at a special meeting of the holders of Series A Preferred Stock held for such purpose or by written consent. At each meeting of stockholders at which the holders of shares of Series A Preferred Stock shall have the right, voting separately as a single class, lo authorize the Corporation to take any Restrictc:d Action as provided in this Section S, the presence in person or by proxy of the holders of the Requisite Percentaae of Series A Preferred Stock entitled to vote on the matter shall be necessary and sufficient to constitute a quorum. At any such meeting or at any adjournment thereoj in the absence of a quorum of the holden of shares of Series A Preferred Stock, a majority of the holders of such shares present in person or by proxy shall have the power to adjoum the meeting as to the actions to be taken by the holders of shares of Series A Preferred Stock from time to · time and place to place without notice other than announcement at the meeting until a quorum shall be present. 6 , Conversion Rishts . (a) Conversion Procedure. (i) Each share of Series A Preferred Stock shall be convertible, at any time and from time to time, after the date of issuance of such share, ! : lt the option of tho holder of Series A Preferred, into &uch number of shares of fully paid and nonassessable shares of Common Stock computed by dividing the Purchase Price by the Conversion Price in effect on the Conversion Date as hereinafter defined . (ii) On a date (the ''Corporation's Conversion Date 11 ) immediately prior to which the Common Stock bas traded for not leas sixty (60) consecutive days at a closing price of not less than 150% of the implied conversion price derived by dividing the amount of the. Series A Preference Amount by the number of shares of Common Stack issuable lo the Holders upon oonveraiona the Corporation may. in its sole discretion, require the conversion of all, but not less than all, of the then outstanding Series A Prefemd Stock . The Corporation shall cause to be mailed to all holder! of Series A Preferred Stoclc at their la.st address reflected on the Corporation 1 s boOQ and records a notice notifying such holders that the Corporation has exercised its conversion right pursuant hereto (a "Conversion Notice " ). The Conversion Price and the number o.f shares of Common Stock issuable upon conversion of the Series A Preferred Stoek shall be u set forth in below. (iii) A conversion of Series A Pre . fcrT Stock pursuant to (i) above shall be deemed to have been effected as of the close of business on the effective date of such conversion specified in a written notice (the "Holder's Conversion Date") ; provided , however, that the Holder's Conversion Date shall not be a date earlier than the date such notice is so given, and if such notice does not specify a conversion date, the Holder's Conversion Date shall be deemed to be the date such notice is given to the Corporation . A conversion of the Series A Preferred Stock pursuant to (ii) above shall be deemed to have been effected as of the close of business on the Corporation's Conversion Date . The Corporation's Conversion Date and the Holder's Conversion Date are sometimes both referred to herein as the "Conversion Date . " On the Conversion Date 1 the rights of the holder of such Series A Preferred Stock as such holder FINAL Cenifi lltc or designation.doc - 4 - T" L 1 T' , ,._.. - , , 1 r"'T 11 • - - . - - - - -- _. ,_

 9 

 

(including the right to receive dividends) shall cease and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby . (iv) As soon as practicable after the Conversion Date (but in any event within ten ( 10 ) business days after the holder has delivered the certificates or affidavits of los s in the cas e of subparagraph (A) below) evidencing the shares of Series A Preferred Stock converted into shares of Common Stock in accordance herewith, the - Corporation shaJl deliver to the converting holder : (A) a certificate or certiflcates representing, in the aggregate, the number of shares of Common Stock issued upon such conversion, in the same name or names as the certificates representing the converted shares and in such denomination or denominations as the converting holder shall specify and a check for cash with respect to any fractional interest in a share of Common Stock as provided in clause (viii) of this Section 6 (a) ; and (B) a certificate, if necessary, representing any shares that were represented by the certificate or certificates de 1 ivered to the Corporation in connection with such conversion but that were not converted . (v) The issuance of certificates for shares of Common Stock upon conversion of Series A Preferred Stock shall be made without charge to the holdel's · of such Series A Preferred Stock including any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such conversion and the related issuance of shares of· Common Stock. Upon conversion of any shares of Series A Preferred Stock, the Corporation shall take all such actions as are necessary in order to insure that the Common Stock so issued • upon such conversion shall be validly issued, fully paid and nonassessable. (vi) The Corporation shall not close its books against the transfer of Series A Preferred Stock or of Common Stock issued or issuable upon conversion of Series A Preferred Stock in any manner that interferes with the timely conversion of Series A Preferred Stock . The Corporation shall use reasonable efforts to assist and cooperate with any holder of shares of Series A Preferred Stock required to make any governmental tilings or obtain any governmental approval prior to or in connection with any conversion of shares of Series A Preferred Stock hereunder (including, without limitation, making any filings required to be made by the Corporation), (vii) The Cotporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the pmpose of issuance upon the conversion of the Series A Preferred Stock, such number of shares of Common Stock as are issuable upon the conversion of all outstanding Series A Preferred Stock . AU shares of Common Stock that are so issuable shall, when issued, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges . The Corporation shall take all such actions as may be reasonably nece sary to assure that all such shares of Cqmmon Stock may be so issued witnout violation of any applicable law or governmental regulation or any requirements of any domestic securities exch ge upon which shares of Common Stock may be listed (except flNAL Cet1iftcate of designation.doc 9 · , - 1

 10 

 

for official notice of issuance which shall be immediately delivered by the Corporation upon each such issuance) . (viii) No fractional shares of Common Stock or script may be issued upon conversion of shares of the Series A Preferred Stock . Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of any shares of Series A Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fractional intere - st equal to the fair market value of such fractional interest as detennined by the Corporation's Board of Directors . (b) Conversion Price . The initial conversion price shall be the Purchase Price . . which may be adjusted from time to time hereafter (as so adjusted, the 11 Conversion Price") . If and whenever on or after the original date of issuance of the Series A Preferred Stock the Corporation issue $ or sell&, or in accordance with Section 6 (c) is deemed to have issued or sold, any shares of its Cammon Stock or Convertible Securities for a consideration per share less than the applicable Conversion Price then in effect (a ''Dilutive Issue"), the Conversion Price shall be _reduced in accordance wi'th the following fonnula : p ""' 2 lgl + p 2 g 2 ql +q2 where: p= Conversion Price per share of Serles A Pref erred Stock following the Dilutive Issue pl= prevailing Conversion Price per share ofSeries A Preferred Stock prior to the Dilutive Issue q1 = number of equivalent shares of Common Stock outstanding prior to the Dilutive Issue p2= price per share of Dilutive Issue q2= effective number of equivalent shares of Common Stock issued in the Dilutive J55uc:. (c) Effect on Conversion Price of Certain Events. For purposes of determining the adjusted Conversion Price under Section 6, the following shalJ be applicable: (i) Issuance of Convertible Securities . If the Corporation in any manner issues or sells any Convei : tible Securities, whether or not the rights to exercise, exchange or convert any such Convertible Securities ace immediately exercisablei and the price per share for which Common Stock is issuable upon such exercise, conversion or exchange is less than the Conversion Price in effect immediately prior to the time of such issue or sale, then the maximum number of shares of Common Stock issuable upon exercise, conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible Securities for such price per share . For the purposes of this paragraph, the ''price per share for which Common Stock is issuable" shall be detennined by dividing (a) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus the FINAL C1trtlfl.cate of de&i&nation.do . 6 - I 'J

 11 

 

cumulative minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the exercise, conversion or exchange thereof and, if applicable, the exercise, conversion and exchange of any other Convertible Securities that such Convertible Securities may be converted . into or exchanged for I by (b) the total maximum number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Convertible Securities . No further adjustment of the Conversion Price shall be made when Common Stock and, if apphcable, any other Convertible Securities, are actually issued upon the exercise, conversion or exchange of such Convertible Securities . The foregoing notwjthstanding . no adjustment shall be made to the Conversion Price with respect to the issuance of employee stock options, is $ Ued after June 1 , 2000 under a stock option plan approved by the shareholders of the Company, with exercise prices at not less than the fair market value and for not more than 3 , 000 . 000 shares of Common Stock and the issuance of Common Stock or Convertible Securities in connection with an investment of up to $ 100 , 000 in the Company by a third party . (ii) Change in Exercise . Price or Conversion Rate . If the additional consideration payable to the Corporation upon the exercise, conversion or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be read . justed to the Conversion Price that would have been in ffect at such time had such Convertible Securities that are still outstanding provided for such changed additional consideration or changed conversion rate, as the case may be, at the time such Convertible Securities were initially granted, iasued or sold ; but only if as a result of such adjustment the Conversion Price then in effect hereunder is thereby reduced ; and on the tennination date of any right to exercise, convert or exchange such Convertible Securities, the Conversion Price then in effect hereunder shall be increased to the Conversion Price that would have been in effect at the time of such tennination had such Convertible Securities, to the extent outstanding immediately prior to such tennination, never been issued . (d) Subdivision or Combination of Common Stock . If the Corporation at an y time subdivides (by any stock split, stock dividend, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such combination shall be proportionately reduced, and conver3cJy, in the event the outstanding shares of Commons Stock shalt be combined (by reverse stock split or otherwise) into a smaller number of shares, the Conversion Price in effect immediately prior to · such combination shall b proportionately increased. (e) Certain Event † . If an event not specified in this Section 6 occurs that has substantially the same economic effect on the Series A Preferred Stock as those specifically enumerated, then this Section 6 shall be construed liberally, mutatis mutandis, in order to give the Series A Preferred Stock the intended benefit of the protections provided under this Section 6 . In such event, the Corporation's Board of Directors shall make an appropriate adjustment in the Conversion Price so as to protect the nshts of the holders of Series A Preferred Stock ; provided that no such adjustment shall increase the Conversion Price as otherwise determined pursuant to this Section 6 or decrease the number of shares of Common Stock issuable upon conversion of each share of Series A Preferred Stock, except as set forth in Section 6 (d) . (f) Notices. PINAL Certificate of designation.doc - 7 - S " d

 12 

 

(i) Promptly upon any adjustment of the Conversion Price, the Corporation shall give written notice thereof to all holders of Series A Preferred Stock, setting forth in reasonable detail and certifying the calculation of such adjustment . (ii) The Corporation shall give written notice to all holders of Series A Preferred Stock at least twenty ( 20 ) days prior to the date on which the Corporation closes its books or takes a record (a) with respect to any dividend or distribution upon Common Stock, (b) with respect to any pro rata subscription offer to holders of Common Stock or (c) for detennining rights to vote with respect to any dissolution or liquidation . 7 , Redemption . The Series A Preferred Stock shall have no redemption rights. 8 . Status of Reacquired Shares . Shares of Series A Preferred Stock which have been issued and reac(tuired in any manner shall (upon compliance with aJ' . lY applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of Series A Preferred Stock issuable in series undesignated as to series and may be redesignated and reissued . 9 , Exclusion of Other Rights . Except as may otherwise be required by law, the shares of Series A Preferred Stock shall not have any preferences or relative, participating, optional or other special rights, other than those speci.ficatJy set forth in this Certificate or Designation. The shares of.Series A Preferred Stock shall have no preemptive or subscription rights pursuant to this Certificate of Designation. 10 . - The Series A Preferred Stock shall rank senior in right as to dividends and upon liquidation, dissolution or winding up to all Junior Securities, when,ever issued. 11 , Identical Rights . Each share of the Series A Preferred Stock shall have the same relative rights and preferences as, and shall be identical in all respects with, all other shares of the Series A Preferred Stock . 12 . Certificates, So long as any shares of the Series A Preferred Stock are outstanding, there shall be set forth on the face or back of each stock certificate issued by the Corporation a statement that the Corporation shall furnish without charge to each shareholder who so requests, a fu]l statement of the designation and relative rights, preferences and limitations of each class of stock or series thereof that the Corporation is authorized to issue and of the authority of the Board of Directors to designate and fix the relative rights, preferences and limitations of each series . l 3 . Amendments . Any provision of these terms of the Series A Preferred Stock may be amended, modified or waived if and only if the holder of the Requisite Percentage of Serie s A Preferred Stock has consented in writing or by an affirmative vote to such amendment, modification or waiver of any such provision of this Certificate ofDesignatio'! 1 , FINAL Ctrcifieate of designation.doe - 8 . 6'd

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14. Definitions. "Affiliate or Affiliates" shall mean with respect to any Person, any other Person that would be considered to be an affiliate of the Corporation under Rule 144 (a) of the Rules of Regulations of the Securities and Exchange Commission, as in effect on the date hereof, if the · Corporation were issuing securities . ''Certificate of Designation'' shall mean this Certiffoate of Designati ns of the Series A Preferred Stock . "Certificate of Incorporation" shall mean the Certificate of Incorporation of the Corporation, as amended from time to time . "Common Stock'' shall mean the Corporation's Common Stock, $ . 01 par value . "Common Stock Deemed Outstanding " sha 11 mean, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock, plus the number of shares of Common Stock issuable upon the ex rcise in full of all Convertible Securities whether or not the Convertible Securities are convertible into Common Stock at such time . "Conversion Price" shall have the meaning set forth in Section 6 (b) hereof . "Convertible Securities" shall mean securities or obligations that are exercisable for, convertible into or exchangeable for shares of Common Stock . Tl)e tenn includes options, warrants or other rights to subscribe for or purchase Common Stock or to · subscribe for or purchase other securities that are convertible into or exchanged for Common Stock . "Dilutive Issue" shall have the meaning set forth in Section 6(b) hereof . "Junior Securities" shall mean any of the Corporation's Common Stock and alt other equity securities of the Corporation other than the Series A Preferred Stock and any other shares of the Corporation's preferred 6 tock ( 11 ) which by their terms , state that they are not Junior Securities or provide the holders thereof with rights pari passu with or senior to those of the holders of Series A Preferred Stock and>{b) are approved for issuance in accordance with Section 5 hereof . "Person" shall mean an individual, partnership, corporation, association, t rust, joint venture, unincorporated organization and any government, governmental department or agency or political subdivision thereof . ' ' Preferred Stock" shall mean the Series A Preferred Stock. "Purchase Price" of any share of Series A Preferred Stock shall be $0.63 . ''Qualified Public Offering" shall mean any underwritten offet'ing by the Corporation of its equity securities to the public pursuant to an effective registration statement under the Securities Act of t 933 or any comparable statement under any similar federal statute then in FINAL Certificate of designation . doc . 9 - T l lT ,, - ,r, , ._, _, ,,.T .... - I I ,,... - - - - - - -

 14 

 

force yielding the Corporation net proceeds of at least $ 10 , 000 , 000 , other than an offering of shares being issued as consideration in a business acquisition or combination or an offering in connection with an employee benefit plan . "Required Consent" shall have the meaning set forth in Section 6. "Requisite Percentage" shall mean 50 % except that, with respec t to any amendment to this Certificate of Designation that reduces the Series A Preference Amotmt , reduces the div,idend rate provided in Section 2 (a) or amends this definition , Requisite Percentage means 100 % , "Restricted Action" shall have the meaning set forth in Section 5 hereof. "Sale of the Corporation" shall mean a single transaction or a ser i es of transactions pursuant to which a Person or Persons acquire (i) capital stock of the Corporation possessing the voting power to elect a majority of the Corporation's board of directors (whether by merger, consolidation or sale or transfer of the Corporation's capital stock, provided, however, that a Qualifled Public Offering that results in an acquisition of voting power shall no t b e a Sale of the Corporation) ; or (ii) all or substantially all of the Corporation's assets detennined or,i a c_onsolidated basis . "Series A Preference Amount" shal equal the Purchase Price, subject to the adjustments set forth in Sections 6 (d) and (e) with respect adjustments in the Con v ersion Price . "Series A Preferred Stock'' shall mean the Corporation's Series A Preferred Stock, $ . 0 1 par value, as in effect on the date hereof . "Subsidiary" shall mean, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation , a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors , managers or trustees thereof is at the time owned or controlled, directly or indirectly , by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if apartnership, associatiort or other business entity, a majority or the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that person or a combination thereof . For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons shall be allocated a majority of partnership, association or other business entity gai . ns or losses or sh 1 . tl be or control the managing general partner of such partnership , association or other business entity . 15 . Sevcrability of Provisions . If any right, preference or limitation of the Series A Preferred Stock set forth in this Resolution (as such Resolution may be amended from time to time) is invalid, W 1 lawful or incapable of being enforced by reason of any rule, law or public policy, all other rights preferences and limitations set forth in this Resolutjon (as so amended) which can be given effect without implicating the invalid, unlawful or unenforceable righl preference or limitation shall, nevertheless, remain in full' force and effect, and no right, pr ference or limitation herein set forth shall be deemed dependent upon any other right , preference or limitation unless so expressed herein . FINAL Certificate of de&igna1ion.doc Tl • _ I

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IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by its Chief Executive Officer on November 1, 2000. By: Oukrv Name: William W iss Title: Chief Executive Officer FINAL Cert!ficzte of dc1ignation.d0c - 11 - 21 ' d

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SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 06/13/2000 001300 10 - 2290721 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF PAPERCLIP SOFTWARE, INC. Adopted in accordance with the provisions of Section 242 of the Delaware General Cotporation Law Theundenigned,William Weiss,ChiefExecutive Officer ofPaperClip Software, Inc., hereby certifies as follows: FIRST: The name of the corporation is PapcrClip Software, Inc. (the "Corporation"). SECOND: amended as follows: That the Certificate of Incorporation of the Corporation is hereby By striking out Article FOURTH in its entirety and inserting the following in lieu thereof: FOURTH : The total number of shares of all classes of stock which the Corporation shall have authority to issue is 40 1 000 , 000 shares, consisting of (i) 30 , 000 , 000 shares of common stock, $ . 01 par value per share, and (ii) 10 , 000 , 000 shcrcs of preferred stock, S . 01 p : ar value per share . TheBoardofDirectors is authorized, subject to limitations prescribed by law and the provisions of this Article FOURTH, to provide for the issuance from time to time of the shares of Preferred Stock in one or more series, and by filing a certificate pursuant to the applicable lnw of the State of Delaware, to establish from time to time the number of shares to be included in a series, and to fix the designation, powers, preferences and rights of the shares of such series, which may be different from the designations, powers, preferences and rights of shares of any other series, and the qualifications, limitations or restrictions thereof, 271!>33.I

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The authority of the Board of Directors with respect to such series shall include, but not be limited to, determination of the following: a. The number of shares constiruting such series and the distinctive designation of such series; b. The dividend rate on the shares of such series, whether dividends shall be cumulative, and, if so, from whlch date or dates, and the relative rights of priority, if any, of payment of dividends on shares of such series ; c. Whether suchseriesshallhave voting rights,in additionto the voting rights provided by law> and, if so, the terms of such voting rights; d . Whether such series shall have conversionprivileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine ; e. Whether or not the shares of such series shall be redeemable, and, if so, the tenns and conditions ofsuch redemption, including thedate or date upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates ; f. Whether such series shall have a sinking fund for the redemption or purchase of shares of such series, and, if so, the terms and amount of such sinking fund ; g. Therights of theshares of such series in the event ofvoluntary or involuntary liquidation) dissolution or winding upof the Corporation, and the relative rights of priority, if any, of payment of shares of such series ; and h. Any other relative riihts, preferences and limitations of such series. Dividends on outstanding shares of Preferred Stock sba 11 be paid or declared andsetapart fo payment before any dividendsshall be paid or declared and set apart for payment on the shares of common stock with respect to the same dividend period . 271933.1 2

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If upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the assets available for distribution to holders of shares ofPreferred Stock of all series shallbe iusuffieient to paysuch holders thefull preferential amount to which they are entitled, then such assets shall be distributed ratably among the shares of all series of Prefened Stock in accordance with the respective preferential amounts (including unpaid cumulative dividends, if any) payable with respect thereto . THIRD: That such amendment has been duly adopted in accordance with the applicable provisions of Section 242 of the Delaware General Corporation Law. FOUR m: 'Thisamendment to theCertificate oflncorporationoftheCorporation shall be effective on and as of the date of filing of this Certificate of Amendment with the office of the Secretary of State . of the State of Delaware . IN WITNESS WHEREOF, I havesigned this certificate this 7th day ofJune , 2000 . /s/ Name: Title : William Weiss William Weiss Chief Executive Officer 271933 . 1 3

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SECRE!l"AAY OF S!l"A!l"E DIVISION oe CORPORA!l"IONS FILED 09:00 AN 02/17/1998 981061966 - 2290721 CERTll1CATE OF DMENT OJ' CERTIFICATE OP INCOBPORA TION or PAPDCLlP SOffWAU, INC, Adopted in accordance with the proviilons of SeoUon 242 of theDelaware General Co1p0 io.11 Law "' - -- · ---- ··· ....... - - --- ·· · ----- ···· . · . ••··· .. ·· - We, William Weiaa, Qdefl!xao1.1llvc Officer, anti Michael Suleski, Secretary, of PaporClip Software, . hereby crtify u follows : Fll ST: The oamo oftM ,otp0ration.i1 PaperClip Softwarv, tne. (the SECOND1 That the cite of Incorporation of the Corporation is hereby amended II follows: By miking out Article POUR.TH in it11 entire&)' and inserting the followma in lieu thereor. POURTH, A. AUtbod7&4 Sharu . The total wnbor of share, of ell ela.ne1of stock which the Cotporation shall havoauthority to issue is : 31,000,0001hares. conaisting of (i) 30,000,000 sharea of common stock, S.01 par value per: 1hare (herainafter refen - ed to u 11 Common Stock' 1 ), Ind (il) 1,000,000 lharet ctnon•vot!ng prtierrad atock, S.01 par value per share (hereinafter re!erred to 11 ''Ptofened Stock"). s. I•an, g(tht Pret'lrtod Stack sWalt RI M fsillR»:1 : 1. R!!:lk , The Prc!em:d Stock th1ll rank, with respect to divldaad rt1hu and rights on liquidation, winding Up and d.laaolution. i,rior to all Junior Securities (u herelnafter de.fiaed) o! the Corporation , {All ;quity 100 U'ities of the Corporaticn othar 1hm the Ptefmed Stock, includlna the Common Stook, are oo1ltetive1y roferred to herein u ''Junior S uriti"".)

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(I) The holder• of the share1 of Preferrod Stock shall be titled to receive, when, as and if <ie la:cd by the lloud of Dire ton of tbo Coq,oration out of fundi legally available for the payment of dividends, c.umulative dividend, at the initial ann - ual rate of · 12% per shue (exproased u a porcui,.10 o£the $.30 per slme liquidation prlfer1nce) 1 (the ''Dividond Rate"). S h dividesid, ahall be payable quarterly on the last day of J111uary, April. July and October of 11ch yoar (eacn of suoh dato• being , ''dividend payment date"), i:omman,;ing April 30, 1998. Such di"f'ldenda shall be paid to the holders of record at the close of businees on the date s;eeifled by Che Boazd e!Di:ectors ofthQ Corporation at the time sueh dividend i1 dccla.rc:id; umrld@ . hOWQcr. that such date mall not be mote than !ixty (60) days nor "lctn than ten ( 10) days prlar to the plicabla dividend payment date. Each of 1uc:.h (lUarterly dividends (whether pay,blc in ;uh or stoek as hereinafter provided) ahaU bo fUlly ewnulative and shall accrue (whe1hcr or not declan,d), without interest, from thofirst day cf the quarter in whlc.h such divldend may ba payable u htrlin ptovided, except that with respect to the tlrst i:iua:terly dividend on eiu:h 1h.ue of Preferred Stock. sueh dividend shall accrue from the. dAte the Prefan - ed Steck LI fitat iaeued. All dividend payments Jhall be tnade inc.uh 0r 1tock, &t the option of the holder. If any dividend paym.en date is not a buaine11 da.y, .uch divid1md i,a.yment data shall be the next alJCUOdins butine11 da.y. (ii) The amowit and fonn of all dividends paid with r11pect to !hate.& o!the Prefetted Stock pwwa.nt to parqraph (2)(i) shall be paid pro rata tc the holders entitled thereto. {iii) (a) Holders of siwcs of tho Pr=foneci Stock shalt beoo.titled to regeive the dividAndl provided for inpangraph (l)(i) hereof in pzeference to, and in priority over, a.ny divla.n.d11 upon any oitho Jwiior Soc Uitie,, (b) So long a.a any 1h&N1 ofthePrefmcd Stoclc are ouuta.nding, the Corporation shill not declare, pa.y or act apart for payment, any divid anany of the Junior Seouritie., or make any payment on account of 1 or set .Part !or pa:ymeot, money for a slaking or other 1imila: i ind for, the purcbasei redemption or otbcr retirement of, any af the Junior Securities or any warrants (other than the Clu1A Warrants exucua.ble through AUg1.1at 9, 2000i the option and warrants lsaucd to A.R.. Baron, oxerclaablo throuah 2000, and th= A.SI mazidatorily convertible notes to boissued on or about February 199& in coMection with raising capital in an amount t&nsins betwecs SS00,000 and Sl,000,000)> rights. c&lt, or option., ntteiaablc tor or convertiblo into any of tho Junior Securities, or mak= any distribution in reapc t thc:rcof, eitherdirictly or imilrectly, and whether in caah, obligations or shares of the Corporation or other property, W1lla prior to, or cotlc:urrontly with, such declaration , paym;.nt, 1ettin; apart for pa.yment, purchase, rectemption 9t dlstribution, as the cll.!!c ma.y be. all accrued and I.Qpai4 dividend• on shares of tlul PRf'crred Stock not paid on the datn J)l'Ovided for in paraaraph l(i} hereof &hall have been paid in t 111 in . Holders of sbaros of Pte!orred Stock ahall not bo entitled to1J1Y dividends, whether payable in cub, property or stock, in oxc,a Ŷ of full cumulative dlvidendl, u herein provided.

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(iv) Each fractional 1hare of Preferred Stock outstanding shall be entitted to a rattbly praportion&te amount of all dl - videndl '"Nini with. roapciot ta each ouutandins share of Preferred Sto k purauant to paraarai,h (2)(i) hlzcof, &.'ld a.Il suchdividend, with respect to 1uoh outetanding1 - actional ahares1ball be Hy cumulative and shill accrue (whether or not di,lartd), Without intoreat, and llwl be payable in the 1ame manner - and at such irnes ti provided.!ar in par&p'lph (2)(1) hereof with retpect to dividend• on o&ch outsian.ding dwe of Prefened Sto;k. 3. tJqpid1iien Prof,mee. (i) In the event of any liquidation. d.luolutio.a. or windini up of the affairs of the Corporationi the holder, of thare• of Pretend Stotk then outatand3na shall be titled to be paid out of tho wots of tho Corporation available for disttibution to its sto kholders an amowi.t in cuh equal ro 5.30 for ead shar11 ouut&ndln1, plus a.n amount lncash equal to all accrued but unpaid dividends thereonto the datofixed for liquidation, dissolution or wiwiing up, without interut, bafora a.ny paym.e!U1bal bt made or any asaeta diatributed to 1he holders of any of the Junior Socurltles. E,ccei,t u provided in the prcocduii 1entence, holdera of Preferred Stcok ahall not l,o entitled to any dittribution in the event of liquidation, <iiuolution or winding up otthe affairs of the Coiporation, If tho aaseta o!tha Corporation are not gufflcict to pay hi full the liquidation payment, payable to tho holders of cutatandin; sharea of the Preferred Stock, then the holders of all auch share, shall aharo r1.1ably in such diatriburion of uaots. The Corporation shall mail written notice of1uoh liquidation, dil•olution or winding up. not less than. twenty (20) day, prior10 the payment date stated th cin, to each record bolder of Prefe?Ted Stock. (ii) For tho purposes ofthi1 pcagraph 3, neither (a) the volW1W')a' le, - 1.ouvoyan o. haoac ortxanafer (for 1;1aah, ,hares of crto", sacuririe, or other conoideratlon) of al!or aubstal ti&lly &11 of the propUty or uam of the Coipotation, nor (b) Ou, QOnsolidation or moraw of tho Corporation wUh one or more other c:oipamtiona shall be deemed to be a liquidation. disaolu1ion or wind.ina up, voLuntary or involuntary, (iii) The liquidation payment with r11pect to each out1tandill1 fractional share of Profetted Stock ah.all bo oqual to a tat&bly proportionate amount of the Uq_uidatlon pa.ytnen With retpect to Hoh outstanding ahar of !>referred Stock. 4. PmQptjon , (i) S lbjeet to applicable law, at imy time c:ommencins on or after the date whioh ii ol.ghtcon months after the cto1in11 of th1uanuction (tht "Closing") contemplated by the Airccm nt md Plan ofMers•t dated u ofNovembar 12, 1997, as amended, amona the Corpor&tion, Access Solution, International, Ino. ("ASI") md.PaperClip Acquisition Corp, (' 1 Agq,ui1itionu), any holdu of the Prt!erred Stock will lave the option to . put all or part of the shar Ŷ s of Preferred Stock owned by any swih haldar, to the Corporation orto ASI fer cash or share, Qf ASI 1 1 common ltoek azid ASI 1 s Clu• B Warrant•, at th option of the holci Ŷ r; JU:AYJ4cd; howey;r, that in 'the avw (i) of any liquidation, di11olution or winding up of tht afflur1 of ASI,

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{ii) thi&ra shall b1 filed ag,inat ASI a voluntu)' or uivolur.wy i,otition under any bankruptcy. r1oraanizatio11or in1olv,ncy Jaw of any juri.ldiotion 1 whl1b.cr ru:iw or hereafter in ff=ct, (iii) AS1 shall admit in writing ita in.ability to pay ita debts asthey mature, or (iv) ASI ahall ma.kc a general ualpment fot th8 benefit of creditors, any holder oftht Pr,ferred Stock shall have the option to put ell or part of the shares of Pre:f'emd Stock owned byany such boldtt to the Corporation or to ASI for ouh or sharu of ASI's common sto,kand ASI't Class B Warrants, at th• option of the hotdu 1 at any time tfter the ilauwo of1hc Preferred Stock. The put price for each share of Preferred S1o k. will be equal to (i) in the event of payment by •hares of ASJ'i common • k.(•) ,uch fnction ofa sh.art of ASI's common stock, S.01 par value per share, as is equal to the Converaion Rada (111 dofined bQlow), plus (b) an equivalent number of ASI's Clau B Warrant&, plu, (c) auoh number of shares of ASI 1 1 eommon stock u i1 eqUal to (x) the e.tn0 Dlt of any a;orucd b lt wipaid di11idends to the date fixed for th• put, (y) divided by S.30. a.ad (z) th& result multiplied by the Conversion Ratio, or (ii) in the cvont of payment by cash, th• liquida.tion preference valua. in the amount of S.lO per ahar1, of the Prefemd Stock, plus any accnu;d but unpaid dividends to the date fixed for the put, In the cue of &hares of Preferred Sto;k tailed for redemption by the Corporation. the put ri&h.ta will expire at the;lose of business on the date fixed for redamptlon by the Corporation. (ii) Any holder of Preferred Siook cle ting lo = crobo its put option in conneetion with iUCh shares. or any ponicn theroot 1 in a.c:cor • With subparaifaph (i) of this parasraph 4 ahall deliver the cenificates thcmor to tho principal executive office, of the Corporatic,h or ASI, duly endorsed or ac ompani.td by proper in.1trument1 of transfer, with a form of notice of election to ex•r tae it, optionto put TM sharesi1 llly complated anci duly exe utcd. and p1y any required taxaa. S loh notice 1hall alao ata.tc: (a) the manJ1er of pll)'ment that the holder wishes 10 receive for ita shares of Prefeued Stock(i . o., whether in cash or in shates of ASl's common stock and.ASI's Clw B Wmanu), and (b) the addresa or a.ddtoaaH to whieh tla PA}1llont for the hare• i• to be trantmittod, Tho pui ri&ht with i - e.pcQt lQ any IU ;h share, of Pr.furccl Stoc:k shall b1 d1emod to have been exercised at the date upon which the holder uti sfiod the last of 1 loh ttquirementl and the person or persons entitled. to receive aharea of ASI'a oommon ,tock and ASI's Cl111 B Warranta is•U&ble upon suob put exi:tciBe, if applica.ble, 1hall be trtatcd for all purposes u the rei:ord holdet or holders of ASI1s comman. 1toclc and ASI's Clw B Warrants upon slid date. If a holder fail• to notify the Corporation or ASI of number of sh.ate• whioh such holder wishes to put, auch holder1h1ll be deomod. to have ela t•d to put all ahare, repre,ented by the certificate or cezt!tlcates surrendered. 5. BRFl@mptjpn. (i) Subject to applicable law, at any time com.menoing on or after the date whioh is thiny months after the Clasina, th• C0rporation will have the right to redeem in whole, or tiom thne to time in part, the Profomd Stock for cuh or sharea of ASI 1 1 Qcmmon atotk and AS1'1Clas.1 B Warrant, in th• amount determined below , The redemption price for eatji :th.are of Preferred Sto k will be equal 10 (i) ln the event of payment by shares of ASI's common stock, (1.) such fr tion of & sh.art ot ASI's common stock. S.O1 par value per share, as ia equal to the Conversion Ratio (u defined below), plu, (b) an equivalent number of ASI1.t Cius B Warrant,, plu,(o),uch number of ahar11 of ASl11 common 1t0ck u is equal to (x) the 1mount of

 23 

 

any &CCN14 but unpaicl dividends to tlu, date flxtd for the redemption, (y) divided by S . 3O, and (z) the recult multiplied by the Converaion R.&ti0 1 or (U) in thoevent of payment by euh, the liquidation prcfercau value, in the amount ofS.30 per thare, of the Preferred Stock, phu any accrued but unpaid dlvidonds to the date fixed for the redemption. Rodemption:i shall be rlfeeted in the manner providod be1ow , N0twltb1tmdin1 tho fore1of.ns. unle.11 full cwnulative cil lidcnd, on 1U outatandin, shares of Prefenod Stock lhall b&vc; bcon paid or contemporaneously are dc lared .nd paid !or all put dividend poriodt, n0nt of the aharea of Profmed Stock shall be redeemed unl•ts all outatandina aharet of Prtfmtd St.ode arc . simultaneously red.timed. (ii) In the evtnt that fewer than all the out,tmdlng !hates of Prefmcd Stoc.k are to be redeemed, the umber of shares to be red.oemld &hall be determined by the Board of Oircctora and the shares to be redeemed ,hall he ael on t pro rata buia, (lii) In the event the Corporation or ASI shaU red.com sharos of Preferred Stock, notice of such redemption shall be ai"en not less than 1hirty (30) days nor more than sixty ( 60) days prior to the t=domption date, to each boldor of record of the ahues to be redeemed at •uch holder's addru1 u the same appoars on the1to,lr. rc;istcr of the Corporation; grovidc.d,. ho 1/fVtt, that no failure tc aivc notice nor any defect therein shall at!e the vaUdity of the pra eeding for tht redemption of any aharea of Preferred Stock la be redeemed except u to tho holder to whom me Corporation or ASI has failed to Jive said J oti e or 02t;opt aa to the holder wbose noti.o. wu dtfGtiv1. (iv) Nctice having bean mailed u afore&aid, from and .nor tho redemption dato dlvidcmda ontho lb.ates of Prefffled Stock IO called for redemi,tion shall cease to accrue, and satd lb.arts shall no lon;tr be dttmad to be ouutandlna and shall bavo the status of authorized but uruc,ued share1 of Prt!ened Stock, undesignated a, to aories, and all riahta of the holder• thereof u ,tookholdcn of the Corporati.0n (oxcept the right to re ivc: from w Co oration. or ASl tu redemption pti • and any accrued and unpaid dtvidsnds) shall ceue. Cp0n auntndo: in accordaftco with said noUce cf the ee.rtifieates Io: any share so tedGmncd (properly ondoraed or auigned for transfer), ,uch aharea ahall be redeemed by th.a Corporation or ASI &t the redemption price atoreaaid. In oaac fewer than all ths shares represented by any suoh cc.ttifieate are rodeemod, a now certificate ahall be iuued rep £Uting the UNcdcemed ahar11. 6. Purncot with Mf• Common Stock or ASt 1 Clas• B W,aants . (i) The ton:n "Conversion Iu:tio" shall mean l,S44,438 (u adjuated pursuant to the term.a set forth bolow) di1'ided by the Slumber of tbarea ofth• Corpotation's Cammon Stock iJsued and outat111dina (other than treclUI)' sbue.s) immediately prior to the limo that tho Corporation and Acquisition (tle a certlfloate of muser. (il) No ftutional sharca of ASI't common stock or A.Sl's Claas B Warrants or scrip reptt1tnting &aotional ahatea thoreof shall b iasucd upon the oxercisc of a put option or redemption of share Ŷ of Preferrtd Stock. In lieu of any fractional .lhAres of A51'1 common atock or ASI'a CJaae B Warranta which wowd otberwi1e be wuable upon th, oxoroiso of a put option er redemption of a.ay shares otPretmed Stec:"' the Corporation or ASl shall pa.y s

 24 

 

a cub adjutttnent band upon the fair marktt value of ASI ' scommon stoo or ASI'a C111J1 B W&:rantl II dct.cmiintd in100d faith by tho Board of Dircctan. (Ui) All sharoa of ASI'• common stock ot ASI's Cla11B Wurtntt which may be laautd upon ?be cxcrciie of a put option or rodomption of the shares of Prefen&i Stock eh&ll be vaHdly it.ued, fully paid and nonaueuable. (iv) In ouo ASI shall bsue any sharea of its oommon stoek as a ato k dividaid, subdivide tho numbcrofoutatanding lharH cfit1 commo1' ttock into a sr•ater number of 1hate1 either through a stoclc split or othcrwbe, re;lustfy or rccapitalizo iu outatandln, 1hue1, or implement any other rdinary chance to the oapitaliation of ASI, then in my auoh caac the Board ofI)frectora shall ln good faith, adjust the Con llrsion Ratio in c:!feot at thetime of 1w:h a.otio11 in an equltable manner . If ASI shall ofter to lu 1tockhcldM1 & ria}rt to pureh,ae:1ew ocmmon 1tock of ASl or l11ue other nvembl securlty to all of ibl sto kholders, ln either such cue t a prioe below tha then ou.rrcnt marke t price thoreof, then l.n aey suchoaao th• Board ofDirectora ,hall, in good faith, adjun the Converaion Rauo in eft'tct at tho time of such • tian in an oqultable manner . (v) Tho Board ofDirootor, shall have the power to re.solve in good faith any ambiguity or correoc any ertor in ihi! parapaph 6 and to authortzt the filina of Certificate of'Co""ticn with - respcot u, any such ambipity or emr . 7 . Mtta,r, etc , In oaeo of any comolidation or mor1c;r towhich the Corporation or AS T is party (other thm A mer1,r or centolidation in which the Corporation or ASI ia th, s ll'ViYin& entity and which does not rosull in any r"luaitic:1tion of, or change in, owtanding ahares o! Common Stock or ASI 1 1 oommon stock), or in case of any rcclaai,ificatton pursuant to whioh a!l of ihe outttandina 1h11es of Common Stock or . ASrs common at.eek at• ccnvorted into athor 1eouritiea gr _property, tho Cotp0ratio ƒ ' ASI or the 1urvivin1company, as tho "•c may be.shall make appropriate provi1i0ns 10 th&t holders of ah.ale, of Preferred Sto " menOUUtmdins lb.Ill h1v1 the rtlht thereafter - to con /Crt noh sharoa into tht kind and amount of •unties or other proporty or asseh (includina c:a,h) which ,ucb hold11'1 would have had th, right to r v• upon au 00.0.,olldatton, mtta•r or rcoluaiflcationhad 1uc:h abates bem convorted immediately prior to the effective d&to of aw:h coruolidation, meraer or reclassification . Neithtr th• Corporation nor ASl ahall tffKt aey such ttmsaetion U!'lle11 the provislonJ of this aubparapph havo been c.omplied with. The above provision• ah&ll •imilarty apply to sw:ce1dve coaaolid1tion1 1 mcrrJcts o.r reolaaaifioatiom . 8. Yntjog. (i) Exc:c:pt II othorwiao provided herein and as otherwise raquired by lAW1 tho Prcfc.rred Stock shall have no voting right,. (ii) The Co?lloration ihall cot am.end : alter or repeal the profcrenoes, apcciaJ righta or other powu1 of'th• PNftncd Stock10 u to at!ec:t ad la1'1oly 6

 25 

 

auc.h ,eciea, without the written eon,ent gr affinnative 'ott of the bolder• of at lcut 66, 66¾ of the thon outatan4Jn1sharea of Prefemd Stoc.k given in writing or by vote at a mHtmi 1 conaennn, or voting (u th• cue may be) 1ep1.rately H a glua, Por this purpose, without limitin& tha ;entrality of the!ar11oing, the authoriution or isS'!Wtco of any son of Prefeaed Stock whfoh is on a parity with or baa preference or priozlty over the Prcfemd 5to k u to the tight to receiv• either dividtods er amounts distributable upon liquidation, di11olution oz windinii up of the Corporation shill be deemed to aff t advusely 1he Ptefemd Stock. 9. &csinttatinn ofTranafer, Th.a Corporation wJl cep at lu pri.Dcipal office a regis for thil reaittr&tion of th, Premed Stoo1', Upon the IUffander of any certifioat.e reptestnthla the Prefened Stock, the Corporation lh&ll, at th.., rtqueat of the reoord holder of1uch ,ertifieate, cxc:;utc and doliver (at tho Corporation's expense) a new certificate ot oortificatea in exchanae th1tt!ot representin& in the agaregate the number of share, of th, Prefmrod Sto k roprcacnted by thoauttendcr,d certlfioate , Each such new certificate shall 'oc rc1iatctcd in auch name anci sh.&11rtpreaent such munber of she.res ot'the Pteferred Stock as ia roqucatad. by the hcldet of the •urrcndffld ,ortifioate and shall be substantially identical in form to the 1urrenderecl ceitifioatc, 111.d divi4eda sb&11 accrue on the Preforrod Stack repruemod hy 1w:h new cert!fic1te &om the date to which dividond1 have been fully paid on web Prefm1ci Stock re_prosentcd by the surrendered certific&te, 10. Rer)acsro;cl. Upon ipt cf eviden" reason.ably 11atisfactory to the Corporation (an affidavit of the re;istcred holder aball be sati1factory) of the ovm1rshlp and th• lou, thaftt desnuetion or mutilation of any certificate evidencing shates of any seriea of the Preferred Stock, and in. tht case of any sueh loss, thcsft or ciest?U.otion. upon receipt of indemnity rwonably aatiswtory to the CorporaHo.n (provided that if the holder is a fi.Daoclal int1i tion or othQr inalitutional snveat.or its own a,reement shall be 1ati1factory), or, in tho cuo of atiy ,uch mutilation upon auncndcr of 1uah cartifl" - tt 1 tho Corporation shall (at its expenu) eucuie ud deliver in lieu of SUQh cutiftoate l new cutifloato of lika k'ind repres,mm1 the nwnbcr , cf ahares of suoh 1em, ropicacntad by suoh lo&t, stolen, dettroyed or mutilued oettifiCAto 1nd dattd the date of auch loll, ttolen, doatmyed or mutilated certificate, and dividands 1hall IM:Ol'Ut on the Preftrr9d Stock ropre,onted by ruoh new ceni11catc from the date towhich dlvidend1 have been fully paid onsuch lost, Stolen, deauoyed or mutilated certificate. 11. Nptf C'..aa . Except u otherwise expressly provided h.eteundet. all oticca ntemci to horoin lhall be tn wrltin, and shall be dllivered by resistered or certified mail, ieturn recei11t r1quHted and po1t11c :PfCpaid. or by reputable ovemi;ht couri.r service, cbar1e1 prepaid, lltd •hall be deemed to have been. atvesi when 10 mailtd or 1enc (i) tc tho Corpontion, at iu principal executive offl.: - ., and (ii) toany atockholdtr, at such holder's addru1 u it appea.ra in the.stock rec:ordl of tho Corporatioa (unl,ss orharwt.se indicated by any1u0h bolder). ..

 26 

 

0T'd .1O.l ' . TIIUU>t That auch unendmont hae bten duly adopted in aooordance With the applicable provitioa, ot S1ctio.o 242 cf the Delaware General C01por1Uon Law. JOVRTH: This amcndmeoc t0 the CtrtifiQato of Incorporation of the Corporauon th&11 bt effective on and u of the date of fil{ni of this Certifica.te of Amendment with tho of&c of the Secretary of State of die State of Delaware, IN WITNESS WHEREOF, I have11an,d this Qertificate this 17th day of Fe'oruary, 1991. Nun : William Weisa Title: Chie!Executive Officer T!tlo: Smetary

 27 

 

SECRETARY OP STATE DIVISION OF CORPORATIO FILED 09:00 AM ll/25/19 960346300 - 2290721 CERTIFICATE OF AMENDMEN'r OF CERTIFICATE OF lN'CORPORATION OF PAPERCLJP IMAGING SOFrWARE. INC. • - - ••• - ••• - ,...• - ---- •w - • - -- • - •• - •• - •• Adopted in accordance with the provisions or Section 242 of the General Corporation Law of the State of Delaware ---- ··· ---- · - ·· --- · -------- · ----- - We, William Weiss, ChictExecutiveOfficer, and Michael Suleski, Secretary, of PAPERCLIP 'IMAGING SOFlWARE, INC., hereby cenify u follows: FIRST: That the Certificate oflncorpor&tion of said corporation is hereby amended u follows: By striking out the whole of Articles FIRST and POUilnt thereof as they now exist and insening in their place the fo11owing: "FIRST": The name of the corporation is: PAPBRCLIP SOF:fWARE, INC. "FOUllni: The total number of shares otstock which the corporation shall have authority to iaaue is30,000,000 shares ofCommon Stock. par value S . 01 per ahare." SECOND: That such amendment has been duly adopted in accordance with the provisions of Section 242 of the Genera) Corporation Law of the State ofDelaware by the vote o · • 3'7i!IJJ.l

 28 

 

the holders of note less thana majority of the outstanding atock entitled to vote thereon at the annual meeting of shareholders . IN WITNESS OF, we have signed this cate this 29th d&y of August, 1996. William Weis ChiefExecutive Officer Michael Sulesld, Scc:rtt ƒ uy .. 3769'.M 2

 29 

 

STATE OF DELA W ARE SECRETARY OF STAT E DI VISI ON OF CORPORATIONS FILED 10.45 AM 03/0 1 / 1 995 950045613 - 2290721 CIRTIFICATR OFAMiNDMINT OF CERTIFICATE OF INCORPORATION OF PAPERCLIP IMAGJNG SOF'IWARE, INC, Adopted in accordance with the provisions ot Section 242 ot the General corporation Law of the atate ot Delaware Wa, Willian W•i••, Chiat E Aoutiva Offioar, and Joan l•h•nharg, Sacrataey, of PAPBRCL!P IMAGING SOFTWll!, INC., hereby certlty aa follow•: 7IRS : That the Ce tifioate ot Incorporntion of said corporation i• h•reby amended as tollow•: y striking out the whole at Article FOURTH thereot as it now e iata and in Ŷ ertinq in it• place a new ARTICLE POURTH, reading aa followat ••rotm'l'H: Tha total number ot Ŷ hara• ct stock which the corporation shall have authority to iaaua is 1s,ooo,ooo ahara Ŷ of Common Stock, par valua $.01 par ohara . M SEQONOs Tha s ch amond • t haa b••n duly adopted in aooord nge with the provisions o the Ganaral Corporati0n

 30 

 

Law ot the State of Delaware by the written consent ot the holder• ot not l••• than a majority of the outetandinq atock entitl•d to vote thereon and that written notice of th• corporate action hao been giv•n to thoea atoekholdar• who have not conaantad in writinq, all in accordanQa with th• proviaion• of S•otion 228 of tho ceneral corporatio Law. IN WITNESS WHEREOF, we have aigned this eertifi t• this a_.t day ot February, 1995, ATTEST: , nAshen' Sa retary

 31 

 

CBRTIFICATB OP INCORPORATION OP PAPF.RQ - IP IMAGING SOFTWARB, INC, FIRBTr 'l'he name of the corporation i Ŷ : 1APBRCLIP DGGIXG IO RAU, IHC, SBCONOr Th• addr••• ot it Ŷ reqietered office in the stat• ot Dalava.ra 1• 32 Loookerman Square, suit• 1. - 100, ln the city ot Dover, County of Xant. The.name of it• reqiatered agent at aueh addree Ŷ i• 'I'h• Prentice - Hall corporati • on system, Ino. THIRDS The nature of the busineaa or purpo••• to be conducted or promoted i Ŷ to •n a9e in any lawful act or activity tor whioh corporation• may be organlied under the General Corporation Law of Delaware. FOURTH& fhe total number of aharaa ot atook which the corporation whall have authority to ie•u• 1 Ŷ one millio (1,000,000) share Ŷ of common ,tock, par value s.01 per •hare, Fll"l'Hs Th• Board of Dir•otora ot _ ho eorporation may, trom time to time, uend, alter or repeal the By - Law1 or adopt additional By - Law proviaion11 provided, that any By Lawa adopted, amended or repealed by the Board ot Directors may be amended or

 32 

 

repealed, and any By - Law• may be •ade, by the etookholder Ŷ ot th• corporation. SlXTHr Member• of the Board of Director• may be elected either by written ballot or by voice vote, u.nl••• otherwi•• provided in the By - Lawe of the corporation, SBVKN'ras Th• name •nd mailin9 addr••• ot th• inaorporator 1• Nahua L. Gordon, 521 ritth Avenue, New York, N,Y, 10176, EIGHTH: Th• Corporation ehall, to tho tulleat extent per1nitted by 1145 ot the General Corporation Law of the State of Delaware, •• th• aama may be amended and supplemented, indomnify any and all peraon• whom it •hall have power to indemnify under •uch aeotion from and a9ain1t any and allot the expenaa•, liabilitie•, or other matter• referred to in or oovared by auch aaotion, and the indemnification provided for herein shall not be deemed exclueiv• of any other iqht• to Which those inde'IIJ ifi•d may be entitled under any By - law, agreement, vote of etockholdera · or di Ŷ intere Ŷ tad directors or otherwise, both a Ŷ to any •otion taken in hi Ŷ or her Official oapaoity and•• to any action taken in another capacity hil• holding Ŷ uoh ottioe, an •hall continue •• to a par Ŷ on who haa cea Ŷ ed to be a director, officer, uployee, or aqent and shall inure to th• benefit of the heir Ŷ , exeoutora, and adminiatratora t 1uoh a per Ŷ on. NINTH& To the tulle Ŷ t extent permitted Y th• General Corporation Law ot the state of Delaware, aa the eame may b•

 33 

 

amended and auppl•m•nted, a dir•etor or former director ot the corporetion Ŷ hall not be liable to th Ŷ corporation or it• Ŷ took.holder• for monetary damaqe• for breach - of fiduciary duty a Ŷ • direotor, except for liability (i) for any breaoh of the director•• duty of loyalty to the Corporation o it• ehareholdar Ŷ , (ii) for act• or omieai n• not in 9ood faith or whioh involve intentional mi100nduot or a knowinq violation ot law, (iii) under Section 174 of the General co poration Law of th• state of Delaware, or (iv) for any transaction from whioh tbs director derived an improper peraonal benetit. Thia certificate ot Incorporation ha• een signed and atteated to on March , 1993.

 34 

 

STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS F ILE Ƒ 1 1:30 AM 03/13/1992 752073062 - 2290721 PLAN AND AORBBMENT OFMBRGBR o, PAPERCLIP l'JIAGIHG 80PTWARB, Ille. (a New Jeraey corporaticn) ARD PAPE R u CL:t P IMAGIHQ SOFTWARE, INC. P1iawv1 ggrpqrat1on, March PLAN ANI> AGREl'.Ml!NT OF MDGU, entered into on "l - , 1993, l:)y PAP!RCLIP IMAGING SOFTWARE, INC., a buain••• corporation of the State ot New J•rsay, and approved by reaolution adopted by it• Boar of Directors on Ŷ aid date, and entered into on Mareh 1 - ,, 1992, by PAPDCLIP IMAGING SOP'l'WMZ, INC., a inaee corporation of the State ot D•laware, and approved by resolution adopt•d by it Ŷ Board of Directors on aaid data. WHEREAS, PAPERCLIP IXAGIN'i SOl"TWARB, INC:., (the " •rged corporation") i• a u Ŷ in••• corporation ot h• State of New Jer Ŷ ey, with its principal office therein located at one onivaraity Place, Hackensaok, New Jeraey 07801. kHERBAS, the total nWIQer of Ŷ h•r•• ot atock whic:h the m•%'9•d corporation ha Ŷ authority to i Ŷ •u• i• i #: 3AOO SOHd LO: L l 8 - SL - S 3AOO SOHd:A9 AO

 35 

 

2,500, all of which are of ona olaas and of have no par valua1 WHDEAS, PAPERCLrP IMAGING SOF'l'WllE, INC. (the "aurvivinq corporation") i• a bu Ŷ ine ŶŶ corporation of • St1 , te ot Oalawara with ita ragi•tered office therein located at 32 Loockerman · square, City ot Dover, county of Xent1 W!IEREAS, the total number ot shares ot stock which the aurvivin9 corporation has authority to iaaue is s1,ooo,ooo, allot which are of one ela•• and $.01 par value, WHEREAS, the Bu•ine•• Co poration Aot of New Jar Ŷ ay permits a merger of a buainaae corporation of th• stat• or New Jersey with and into a buain••• corporation of another juriadiction1 WHBREAS, the General corporation Law of the State of Delaware permits the merger of · a bu•in••• corporation of another juriediction with and into a buaineaa corporation of the Seat• o Delaware; WHEREAS, the •rqad corporation and the •urvivinq corporation and their respective Boards ot Director• deem it advieable and in the beat interests of ■ uch corporation• and their respective Ŷ tockhold•r• to mer9e th• mer9•d corporation with an4 into th• aurvivin; - 2 - € #! 3! 00 S Hd

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c0rporation, pursuant to the provi Ŷ ion• ot the Bu Ŷ in••• Corporation Act of th• state of N•w Jer Ŷ ey and pursuant to the proviaiona ot the General corpor•tion Law or tb• state ot Delaware upon the terma and con41t1on Ŷ hereinafter set forth1 and WHEREAS, the Board ot Director• of each ct aucb corporation• ha• approved t:hi Ŷ Plan and Agraeaent ot Ker;er1 NOW THE'RZFOU, in conaidaration of the premi Ŷ e• and the mutual a;reement of th• parti•• hareto, the parties, intending to be la;ally bound, here y agree•• tollow•a 1, Th• merged ccrporation ,nd the surviving corporation ahall, purauant to the proviaiona ot the Bu Ŷ ineaa Corporation Aot of the state of New Jeraey and the proviaions of the General Corporation taw ot the state of D laware, be mer;ed with and into a eing - 1• corporation, to wit, the surviving corporation, which shall • tb• surviving corporation from and attar the attective time ot the m•ri•r , · and which Ŷ hall continue to •xiet •• •aid surviving corporation under ita pr•••nt name pur•uant to the provision Ŷ of the aenaral Corporation Law of th• state of Delaware, The Ŷ aparate - ' - V #: 3AOO SOHd 3AOO SOHd:AB AO

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axi•tanee · of th• m.rged corporation Ŷ hall c•••• in aaoordanc• with the provision• ot the Buain••• Corporation Act ot the state ot New Jar••Y upon the filing of a Cartificate of Merqar in New 3•r••Y• 2. Annexed hereto•• Exhibit A 1• a copy of the cartiticata of Incorporation of th• aurviving corporation•• the ••m• •hall be in torce and ettect at the etteotive time ot the mer9ar herein provided tor; and aaid cert . iticata of Incorporation ahall continue to be the certificate of !noorporation ot th• aurviving corporation until amended and chan9ad pur•uant to the provisions of the Ganaral Corporation Law of the Stat• ot Delaware. 3. 'l'h• present by•law• ot the Ŷ urviving corporation will be the by - lawa of the survivin9 c0rporation and will continua in fUll foroe and effect until changed, altered or amended aa therein provided and in the manner preacribad by the provision• ot th• General co poration Law of th• state of Delaware. 4. The director Ŷ an4 ottioer Ŷ , re•pectively, of the surviving cot"poration Jt the ettective time ot th• mer9•r Ŷ hall b• the memb•r• of the first Board of Director Ŷ and the firat otticer Ŷ ot the •urvivinq corporation, r•apectively, and allot them Ŷ hall hold their diractor Ŷ hip Ŷ and ottic•• until the aleotion and - ' - g #l 3MO SOHd 3AOO S0Hd:A8 AOM

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qualitication ot their reapectiva aucce Ŷ •or Ŷ or until their tenure ia otherwi•• terminated in accordance with the by - law• cf t:h• •urvivinq oorporatio . 5. In view ot the fact that the aurvivini eorpora . tion owna all ot tha out Ŷ tandinq shares ot • merqed corporation, eaoh iaaued share of the mer9ed corporation •hall, at 'the eftactive time of the merger, be canoalled. Th• ieauad ahares of tha aurviving corporation ahe.ll not be converted or exchanged in any manner, but aach said ahare which is issued aa of the effective date ot tha merger shall continua to represent one issued share of the surviving oor _ poration. &. The partiea agree that they will causa to • executed and riled and recorded any a wnent or documents prescribed by the laws of. the . St ate ot New • r •• Y and by the laws ot th • State - of Delaware, and that they will cause to be performed all neceseary acta within the state of New Jersey, State of ' Delaware, nd elsewhere to effectuate the merger herein p ovided tor . 7. The D9 rd gt Dir•ctore and the proper officer Ŷ of the marg d 0orpor•t on and of the surviving corporation ara hereby auth.or , izad, empowered, and directad to do any an - ll acts and things, and to make, execute, deliver., tile, and record any and all inatrwaent Ŷ , pa ere, and document• which Ŷ hall • or 9 #! 3/ 00 S0Hd

 39 

 

.. become hecesaaz:y, rop , - csonveni · ent . to Carry t f put · into etf• JlY of thtt pre>vi Ŷ io : of thi• , Plan . and ; . . . . . = ,· Agreement o , t ke;rq ·· or e>t 't;b• : mercjar h · • ein provided for. . : , ' . - . . . IN Wiffl!;SS . , thie Pl and · Agreemcnt : f : . . . . . ! • : . 1a hereby exeout+4 bpc,, behali teach of • I oonatituent oorj>o _ ion , • . Dated& Attest: , - JanAah - · s or tary . ' PAPERCLIP IMAGblG . 80'1,'WW, INC:. · (New Jusey) . . . ·:· , _ Ro Ŷ i ent ·, . I PAPERCLlP GING SOFJWARB, INC. (Del&WU'!I) . ·. . . Attest: c f . a A n sh e <J . · . : · Secr . etary . · . .. ' ' • • I •• ' • l • J .. . •. . . - ·•

 40 

 

· Clll l TIP I CMr B ( l ) p s;:sm.rARY OP '. , . PAPEltaJPJM40 . l , NGsofl'W.w3. C: . (l, . ®mi, 9mXRldoA.) • I Tile upderaignad inq tha" secretary ot I : • PAPERCLIP IKAG G - uc;, . : 1 - i - • co tton, . . ' : · d.oea hereby iff . tha • h ldera ot il of th• ' · . ' t ' • out•tand ng atOf;k (? . aaid 4=orporati _ o , n dispensed Yi a . . aeeting a . nd vot• · of etocl(hpldar . •, , · and ali . • tOCkholdera _ entit1.a to .. ' t• C nJ•nted of the ' writing, pursuant o the provia16mJ of _ : Secti - on 22$ . of the GeJier . al . ' . . Corporation Law ot the Stat• or · : Delairani to the adoption · • • I • : • • • : I ' ' ' ' of the Datedi tor 9oin4i Pl! n and Agr - ot • . ' . ... ' • . March it, · , 1992 PAPDCLIP DIAGIHG SOPTWARK, uc • . : · c Delaware . COrporatjon} ' . . . I ' ' ti - =Ash - !· . secretary . . • : ", ' .. . . . ' i : . , ; : . . ,, . f I I; • • .. •' , .

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... CB . R . ll'JPICATB d ' F SBCR B • . 'l'A R . Y .. . ' I • • .' OP· P CUPiMADJNGSOPIWAJm.JNC. . •, • (iNoWhaJY Tti der•igned leil'9 the secretary of . . •' I ••' I ; •, l'': : .. : ... . . PA»ERCLIP ' DIAG Q 80 .i · : - , - Haw Jersey corporati4:) · n, do • . h - .i - eby cetti th t tb• · holdei - s o ot theou •t df.ng st;ook .: · . o · fl _ s .: aid ootj>orat. on - i• n •l:l :_:· · with a aeat:ing a qte t 111to0kholdua, and all oi_ ; the · atockholcle.t'5 . entttl to · vdte on• in writing, .: . . . purBU&nto · • p;rovtsi . on• at the Business rpo ation : Law ot the State ot N'.ew J :ey, : to the · adoption o _ t tJi• · ··. • ": . ' . .. . . tore9oinc . JPlan Q 4 euen t ; · O f Karger. · ; . ' Dated: Harell 0 - · :' , 1992 ': . , ... : . '·, . PAPERCLiP IMAGING SOF'l'WARB, 1 IN C • .. : • •• • : · <• Nev r••Y corporation) 4 • • ' : • • - · , • ' Ƈ . . ' ' .. ,·.

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STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIO N S FILED 12:15 PM 03/11/1992 752071005 - 2290721 CERTIFICATE OF INCORPORATION OF !AmRQJP IMAGING SOFIWARB. INC . PtRBTi The name of the corporation ia: ' SECOND: The address ot it Ŷ regiatered ottiae in the state ot Delaware ie 32 Loookerman Square, suite L - 1O0, in th• city ot Dover, county ot Kent. Thane• of it• regiatered agent at eueh addr••• is The frentice - Hall corporation Syatem, Ino. 'l'KIRt>: The nature of tha busine Ŷ a or purpo••• to be conducted or promoted ia to enqaqa in any lawful act or activity tor which corporation• may be organized under the General Corporation Law of Delaware. FOURTH: The total number of ehares ot stock which th• Corporation whall have authority to iaaua is on• million (l,000,000) aharaa of common stock, par value $.01 per share, Flll"l'K: The Board of DireQtors of the Corporation may, from time to time, amend, alter or repaal tho By - Law• or adopt additional By - aw provision Ŷ ; prov14ed, that any By Lawa adopted, amandad. or repealed by the Board of Directors may amanded or I t 1 ' t. t ' ,.

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repealed, and any By - Lawe may be made, by tho stockholders ot the corporation. SIXTH: Member• of the Board ot Diractora may be elected either y written ballot or y voice vote, unless otharwis& provided in th• By - Law• of the Corporation, SIVBNTH: Th• name and mailing ad eaa ot the in00rporator i• Nahua L. Gordon, 521 Fifth Avenue, New York, N.Y. 10175. EIGHTH: Th• Corpor«tion •hall, to th• tulleat extent permitted by 1145 of the Gen•r•l corporation Law ot th• State ot Delaware, aa the •ame may be amended and supplemented, ind•mnify any and all persona whom it •hall hav• power to indemnify under ■ uah section fro and a;ain•t any and all of the expensea, liabilitiea, or other matter• referred to in or covered by auoh ■ eotion, and th• indemnification provided tor herein •hall not be deemed exclueive of any other right• to which thoaa indemnitied may be entitled und•r any By - law, agreement, vote ot atookholdera or diaintereated directors or otherwise, both aa to any aotion ttken in hia or her ofti0ial capacity and as to any action taken in another capacity while holding Ŷ uoh ottice, and Ŷ hall continue as to a P• •on who ha11 Qeaaed to t)e a director, otticer, amployee, or aqent and shall inure to th• benefit ot the heira; executors, and adminiatrato. r _ a o t suoh a peraon, · , . · .. , NIN'l'H1 Tot.he tulleat _ extent permitted by th• General Corporation Law ot the State of Delaware, aa th• eue may l)e

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amended and aupplemonted, a dir•ctor or former director of the Corporation •hall not • liable to the corporation or ite •tock.holder• for monetary damages for oraach of fiduciary d ty as a director, except for liability (i) tor any breaeh oft.ha director's duty ot loyalty to the Corporation 9 it1 ahareholdara, (ii) for acts or omissions not in good faith or which involve intentional miaconduct or a knowing violation ot law, (iii) under Section 174 of the G•n•ral Corporation Law ot the state ot Delaware, or (iv) for any traneaotion from whioh the director derived an imprope personal benefit, Thie certificate of Inoorporation ha• been aigned and atte Ŷ ted to on March , 1992.

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Exhibit 3.2

 

AMENDED

 

BY-LAWS

 

OF

 

CHINA DONGSHENG INTERNATIONAL, INC.

 

ARTICLE I

OFFICES

 

SECTION 1. REGISTERED OFFICE. The registered office shall be established and maintained at c/o United Corporate Services. Inc., 410 South State Street, Dover, Delaware 19901 and United Corporate Services, Inc. shall be the registered agent of this corporation in charge thereof.

 

SECTION 2. OTHER OFFICES. The corporation may have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time appoint or the business of the corporation may require.

 

ARTICLE II

MEETINGS OF STOCKHOLDERS

 

SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of meeting. In the event the Board of Directors fails to so determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the registered office of the corporation in Delaware.

 

If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting.

 

SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other than the election of directors may be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of the meeting.

 

SECTION 3. VOTING. Each stockholder entitled to Vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these By-Laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholder, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting, shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority Vote except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware.

 

A complete list of the stockholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the- time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

 

 

 

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SECTION 4. QUORUM. Except as otherwise required by law, by the Certificate of Incorporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding a majority of the stock of the corporation entitled to vote shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be, present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting frog time to time without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof.

 

SECTION 5. SPECIAL MEETINGS. Special meetings of the stockholders for any purpose or purposes may be called by the President or Secretary, or by resolution of the directors.

 

SECTION 6. NOTICE OF MEETINGS. Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat at his address as it appears on the records of the corporation, not less than ten nor more than fifty days before the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat.

 

SECTION 7. ACTION WITHOUT MEETING. Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such-action at a meeting at which all shares entitled to vote thereon were present and voted.

 

Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

 

ARTICLE III

DIRECTORS

 

SECTION 1. NUMBER AND TERM. The number of directors shall be at least three and no more than five. The directors shall be elected at the annual meeting of the stockholders and each director shall be elected to serve until his Successor shall be elected and shall qualify.

Directors need not be stockholders.

 

SECTION 2. RESIGNATIONS. Any director, member of a committee or other officer may resign at any time. Such resignation shall be made in writing, and shall take effect at the tine specified therein, and if no time be specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective.

 

SECTION 3. VACANCIES. If the office of any director, member of a committee or other officer becomes vacant, the remaining directors in office, though less than a quorum by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his successor shall be duly chosen.

 

SECTION 4. REMOVAL. Any director or directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of the shares of stock outstanding and entitled to vote, at a special meeting of the stockholders called for the purpose and the vacancies thus created may be filled, at the meeting held for the purpose of removal, by the affirmative vote of a majority in interest of the stockholders entitled to vote.

 

 

 

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SECTION 5. INCREASE OF NUMBER. The number of directors may be increased by amendment of these By-Laws by the affirmative vote of a majority of the directors, though less than a quorum, or, by the- affirmative vote of a majority in interest of the stockholders, at the annual meeting or at a special meeting called for that purpose, and by like vote the additional directors may be chosen at such meeting to hold office until the next annual election and until their successors are elected and qualify.

 

SECTION 6. POWERS. The Board of Directors shall exercise all of the powers of the corporation except such as are by law, or by the Certificate of Incorporation of the corporation or by these By-Laws conferred upon or reserved to the stockholders.

 

SECTION 7. COMMITTEES. The Board of Directors may, by resolution or resolutions passed by a majority of-the whole board, designate one or more committees, each committee to consist of two or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member or such committee or committees, the member or members thereof present at any such meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

Any such committee, to the extent provided in the resolution of the Board of Directors, or in these By-Laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power of authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the By-Laws, of the corporation; and unless the resolution, these By- Laws, or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock.

 

SECTION 8. MEETINGS. The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent, in writing, of all the directors.

 

Regular meetings of the directors may be held without notice at such place and times as shall be determined from time to time by resolution of the directors.

 

Special meetings of the board may be called by the President or by the Secretary on the written request of any two directors on at least two days' notice to each director and shall be held at such place or places as may be determined by the directors, or as shall be-stated in the call of the meeting.

 

SECTION 9. QUORUM. A majority of the directors shall constitute a quorum for the transaction of business. If at any meeting of the board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned.

 

SECTION 10. COMPENSATION. Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the board a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent or otherwise, and receiving compensation, therefore.

 

SECTION 11. ACTION WITHOUT MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the board, or of such committee as the case may be, and such written consent is filed with the minutes of proceedings of the board or committee.

 

 

 

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ARTICLE IV

OFFICERS

 

SECTION 1. OFFICERS. The officers of the corporation shall be a President, a Treasurer, and a Secretary, all of whom shall be elected by the Board of Directors and who shall hold office until their successors are elected and qualified. In addition, the Board of Directors may elect a Chairman, one or more

Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as they may deem proper. None of the officers of the corporation need be directors. The officers shall be elected at the first meeting of the Board of Directors after each annual meeting. More than two offices may be held by the same person.

 

SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

 

SECTION 3. CHAIRMAN. The Chairman of the Board of Directors, if one be elected, shall preside at all meetings of the Board of Directors and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors.

 

SECTION 4. PRESIDENT. The President shall be the chief executive officer of the corporation and shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. He shall preside at all meetings of the stockholders if present thereat, and in the absence or non-election of the Chairman of the Board of Directors, at all meetings of the Board of Directors, and shall have general supervision, direction and control of the business of the corporation. Except as the Board of Directors shall authorize the execution thereof in some other manner, he shall execute bonds, mortgages and other contracts in behalf of the corporation, and shall cause the seal to be affixed to any instrument requiring it and when so affixed the seal shall be attested by the signature of the Secretary or the Treasurer or Assistant Secretary or an Assistant Treasurer.

 

SECTION 5. VICE PRESIDENT. Each Vice-President shall have such powers and shall perform such duties as shall be assigned to him by the directors.

 

SECTION 6. TREASURER. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books be- longing to the corporation. He shall deposit all moneys and other valuables in the name and to the credit of the corporation in such depositaries as may be designated by the Board of Directors.

 

The Treasurer shall disburse the funds of the corporation as may be ordered by the Board of Directors, or the President, taking proper vouchers for such disbursements. He shall render to the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of' all his transactions as Treasurer and of the financial condition of the corporation. If required by the Board of Directors, he shall give the corporation a bond for the faithful discharge of his duties in such amount and with such surety as the board shall prescribe.

 

SECTION 7. SECRETARY. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and directors, and all other notices required by the law or by these By- Laws, and in case of his absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the President, or by the directors, or stockholders, upon whose requisition the- meeting is called as provided in these By-Laws. He shall record all the proceedings of the meetings of the corporation and of the directors in a book to be kept for that purpose and shall perform such other duties as may be assigned to him by the directors or the President. He shall have the custody of the seal of the corporation and shall affix the same to all instruments requiring it, when authorized by the directors or the President, and attest the same.

 

SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the directors.

 

 

 

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ARTICLE V

MISCELLANEOUS

 

SECTION 1. CERTIFICATES OF STOCK. A certificate of stock, signed by the Chairman or Vice-Chairman of the Board of Directors, if they be elected, President or Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or Assistant Secretary, shall be issued to each stockholder certifying the number of shares owned by him in the corporation. When such certificates are countersigned (1) by a transfer agent other than the corporation or its employee, or, (2) by a registrar other than the corporation or its employee, the signatures of such officers may be facsimiles.

 

SECTION 2. LOST CERTIFICATES. A new certificate of stock may be issued in the place of any certificate theretofore issued by the corporation, alleged to have been lost or destroyed, and the directors may, in their discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate.

 

SECTION 3. TRANSFER OF SHARES. The shares of stock of the corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificate shall be surrendered to the corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as, the directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security,

and not absolutely, it shall be so expressed in the entry of the transfer.

 

SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action, a determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that-the Board of Directors may fix a new record date for the adjournment meeting.

 

SECTION 5. DIVIDENDS. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may, out of funds legally available therefore at any regular or special meeting, declare dividends upon the capital stock of the corporation as and when they deem expedient. Before declaring any dividend there may be set apart out of any funds of the corporation available for dividends, such sum or sums as the directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the directors shall deem conducive to the interests of the corporation.

 

SECTION 6. SEAL. The corporate seal shall be circular in form and shall contain the name of the corporation, the year of its creation and the words CORPORATE SEAL, Delaware, 1984. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

 

SECTION 7. FISCAL YEAR. The fiscal year of the corporation shall be determined by resolution of the Board of Directors.

 

SECTION 8. CHECKS. All checks, drafts or other orders for the payment of money, notes or other evidence of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors.

 

SECTION 9. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, -and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage, prepaid, addressed to the person entitled thereto at his address as it appears on the records of the corporation, and such notice shall be deemed to have been given on the day of such mailing.

 

 

 

 5 

 

 

Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute.

 

Whenever any notice whatever is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the corporation of these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

 

ARTICLE VI

AMENDMENTS

 

These By-Laws may be altered or repealed and By-Laws may be made at any annual meeting of the stockholders or at any special meeting thereof if notice of the proposed alteration or repeal of By-Law or By-Laws to be made be contained in the notice of such special meeting, by the affirmative vote of a majority of the stock issued and outstanding and entitled to vote thereat, or by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors, or at any special meeting of the Board of Directors, if notice of the proposed alteration or repeal of By-Law or By-Laws to be made, be contained in the notice of such special meeting.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 6 

 

Exhibit 4

 

AMENDED AND RESTATED DESIGNATIONS,

PREFERENCES AND RIGHTS

OF SERIES A PREFERRED STOCK

 

I.DESIGNATION AND AMOUNT; DIVIDENDS

 

A.               Designation. The designation of said series of preferred stock shall be Series A Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”).

 

B.               Number of Shares. The number of shares of Series A Preferred Stock authorized shall be Ten Million (10,000,000) shares. Each share of Series A Preferred Stock shall have a stated value equal to $0.001 (as may be adjusted for any stock dividends, combinations, or splits with respect to such shares) (the “Series A Stated Value”).

 

C.               Dividends. The Series A Preferred Stock is not entitled to receive dividends.

 

II.LIQUIDATION RIGHTS

 

In the event of any liquidation, dissolution or winding up Corporation, either voluntary or involuntary, after setting apart or paying in full the preferential amounts due to holders of senior capital stock, if any, the holders of the Series A Preferred Stock and parity capital stock, if any, shall be entitled to received, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of junior capital stock, including Common Stock, an amount equal to $0.125per shares (the “Liquidation Preference”). If upon such liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to holders of the Series A Preferred Stock and parity capital stock, if any, shall be insufficient to permit payment in full of the Liquidation Preference, then all such assets of the Corporation shall be distributed ratably among the holders of the Series A Preferred Stock and parity capital stock, if any. Neither the consolidation or merger of the Corporation nor the sale, lease, or transfer by the Corporation of all or a part of its assets shall be deemed a liquidation, dissolution or winding up of the Corporation for purposes of this Section II.

 

III.CONVERSION

 

With the consent of the holder(s) representing a majority of the issued and outstanding shares of Series A Preferred Stock, which may be withheld for any reason or no reason, each outstanding share of Series A Preferred Stock may be convertible into the number of shares of Common Stock of the Corporation equal to the result of: (i) 1.5 multiplied by the number of shares of Common Stock issued and outstanding calculated on a fully diluted basis at the time of such conversion; (ii) divided by the total number of shares of Series A Preferred Stock issued and outstanding at the time of such conversion.

 

Before any proposed conversion, the holder of Series A Preferred Stock desiring to convert into Common Stock shall notify the other holders of Series A Preferred Stock requesting consent of such conversion. If the consent of the holder(s) representing a majority of the issued and outstanding shares of Series A Preferred Stock is granted, the holder of Series A Preferred Stock desiring to convert into Common Stock shall surrender her, his or its certificate or certificates for all such shares to the Corporation at the place designated in such notice, and shall thereafter receive certificates for the number of Common Stock to which such holder is entitled pursuant to this Article. On the date of conversion, all rights with respect to the Series A Preferred Stock so converted will terminate, except only the rights of the holders thereof, upon surrender of their certificate or certificates therefore, to receive certificates for the number of Common Stock into which such Series A Preferred Stock has been converted. If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his/her attorneys duly authorized in writing. All certificates evidencing Series A Preferred Stock which are required to be surrendered for conversion in accordance with the provisions hereof shall, from and after the date such certificates are so required to be surrendered, be deemed to have been retired and cancelled and the Series A Preferred Stock represented thereby converted into Common Stock for all purposes, notwithstanding the failure of the holder or holders thereof to surrender such certificates on or prior to such date. As soon as practicable after the date of such conversion and the surrender of the certificate or certificates for Series A Preferred Stock as aforesaid, the Corporation shall cause to be issued and delivered to such holder, or on his or its written order, a certificate or certificates for the number of full Common Stock issuable on such conversion in accordance with the provisions hereof; provided; however, such certificate shall contain a restrictive legend with respect to its transferability pursuant to applicable laws.

 

 

 

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IV.RANK

 

All shares of the Series A Preferred Stock shall rank (i) senior to the Corporation's common stock, par value $0.001 per share ("Common Stock"), and any other class or series of capital stock of the Corporation hereafter created.

 

V.VOTING RIGHTS

 

Each issued and outstanding shares of Series A Preferred Stock shall be entitled to the number of votes equal to the result of: (i) 1.5 multiplied by the addition of: (A) the number of shares of Common Stock issued and outstanding at the time of such vote; and (B) the number of votes in the aggregate of any outstanding shares of any class of preferred stock of the Corporation (other than the Series A Preferred Stock), if any, at the time of such vote; divided by (ii) the total number of shares of Series A Preferred Stock issued and outstanding at the time of such vote, at each meeting of shareholders of the Corporation with respect to any and all matters presented to the shareholders of the Corporation for their action or consideration, including the election of directors. Holders of Series A Preferred Stock shall vote together with the holders of Common Shares (and any other outstanding class of preferred stock of the Corporation (other than the Series A Preferred Stock), if any.

 

VI.Drag Along Rights

 

(a) In the event that any holder(s) of Series A Preferred Stock proposes to sell, or otherwise dispose of, to a Person or a group of Persons, other than an Affiliate of the transferring shareholders (a “Purchaser”), shares of Series A Preferred Stock representing conversion rights equal to more than fifty percent (50%) of the then outstanding shares of Common Stock (calculated on a fully diluted basis)(a “Majority Sale”), such shareholders(s) (the “Proposing Stockholders”), shall have the right (the “Drag Along Right”) to require each of the other holders of Series A Preferred Stock to sell, transfer and deliver, or cause to be sold, transferred and delivered, to the Purchaser a number of shares of Series A Preferred Stock (and shares of Common Stock) held by each such other shareholder(s) as shall equal the same percentage of the shares of Series A Preferred Stock held by such other shareholders as the percentage of the shares of Series A Preferred Stock held by the Proposing Stockholders that the Proposing Stockholders propose to sell to the Purchaser, upon the same terms (including the purchase price) and subject to the same conditions as are applicable to the Proposing Stockholders.

 

(b) The Proposing Stockholders shall provide notice to each of the other Shareholders (a “Drag Along Notice”) of (i) the Proposing Stockholders’ intent to exercise their Drag Along Right in accordance with this article; (ii) the identity of the proposed Purchaser in such Majority Sale and (iii) a summary of the purchase price and other relevant terms and conditions of such Majority Sale, no later than ten (10) days prior to the proposed closing of such Majority Sale. At the closing of the sale pursuant to the Drag Along Right, the Proposing Stockholders and the other shareholders subject to such Drag Along Right shall deliver to the proposed Purchaser certificates representing their shares of Series A Preferred Stock (and shares of Common Stock), duly endorsed in blank for transfer or accompanied by stock powers duly endorsed in blank, and the Purchaser shall pay to each such shareholder the consideration due to it in accordance with the terms of such transaction, and this designation. Notwithstanding the foregoing, any such transaction may be structured as a merger, consolidation, amalgamation or similar transaction at the discretion of the Proposing Stockholders and the Purchaser and, in such event, each shareholder subject to the Drag Along Right agrees, if such transaction entitles shareholders to vote thereupon or consent thereto, (x) to vote all of the shares of (and shares of Series A Preferred Stock) held by such shareholder in favor of, or to consent to, any such transaction and (y) if applicable, not to exercise any appraisal or similar rights with respect to such transaction.

 

VII.PROTECTION PROVISIONS

 

So long as any shares of Series A Preferred Stock are outstanding, the Corporation shall not, without first obtaining the written consent of a majority of the holders of Series A Preferred Stock, alter or change the rights, preferences, or privileges of the Series A Preferred Stock so as to affect adversely the holders of Series A Preferred Stock.

 

 

 

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Should any holder of Series A Preferred Stock cease to be an officer or director of the Corporation at any time and for any reason, such holders' Series A Preferred Stock shall be immediately cancelled.

 

VIII.MISCELLANEOUS

 

A.               Status of Redeemed Stock. In case any shares of Series A Preferred Stock shall be redeemed or otherwise repurchased or reacquired, the shares so redeemed, repurchased, or reacquired shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series A Preferred Stock.

 

B.               Lost or Stolen Certificates. Upon receipt by the Corporation of (i) evidence of the loss, theft, destruction or mutilation of any Series A Preferred Stock Certificate(s) and (ii) in the case of loss, theft or destruction, indemnity (with a bond or other security) reasonably satisfactory to the Corporation, or in the case of mutilation, the Series A Preferred Stock Certificate(s) (surrendered for cancellation), the Corporation shall execute and deliver new Series A Preferred Stock Certificates.

 

C.               Waiver. Notwithstanding any provision in this Certificate of Designation to the contrary, any provision contained herein and any right of the holders of Series A Preferred Stock granted hereunder may be waived as to all shares of Series A Preferred Stock (and the holders thereof) upon the unanimous written consent of the holders of the Series A Preferred Stock.

 

D.               Notices. Any notices required or permitted to be given under the terms hereof shall be sent by certified or registered mail (return receipt requested) or delivered personally, by nationally recognized overnight carrier or by confirmed email transmission, and shall be effective five (5) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if delivered personally or by nationally recognized overnight carrier or confirmed email transmission, in each case addressed to a party as set forth below, or such other address and telephone and fax number and email address as may be designated in writing hereafter in the same manner as set forth in this Article.

 

If to the Corporation:

 

CHINA DONGSHENG INTERNATIONAL, INC.

4005 West Reno Ave, Suite F

Las Vegas, NV 89118

 

If to the holders of Series A Preferred Stock, to the address listed in the Corporation's books and records.

 

 

 

 

 

 3 

 

Exhibit 10.1

 

ASSET ACQUISITION BETWEEN

CHINA DONGSHENG INTERNATIONAL AND KILIMANJARO LITHIUM LTD.

 

 

FEBRUARY 24, 2023

 

This Definitive Agreement (the “Agreement”) summarizes the terms relating to a proposed asset acquisition to be entered into between Kilimanjaro Lithium LTD, (“KLL” see Appendix A) and CHINA DONGSHENG INTERNATIONAL., a Delaware Corporation, with a registered address of 4005 West Reno

Ave, Suite F, Las Vegas, NV 89118 (the “Purchaser”) and Lawrence Stephenson (LS) the Founder of KLL

     
  Proposed Terms  
     
1.   Transaction Structure: Subject to the terms and the satisfaction of the conditions described in this Agreement (as defined below), upon closing of the transactions contemplated hereby (the “Proposed Transactions”): (1) the Purchaser shall acquire the exclusive right to earn 100% of the legal right to obtain, prospect and exploit the Prospecting Licenses (“PLs” see Appendix B) that contain the Titan Lithium Projects (the “Properties”) from KLL.
     
2.   Acceptance Date:

February 24, 2023.

     
3.  

Acquisition

Consideration

Under this agreement, for 80% ownership in the Properties the Purchaser will issue to LS and LS will have transferred to KLL the Properties:

 

(a)    One Hundred and Thirty-Three Million (133,000,000) shares of China Dongsheng International common stock issued to KLL.

(b)    After the Purchaser has attained 80% ownership, the Purchaser shall be responsible for exploration and development expenditures and shall make cash payments as follows:

 

(i)            A cash payment of $15,000; this payment has been paid to LS on January 27, 2023.

(ii)           A cash payment of $50,000 (this amount includes the payment for the annual fees for the PLs) will be paid to LS

(iii)          A cash payment of $75,000 will be paid to LS within 60 days of the date of Closing or when suitable financing is done.

(iv)          A cash payment of $75,000 will be paid to LS within 120 days of closing or when suitable financing is done.

(v)           A cash payment of $100,000 will be paid to LS within 6 months of closing or when suitable financing is done.

(vi)          A cash payment of $100,000 will be paid to LS within 9 months of closing or when suitable financing is done.

 

 

 

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3 Acquisition Consideration continued:

Upon receipt of shares, LS will transfer the title and ownership of and all the legal rights to the Prospecting Licenses (“PLs”) that contain the Titan Lithium Projects (the “Properties”) to KLL. And KLL will Maintain that option directly for the Purchaser

 

LS will maintain a 20% beneficial interest in the Properties until the purchaser makes further payments of;

 

(vii)        $1,000,000 for each addition 5% interest for up to 100% interest for an aggregate payment of $4,000,000

 

(viii)       LS shall retain a 3% Net Smelter Return (“NSR”) in the Properties, however, the purchaser holds the exclusive right to purchase up to 2% of the NSR for $1,000,000 per 1%, for an aggregate of up to $2,000,000.

 

4.

Closing

Conditions:

The consummation of the Proposed Transactions shall be subject in all respects to customary conditions, including:

 

1.     satisfactory completion of legal, accounting, tax, financial, commercial, environmental, and other due diligence

 

2.     approval of the Proposed Transaction by the board of directors of KLL and Purchaser (see Appendix C and D). (and LS?)

 

3.     the parties’ execution of this Agreement, including but not limited to appropriate indemnification and other legal agreements.

 

4.     no material adverse change in the results of operations, prospects, condition (financial or otherwise) or assets of Purchaser and KLL’s business.

 

5.     Purchaser’s, as well as KLL’s, and LS representations and warranties in this Agreement being true and accurate at the time of closing.

 

6.     no person or government entity having commenced or threatened to commence any litigation or proceeding to challenge, restrain, or otherwise interfere with the Proposed Transactions.

 

5. Due Diligence and Access: As soon as reasonably practicable after the date of this Agreement, the parties and their representatives shall commence a detailed due diligence investigation of each other. Such due diligence will include, but will not be limited to, a complete review of the legal, financial, tax, environmental, intellectual property, and labor records and agreements of the business, and any other matters that the parties’ legal counsel, accountants, tax, or other advisors reasonably deem relevant.
     
    From and after the date of this Agreement each party shall reasonably respond to the other party’s due diligence inquiries and shall authorize its representatives to provide the other party’s officers, employees, representatives, and advisors with full access to its records, key employees, advisers and operations for the purpose of the other’s due diligence.
     

 

 

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6.Corporate Governance:Lawrence Stephenson, CEO of KLL, will join the Executive Team upon consummation of the merger.
   
7.Expenses:Each party will bear its own expenses.
   
8.Closing Target Date:This transaction is envisaged to close upon the issuance of shares in the Purchaser.
   
9.Working Capital:For the avoidance of doubt, the Purchaser will be responsible for the development, exploration and working capital costs related to the property.
   
10.Net Smelter Royalty:LS shall retain a 3% Net Smelter Return (“NSR”) to which the Purchaser will have the exclusive right to purchase up to 2% as per the Merger Conditions set out in 4 (viii).
   
11.Governing Law:THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THOSE OF THE STATE OF NEVADA.
   
12. The parties acknowledge and agree that neither party shall have any liability or obligation to the other party, except as set forth in the provisions of this Agreement that shall be legally binding obligations.
   
13.Miscellaneous: This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall be considered one and the same agreement and shall become effective when signed and delivered by each of the parties hereto. A manual signature on this Agreement whose image shall have been transmitted electronically will constitute an original signature, and delivery of copies of this Agreement by electronic transmission will constitute delivery of this Agreement, for all purposes.

 

 

 

 

 

 

 

 

 

 

 

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AGREED AND ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN:

 

Kilimanjaro Lithium LTD

 

By:

 

Name:

 

Title: CEO

  

Date: February 24, 2023

 

ADD

 

By:

 

Name:

 

 

Date: February 24, 2023

 

  CHINA DONGSHENG INTERNATIONAL.
   
   
  By:   
     
  Name: Craig Alford
     
  Title: Chief Executive Officer
     
  Date: February 24, 2023
     

 

 

 

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Exhibit 21

 

China Dongsheng International, Inc.

List of Subsidiaries

 

Subsidiary   State or Jurisdiction of Incorporation   Percentage Owned  
Titan Lithium, Inc.   Nevada     100 %
Kilimanjaro Lithium Ltd.   Tanzania     100 %

Exhibit 96

 

 

Report on the Titan 1 and Titan 2 Properties

Same Area, Kilimanjaro Region, Tanzania

East Africa

 

 

 

 

 

 

 

 

Prepared For:

China Dongsheng International Inc.

(OTC Markets CDSG)

4005 West Reno Ave, Suite F,

Las Vegas, Nevada 89118

United States of America

 

 

 

 

 

 

 

 

 

Prepared By: P.Geo C. Alford

(Qualified Person)

 

Date: April 20th, 2023

Report on the Titan 1 and Titan 2, Same Area Kilimanjaro Region Tanzania April 2023

 

 

 

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Table of Contents

 

1. SUMMARY 4
     
2. INTRODUCTION 5
     
3. RELIANCE ON OTHER EXPERTS 5
     
4. PROPERTY DESCRIPTION AND LOCATION 5
     
5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND TOPOGRAPHY 7
     
6. HISTORY 9
     
7. GEOLOGICAL SETTING AND MINERALIZATION  10
     
  7.1       Regional Geology of the Area  10
     
  7.2       Local Property Geology  11
     
  7.3       Mineralization 11
     
8. DEPOSIT TYPES 12
     
9. EXPLORATION – GEOCHEMICAL SAMPLING  13
     
10. DRILLING 15
     
11. SAMPLE PREPARATION, ANALYSES AND SECURITY 16
     
12. DATA VERIFICATION 16
     
13. MINERAL PROCESSING AND METALLURGICAL TESTING 16
     
14. MINERAL RESOURCE ESTIMATES 16
     
23. ADJACENT PROPERTIES 16
     
24. OTHER RELEVANT DATA AND INFORMATION 16
     
25. INTERPRETATIONS AND CONCLUSIONS 17
     
26. RECOMMENDATIONS 17
     
27. REFERENCES 18

 

 

 

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LIST OF FIGURES

 

1.Location of Property in Tanzania 6
2.Titan 1 Dry Lake 8
3.Titan 2 Dry Lake 9
4.East African Rift Zone 10
5.Lithium Rich Continental Brines USGS Model 12
6.Titan 1 Sample Locations and Results 14
7.Titan 2 Sample Locations and Results 15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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1. SUMMARY

This report was requested by China Dongsheng International Inc.’s Chairman Harpreet Sangha to address the regulatory requirement, provide an exploration program and assist in financing.

 

The Properties are located in Northern Tanzania approximately 25 to 30 kilometers West of the town of Same (Titan 1) and approximately 20 kilometres to the Northeast of Landanai (Titan 2) and comprises of two Prospecting Licenses: PL22468/2022 (Titan 1) and PL 23071/2023 (Titan 2) of approximately 298 km2 and 53 km2 respectively, and are owned and held in the name of Kilimanjaro Lithium Inc. On February 27, 2023, Titan entered in an Option Agreement with Kilimanjaro Lithium Inc.

 

Topography in the area is moderate with flat basins represented by dry lake flats. The area of the Properties is a hot equatorial climate. Tanzania has recently become a major mining area of Africa since the late 20th century. There is no known exploration or history of the area for lithium.

 

The geology of the surrounding mountains is mainly metasedimentary rocks of the eastern part of the

Usagaran Belt which was mobilized by the Neoproterozoic Pan African Orogeny forming the Mozambique Belt. To the north is the recent volcanic activity of the Mount Kilimanjaro area associates with the eastern arm of the East African Rift system.

 

Both Properties are singularly basins that have been local “traps” and the playa sediments host the erosion debris from the surrounding areas. The Properties are entirely covered by alluvium with no outcrops.

 

Lithium mineralization with values consistently above 3000 ppm has been identified on the both Properties. The Titan 1 valley, 40kms long and 15 km wide had 94 soil samples taken, while the Titan 2 valley, 6km long and 4 km wide had 22 samples taken; 22 (from Titan 1) and 4 (from Titan 2) have lithium values in excess of 0.30%, (and an additional 3 (Titan 2) and 17 (Titan 1) had values in excess of 0.10% Li) with the highs value at Titan 1 of 2.24% lithium and 0.92% lithium at Titan 2.

 

Lithium is known to occur in potentially economic concentrations in three types of deposits: pegmatites, continental brines, and clays. Lithium clays, are associated with weathered volcanic deposits, which is the environment of these properties.

 

Exploration done by Titan, consists of sampling the dry lake areas, two felsic volcanic rock samples taken “uphill” returned 1.76 % Lithium and 0.07% lithium. A Geochem soil sampling Exploration program was undertaken on 1 km sample spacing, North- south lines, approximately 1-2 km apart to cover the both dry lakes. Both dry lakes showed anomalous lithium values in the dry lake sediments.

 

Samples were collected by personnel under the supervision of a qualified geologist. To date, work completed on the Properties has identified that lithium values are in the sediments in these dry lakes that was not previously revealed. The property fits all the criteria for the formation of an economic lithium prospect which needs to be further investigated.

 

A Phase I program of $170,000 is recommended with a dependent Phase II program of $1,140,000 for deeper drilling and downhole follow up, for a total of $1,310,000 exploration expenditure to evaluate the property’s potential. An additional budget to establish operations in Tanzania of $400,000 is recommended.

 

 

 

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2.        INTRODUCTION

 

This report was requested by China Dongsheng International Inc. Chairman Harpreet Sangha to address the regulatory requirement of Titan, provide an exploration program and assist in financing of the proposed exploration and development programs at the Properties.

 

This “technical report” is based on area exploration, and technical information published by the United Republic of Tanzania and by the results of the initial exploration program completed by principal, Lawrence Stephenson, of Kilimanjaro Lithium, the optionee of the Properties (Titan 1 and Titan 2). The author has acquired data from sources that he believes in his professional opinion to be reliable with respect to the geology and location of mineralization. In preparing this report the author relied on his observations in the field, and knowledge of Tanzania and its geology, information and other relevant reports, papers and data in the public domain. The author also reviewed the option agreement between Kilimanjaro Lithium and Titan. All documents relied upon in the preparation of this report are listed in Section 27 hereof.

 

The author visited the Properties on February 6th and 7th, 2023. The investigations conducted on the Properties consisted of approximately 4-6 hours on each property as well as hours checking the local geology and its surrounding areas.

 

3.        RELIANCE ON OTHER EXPERTS

 

For the purposes of this report, the author has relied on ownership information retrieved from the Tanzania Mining Cadastre Portal system that is accessible by the general public. The author is wholly responsible for the accuracy of the ownership information, which is referenced in Section 6 of this technical report.

 

4.        PROPERTY DESCRIPTION AND LOCATION

 

The Properties are located in Northern Tanzania (see Figure 1) West of the town of Same (Titan 1) and Northeast of Landanai and comprises of two Prospecting Licenses: PL22468/2022 (Titan 1) and PL 23071/2023 (Titan 2) representing an aggregate area of land covering approximately 298 km2 and 53 km2 respectively, and are owned and held in the name of Kilimanjaro Lithium Inc. which are now under option to Titan.

 

The Titan 1 Property is situated to the west of Tanzanian Highway B1 in eastern Tanzania, approximately 30 kilometres Southwest of the town of Same, Same District, Kilimanjaro Region. The Titan 2 Property is situated approximately 30 kilometres Northeast of the town of Landanai, Simanjiro District Manyara Region (Figure 1). A central point in the properties is located coordinates Latitude 4o 16’ 0” S and Longitude 37o 33’ 30.0” E (Titan 1) and Latitude 30 56’ 30” S and Longitude 30 16’ 20” E (Titan 2).

 

 

 

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Figure 1

 

On February 27, 2023, Titan entered into an Option Agreement with Kilimanjaro Lithium Inc. (the "Option Agreement"). Pursuant to the terms of the Option Agreement, Titan can acquire up to a 100% interest in the Property as follows:

 

(a)Titan shall acquire an 80% interest in the Property upon:

 

(1)the payment of US$350,000 in cash to Lawrence Stephenson;
   
(2)the issuance of 133,000,000 common shares in the capital of Titan (each, a "Common Share") at a deemed price per Common Share of CDN$0.03 on or before March 31, 2023;
   
(3)incurring all exploration and development expenses.

 

(b)Titan may acquire an additional 20% interest in the Property for further payments to Lawrence Stephenson in cash CDN$1,000,000 for each additional 5% interest in the Property for up to CDN$4,000,000. Production from the projects are subject to a 3% Net Smelter Return (“NSR”) in the Properties payable to Lawrence Stephenson, however, the purchaser holds the exclusive right to purchase up to 2% of the NSR for $1,000,000 per 1%, for an aggregate of up to $2,000,000.

 

 

 

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A Prospecting License (PL) in Tanzania grants exclusive exploration rights over the area of the PL for a period of four (4) years with annual renewal fees due on the anniversary of the granting of the PL.

 

Surface rights are not part of a PL and agreement should be made with the lawful occupiers of land.

 

Surface rights in respect of the Properties are currently held by the local Masai and other Tanzanians. Titan has not commenced negotiations with the surface right owners. There are no known environmental liabilities to which the Properties are subject.

 

All exploration is permitted by the PL Grant up to and including Bulk Testing. A Mining License will require a comprehensive report and Environmental Study. No additional permits will be required to complete the proposed exploration program.

 

The author is unaware of any other material factors and risks that may affect access, title, or the right or ability to perform work on the Property.

 

5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND TOPOGRAPHY

 

The Titan 1 Property is accessed from the Tanzanian Highway B1, by gravel roads to the north end and middle of the property. The PL claims are approximately 25 and 30 kilometers, respectively, southwest and east, respectively from Same and Mayanra (Figure 1). The author had no difficulty accessing the area of the Property with a 4-wheel drive truck.

 

The Titan 2 Property is accessed from the town of Landanai which is on the recently upgraded Meremani – Simanjiro gravel highway, by approximately 20 kilometres of bush roads to the Northeast of the town (Figure 1). The author had no difficulty accessing the area of the Property with a 4-wheel drive truck.

 

Topography in the area is generally moderate with flat basins represented by dry lake flats at approximately 625 metres (Titan 1) and 940 meters (Titan 2,) elevation, rising to over 2000 metres east of the projects (South Pare Mountains) to over 1500 metres to the west (the “Landanai” Mountains). The Titan 2 project is approximately 50 kilometres northwest of Titan 1 and the intermediate area rises to over 1000 metres elevation. The land is an open scrub equatorial desert and a flat-bottomed dry lake basin dominates the Titan 1 area which contains sparse vegetation in areas, while the Titan 2 area is dominated by a “recent” dry lake. Most of the Titan 1 property is a dry lake with little vegetation containing areas of intermittent “streams” during the sporadic rainy season (Figure 2) while the Titan 2 property is a dry lake without any vegetation (Figure 3).

 

The climate of area of the Properties is a within an equatorial region of hot weather, with average high temperatures around 20-35° C. Precipitation in this area is low, generally less than 10 mm per year.

 

In Tanzania, mining is a major part of the economy and mining and exploration personnel are available.

 

The area of the Property is sufficient in terms of area and topographic relief for a processing plant site. The area lies adjacent to a major highway, power lines, and regional towns that service the mining industry. Year-round exploration is possible.

 

 

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Figure 2 Titan 1

 

 

 

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Figure 3 Titan 2 (from left to right, Driver Joseph Stansilaus; Lawrence Stephenson; Author- C Alford)

 

6.        HISTORY

 

Tanzania has recently become a major mining area of Africa since the late 20th century. It has become one of the major gold producers of Africa with major operations by Anglo Ashanti and Barrick. Tanzania has active Lithium exploration, which is mainly concentrated on Lithium bearing pegmatites located in the Dodoma region of central eastern Tanzania. With the expansion of the lithium market in recent years, there has been an increase of interest in assessing the lithium potential of any potentially viable source of the mineral.

 

There is no known exploration or history of the area of the property for lithium exploration or exploitation. There are no known previous ownership of the property.

 

Mineral exploration within the general area has been focused on precious gems (tanzanite) and industrial minerals in the surrounding areas. Tanzanite is mined to the north west (50 km) and Gypsum is mined from the sedimentary horizons to the east of Titan 1 (approximately 10 km east).

 

 

 

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7.        GEOLOGICAL SETTING AND MINERALIZATION

 

7.1 Regional Geology of the Area

 

The geology of the surrounding mountains is mainly metasedimentary rocks of the eastern part of the Usagaran Belt which was mobilized by the Neoproterozoic Pan African Orogeny forming the Mozambique Belt. To the north is the recent volcanic activity of the Mount Kilimanjaro area associates with the eastern arm of the East African Rift system.

 

The Pangani Rift, which is part of the large East African Rift system, extends south from Mount Kilimanjaro through the Island of Zanzibar into the Indian Ocean along the east coast of southern Africa. The Titan 1 property is located within this rift zone (Figure 4)

 

 

Figure 4

 

 

 

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Volcanism associated with Mount Kilimanjaro is recent, mainly occurring within the last 3 million years. These intercontinental volcanoes are often peralkaline in nature which has been connected to the generation of and concentration of Lithium resources. Active volcanism occurs in the region, with the last eruption associated with Kilimanjaro occurring approximately 350,000 years ago and Oldoinyo Lengai, located 200 km to the Northwest, is presently an active volcano with the last eruption in 2019. Volcanism of Oldoinyo Lengai is associated with natrocarbonatites and silicate lavas and associated ash falls. These natrocarbonatites are associated with high Lithium Content (up to 294 ppm) and with the Lithium mica – taeniolite.

 

The Pangani Rift would have been an excellent catchment area for the region’s volcanic ash and flows and the one of the main drainage conduits in the Mount Kilimanjaro region.

 

The area around Titan 2 is at a higher elevation and closer to the forementioned volcanism. Although not on any fully recognized rift system, the Titan 2 area would have been an important internal drainage area for all the ash fall from the regional volcanism.

 

7.2 Local Property Geology

 

Both Properties are singularly basins that have been local “traps” for all the erosion debris from the surrounding areas.

 

Titan 1 covers a main flat playa basin within the Northwest-Southeast striking Pangani Rift which presently has drainage which flows to the Indian Ocean from the Mount Kilimanjario region. In the past drainage was more likely restricted to the south by mountains. Titan 2 has no out drainage so it likely has always been an internal drainage basin.

 

Until the recent sampling efforts completed by Lawrence Stephenson discovered lithium in the regional there has been no reported lithium in the deposited volcano-sedimentary units derived from the adjacent tertiary volcanics of the East African Rift volcanism with Tanzania.

 

There are no outcrops located in the basin or on the Property. The playa sediments conform to the expected sediments that are the weathered detritus of the region. The Properties are entirely covered by alluvium related to the adjacent hills and drainages. The main playa areas are flat and consist of fine silt size sediments. Some boulders are present around the edge of the playa reflect the geology of the surrounding mountains.

 

There is no other information on these basins, however, both conform to a dry restrictive basin model that would be conducive to the development of brines and sediments that could contain lithium.

 

7.3 Mineralization

 

Lithium mineralization has been identified on the both Properties in the dry lake sediments and a siliceous volcanic rock “float” located up drainage from Titan 1 assayed 1.72% lithium.

 

Analysis of the dry lake sediments has been indicated values consistently above 2,000 ppm in contiguous 1,000 metre separated samples with the high value at Titan 1 being 2.24% lithium (22,400 ppm) and 0.92% lithium (9,200 ppm) at Titan 2.

 

The Titan 1 valley that is 40kms long and 15 km wide and of the 74 soil samples taken only from the only 10 have had no detectable lithium; 12 samples have had 0.01% to 0.09% lithium; 17 samples have had between 0.10% to 0.30% Lithium and 22 have had lithium values in excess of 0.30% lithium (including 8 samples above 0.70% lithium) [the remaining 14 samples are pending as of this report].

 

At Titan 2, the valley is 6km long and 4 km wide and of the 22 samples taken; 3 samples had no detectable Lithium; 2 sample(s) had 0.01% to 0.09% lithium; 3 sample(s) had between 0.10% to 0.30% Lithium and 4 had lithium values in excess of 0.30% lithium. [the remaining 10 samples are pending as of this report].

 

 

 

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8.        DEPOSIT TYPES

 

Lithium is known to occur in potentially economic concentrations in three types of deposits: pegmatites, continental brines, and clays. Currently and on a global scale, the continental brines are the most important of these resources (Gruber et al., 2012). Lithium pegmatites are coarse-grained igneous rocks that concentrate lithium at a late stage in cooling alkaline magmas. They range from simple to complex in terms of mineralogy, structure and provenance. The primary mined lithium mineral is spodumene because of its high Li content and abundance in Li-pegmatites. The most prominent examples are the simple spodumene pegmatites near Kings Mountain, North Carolina, US (inactive) and complex spodumene pegmatites at Bernic Lake, Manitoba, (inactive) Canada and Greenbushes, Australia. Other minable pegmatite-sourced Li-minerals include petalite, amblygonite and lepidolite.

 

Lithium clays, primarily hectorite and polylithionate, are associated with weathered volcanic deposits such as Western Lithium Corporation’s Kings Valley deposit in northwest Nevada, US, American Lithium’s Thacker Pass deposit and Bacanora Minerals’ La Ventana deposit in Sonora, Mexico. Lithium extraction from clays typically requires a leaching process and recoveries and >90% recovery has been reported from the TLC Lithium-in-Clay deposit near Tonopah Nevada.

 

Continental brines are the primary source of lithium products worldwide. Bradley, et al. (2013) noted that “all producing lithium brine deposits share a number of first-order characteristics: (1) arid climate; (2) closed basin containing a playa or salar; (3) tectonically driven subsidence; (4) associated igneous or geothermal activity; (5) suitable lithium source-rocks; (6) one or more adequate aquifers; and (7) sufficient time to concentrate a brine (Figure 5)” The Li atom does not readily form evaporite minerals, remains in solution and concentrates to high levels, reaching 4,000 ppm at Salar de Atacama, Chile (Bradley et al. 2013). Large deposits are mined in the Salar de Atacama, Chile (SQM and Albemarle), Salar de Hombre Muerto, Argentina (FMC) and Clayton Valley, Nevada (Albemarle), the only North American producer.

 

 

 

 

 

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9.        EXPLORATION

 

Exploration done by Titan, to date, on the Properties, consists of sampling the dry lake areas, reviewing the various geological reports and maps of the surrounding area and region. The Company is currently in the process of acquiring geophysical data associated with a petroleum investigation of the Pangani Rift to analyse it with respect to the Property. The Company has reviewed the magnetic data for the areas of the dry lakes.

 

9.1 Geochemical Sampling and Survey

 

On a regional trip in late 2022, Mr. Stephenson collected two rock samples taken “uphill” from the Titan 1 PL. They were identified visible and chemically as being felsic volcanic and returned 1.76 % Lithium and 0.07% lithium. Subsequently, a defined exploration trip was undertaken in which 5 soil samples were taken in the dry lake bed and adjacent area; 3 samples assayed 0.16% 0.11% and 0.05% lithium while the adjacent samples, one located on the upslope of the drainage into the Playa and one located at a local magnesite pit assayed 0.20% and nil respectively.

 

With these encouraging, Stephenson then initiated a local widely spaced Geochem soil sampling program on two - 1 kilometre sample spacing (GPS locating) North- south lines, approximately 2 km apart of the whole “playa” contained in the PL (PL22468/2022). A total of 20 samples taken from the area of that PL and three samples (out of 5 samples taken) from an adjacent (50 km northwest) “playa” (Titan 2) were analyzed by African Mineral and Geoscience Centre’s Laboratories (Seamic) in Dar es Salaam.

 

An additional Grid Geochem sampling of the Playa was initiate by Titan over the two PLs and over 71 samples were taken to cover the both dry lakes. Samples were taken at a minimum of 10 cm depth, visual observations were recorded and the samples were placed in a cloth soil sample bag, marked and the position recorded on GPS coordinates. Samples were then sealed in cloth bags (plastic bags are banned in Tanzania) and transported to Seamic for analysis. Sample results for Lithium are plotted on Figure 6 (Titan 1) and Figure 7 (Titan 2).

 

In general, any value over 50 ppm lithium (0.005% Li) could be considered anomalous. A 100-ppm (0.01% Li) cut off was used define the results and a 1000 ppm (0.10% Li) and 3000 ppm (0.30% LI) threshold was established to define the higher anomalies. Both dry lakes showed anomalous lithium values in the dry lake sediments. The consistent association of lithium values with the flat lowest part of the playa confirms that the sediments and any potential brines are carrying lithium.

 

The Geochem survey confirms the presence of widespread lithium within the basin.

 

 

 

 

 

 

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10. DRILLING

 

No drilling has been completed to date on the Property.

 

 

 

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11. SAMPLE PREPARATION, ANALYSES AND SECURITY

 

Samples were collected by personnel under the direct on-site supervision of a experienced geologist (Mr. Stephenson has a B.Sc in geology, and is a retired P.Eng).The samples were removed from the dry lakes in a systematic and grid pattern located by GPS co-ordinates below any organic horizons (A horizon) from a depth of 15 -25 cm (B Horizon). The samples were then placed in cloth soil sample bag and transported to the Seamic Laboratory (an ISO 9001 SGS Approved laboratory) in Dar es Salaam. A sample tag was included in the bag identifying the sample number, the bag was numbered and that number was recorded with the GPS station.

 

The soil samples were first dried at 60C until completely dry, sieved to -80 mesh and then submitted to an Aqua Regia digestion. After preparation the sample completed an XRF analysis for multiple elements including lithium oxide and lithium.

 

All sampling was conducted and transported to the lab under the supervision of Mr. Stephenson.

 

12. DATA VERIFICATION

 

All data for the Property, for the geological mapping, soil geochem and sampling has been completed and supervised by qualified geologists and technicians.

 

Analytical results were provided by an independent and ISO 9001 Certified laboratory.

 

As this is the initial work on the property, it is expected that the recommended exploration program will expand the data base for the region.

 

13. MINERAL PROCESSING AND METALLURGICAL TESTING

 

No metallurgical testing has been completed.

 

14. MINERAL RESOURCE ESTIMATES

 

No mineral resource estimate has been made for the potential playa described in this report.

 

Items 15 to 22 are not applicable to this report.

 

23. ADJACENT PROPERTIES

 

No adjacent properties are cited in the report.

 

24. OTHER RELEVANT DATA AND INFORMATION

 

There is no other relevant data or information.

 

 

 

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25. INTERPRETATIONS AND CONCLUSIONS

 

To date, work completed on the Properties has identified that lithium values are in the sediments as found in the geochemical soil sampling survey, reported above. The large extent of potential lithium source rocks, from the volcanism associated with the East Africa Rift, makes the playa covered in this Property attractive lithium prospect.

 

The exploration to date has discovery the presence of lithium in these dry lakes that was not previously revealed. The values of the lithium soils recovered to date is some of the highest seen by this author in the literature and his experience has confirmed the potential of containing lithium in appreciable quantities.

 

The property fits all the criteria for the formation of an economic lithium prospect which needs to be further investigated. The author concludes that the Property, the subject of this report, merits further exploration.

 

26. RECOMMENDATIONS

 

It is recommended that the potential of the area of the Properties be delineated by deeper geochemical sampling, geophysics and auger drilling. A Phase I program of $170,000 is recommended with a dependent Phase II program of $1,140,000 for deeper drilling and downhole follow up, for a total of $1,310,000 exploration expenditure to evaluate the property’s potential. An additional budget to establish operations in Tanzania of $400,000. Given the results to date Phase II is proposed to follow immediately on completion of Phase I.

 

Phase I (All US$) Budget

 

Additional Regional soil Sampling on the PL  $75,000
Detailed sampling around select sites  $15,000
Excavator Sampling $25,000
Casual Labour, Accommodations, food,  $30,000
Incidentals (sample bags, shovels etc.)  
Onsite supervision reporting etc . $35,000
TOTAL PHASE I  $ 170,000

 

Phase II (All US$) Budget

 

Gravity Survey US $ 65,000
IP survey US $ 35,000
Magnetics survey US $ 20,000
Onsite supervision reporting etc. US $ 35,000
Drilling 2000 m US $700,000
Onsite supervision reporting etc. US $ 50,000
Independent Geologists US $ 45,000
PL fees and other governmental fees US $ 70,000
CONTINGENCY US $120,000
TOTAL PHASE II $1,140,000 

 

 

 

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Overhead, Office

1.Staff, Vehicles, Accommodations, supervision etc. $100,000
2.Field costs, including food, fuel, supplies, casual labour, repairs etc. $75,000
3.Travel, reporting Government meetings Promotion $200,000
4.Contingency $25,000
TOTAL OFFICE ET AL $400,000

  

GRAND TOTAL OF EXPLORATION AND DEVELOPMENT PROGRAM US$1,710,000

 

27.        REFERENCES

 

Ralf Halama, William F. McDonough, Roberta L. Rudnick, Jörg Keller, Jurgis Klaudius,

The Li isotopic composition of Oldoinyo Lengai: Nature of the mantle sources and lack of isotopic fractionation during carbonatite petrogenesis,

Earth and Planetary Science Letters, Volume 254, Issues 1–2, 2007, Pages 77-89,

 

Geological Survey of Tanzania

Geological Map Special Sheet (QDS 45,56,57) Kilimanjaro – Moshi

Geological Map QDS 72 Arusha – Chini

Geological Map QDS 73 North Pare

Geological Map QDS 89 Same

Geological Map QDS 88 Ngasumet

 

U.S. Department of the Interior U.S. Geological Survey, Reston, Virginia:

2013 A Preliminary Deposit Model for Lithium Brines

By Dwight Bradley, LeeAnn Munk, Hillary Jochens, Scott Hynek, and Keith Labay

Open-File Report 2013–1006

 

Zaitsev, N. Keller, Jorg

Mineralogical and chemical transformation of Oldoinyo Lengai natrocarbonatites, Tanzania Lithos, Volume 91, Issues 1–4, 2006, Pages 191-207,

 

 

 

 

 

 

 

 

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