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      GME Innotainment, Inc.
      Common Stock
      1357753052
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      $1,304,877, - $32,408 of principal, interest and fees in conversion; $728,413 in settlement of liability under 3(a)(10); and $544,056 in cash for shares issued pursuant to Regulation A
    
    
      Exempt from registration under Section 4(2) of the Securities Act , as Amended, and the Rules promulgated thereunder.
    
  




 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 1-A/A

 

Amendment No. 1

 

REGULATION A OFFERING CIRCULAR UNDER THE SECURITIES ACT OF 1933

 

GME Innotainment, Inc.

(Exact name of issuer as specified in its charter)

 

Florida

(State of other jurisdiction of incorporation or organization)

 

208 East 51st Street, Suite 170

New York, NY 10022

212-508-2130

 

(Address, including zip code, and telephone number,

including area code of issuer’s principal executive office)

 

Registered Agents, Inc.

7901 4th Street North

Suite 300

St. Petersburg, FL 33702

302-241-0613

 

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

 

2750    

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

This Preliminary Offering Circular shall only be qualified upon order of the Commission, unless a subsequent amendment is filed indicating the intention to become qualified by operation of the terms of Regulation A.

 

This Preliminary Offering Circular is following the offering circular format described in Part II of Form 1-A.

 

 

 

 

 

PART II - OFFERING CIRCULAR - FORM 1-A: TIER 1

 

Dated: June 4, 2021

 

PURSUANT TO REGULATION A OF THE SECURITIES ACT OF 1933

 

GME Innotainment, Inc.

10,000,000,000 SHARES OF COMMON STOCK

$0.001 PER SHARE

  

This is the public offering of securities of GME Innotainment, Inc., a Florida corporation. We are offering 10,000,000,000 shares of our common stock, par value $0.01 (“Common Stock”), at an offering price of $0.001 per share (the “Offered Shares”) by the Company. This Offering will terminate on twelve months from the day the Offering is qualified, subject to extension for up to thirty (30) days as defined below or the date on which the maximum offering amount is sold (such earlier date, the “Termination Date”). The minimum purchase requirement per investor is 20,000,000 Offered Shares ($10,000); however, we can waive the minimum purchase requirement on a case-by-case basis in our sole discretion.

 

These securities are speculative securities. Investment in the Company’s stock involves significant risk. You should purchase these securities only if you can afford a complete loss of your investment. See the “Risk Factors” section on page 9 of this Offering Circular.

 

No Escrow

 

The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best effort’s basis. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.

 

Subscriptions are irrevocable and the purchase price is non-refundable as expressly stated in this Offering Circular. The Company, by determination of the Board of Directors, in its sole discretion, may issue the Securities under this Offering for cash, promissory notes, services, and/or other consideration without notice to subscribers. All proceeds received by the Company from subscribers for this Offering will be available for use by the Company upon acceptance of subscriptions for the Securities by the Company.

 

Sale of these shares will commence within two calendar days of the qualification date and it will be a continuous Offering pursuant to Rule 251(d)(3)(i)(F).

 

1 

 

 

This Offering will be conducted on a “best-efforts” basis, which means our Officers will use their commercially reasonable best efforts in an attempt to offer and sell the Shares. Our Officers will not receive any commission or any other remuneration for these sales. In offering the securities on our behalf, the Officers will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended.

 

This Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful, prior to registration or qualification under the laws of any such state.

 

The Company is using the Offering Circular format in its disclosure in this Offering Circular.

 

Our Common Stock is traded in the OTCMarkets Pink Open Market under the stock symbol “GMEV.”

 

Investing in our Common Stock involves a high degree of risk. See “Risk Factors” beginning on page 9 for a discussion of certain risks that you should consider in connection with an investment in our Common Stock.

 

   Per Share  Total Maximum
Public Offering Price (1)(2)  $0.001   $10,000,000.00 
Underwriting Discounts and Commissions (3)  $0.000   $0 
Proceeds to Company  $0.001   $10,000,000.00 

 

(1) We are offering shares on a continuous basis. See “Distribution – Continuous Offering.
   
(2) This is a “best efforts” offering. The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best effort’s basis primarily through an online platform. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds. See “How to Subscribe.”
   
(3) We are offering these securities without an underwriter.
   
(4) Excludes estimated total offering expenses, including underwriting discount and commissions, will be approximately $30,000 assuming the maximum offering amount is sold.

  

Our Board of Directors used its business judgment in setting a value of $0.001 per share to the Company as consideration for the stock to be issued under the Offering. The sales price per share bears no relationship to our book value or any other measure of our current value or worth.

 

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

 

2 

 

 

TABLE OF CONTENTS

 

    Page  
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS   4    
SUMMARY   5    
THE OFFERING   8    
RISK FACTORS   9    
USE OF PROCEEDS   28    
DILUTION   29    
DISTRIBUTION   31    
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   32    
BUSINESS      
MANAGEMENT      
EXECUTIVE COMPENSATION   52    
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS   55    
PRINCIPAL STOCKHOLDERS   59    
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS   63    
DESCRIPTION OF SECURITIES   60    
DIVIDEND POLICY   61    
SECURITIES OFFERED   62    
EXPERTS   68    
WHERE YOU CAN FIND MORE INFORMATION   69    
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS   F-1    

 

We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where such offers and sales are permitted. You should rely only on the information contained in this Offering Circular. We have not authorized anyone to provide you with any information other than the information contained in this Offering Circular. The information contained in this Offering Circular is accurate only as of its date, regardless of the time of its delivery or of any sale or delivery of our securities. Neither the delivery of this Offering Circular nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this Offering Circular. This Offering Circular will be updated and made available for delivery to the extent required by the federal securities laws.

 

In this Offering Circular, unless the context indicates otherwise, references to “GME Innotainment, Inc.”, “we”, the “Company”, “our” and “us” refer to the activities of and the assets and liabilities of the business and operations of GME Innotainment, Inc. 

 

3 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the statements under “Summary”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Our Business” and elsewhere in this Offering Circular constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “should”, “will” and “would” or the negatives of these terms or other comparable terminology.

 

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Offering Circular, including in “Risk Factors” and elsewhere, identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

 

The speculative nature of the business;

 

Our reliance on suppliers and customers;

 

Our dependence upon external sources for the financing of our operations, particularly given that there are concerns about our ability to continue as a “going concern;”

 

Our ability to effectively execute our business plan;

 

Our ability to manage our expansion, growth and operating expenses;

 

Our ability to finance our businesses;

 

Our ability to promote our businesses;

 

Our ability to compete and succeed in highly competitive and evolving businesses;

 

Our ability to respond and adapt to changes in technology and customer behavior; and

 

Our ability to protect our intellectual property and to develop, maintain and enhance strong brands.

 

Although the forward-looking statements in this Offering Circular are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as may be required by law, to re-issue this Offering Circular or otherwise make public statements updating our forward-looking statements.

 

4 

 

 

SUMMARY

 

This summary highlights selected information contained elsewhere in this Offering Circular. This summary is not complete and does not contain all the information that you should consider before deciding whether to invest in our Common Stock. You should carefully read the entire Offering Circular, including the risks associated with an investment in the company discussed in the “Risk Factors” section of this Offering Circular, before making an investment decision. Some of the statements in this Offering Circular are forward-looking statements. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

 

Company Information

 

Company Information

 

GME Innotainment, Inc. (the “Company,” “we,” “us,” “our,” or “GMEV”) was incorporated in Florida on July 8, 1983 and adopted the current name on July 8, 2015. Prior to December 1, 2015, the Company owned twenty-one subsidiaries. On December 1, 2015, the Company entered into an agreement selling all assets and liabilities.

 

On September 17, 2017, the Company acquired 100% of the outstanding stock of Sustainable Resources, Inc. (“Sustainable”) and assumed certain debt of sustainable in exchange for a promissory note for $3,000,000, due in five years, bearing interest of 5%. Sustainable was incorporated in Delaware on April 24, 2015.

 

For purposes of financial reporting, we are treating Sustainable as the surviving entity and financial statements assume Sustainable had been acquired as of January 1, 2017. Sustainable is the only operating entity of the Company.

 

Acquisition of Sustainable Resources On September 25, 2017, the Company entered into a Securities Exchange Agreement with PureSafe Water Systems, Inc. (“Seller”) through which the Company purchased 100% of the outstanding common stock of Sustainable Resources Corporation, a Delaware corporation (“Sustainable”), in exchange for the issuance by the Company of a $3,000,000 non-convertible promissory note bearing a 5% per annum interest rate with a five year term. As part of the Agreement, the Company granted to Seller a twelve (12) month option to purchase up to thirty percent (30%) of the Company’s then outstanding common stock (at time of exercise of option by Seller) at a price equal to seventy five percent (75%) of the average of trading prices during the first thirty (30) days following the closing. The Agreement constitutes a tax-free exchange. Yves Michel shall be appointed to as officer and director of the Company at an annual salary of $150,000, plus a commission of 6.5% of all Gross Sales generated by him The parties also entered into a Royalty Agreement that provides for the delivery of a five percent royalty of the gross revenue earned by Sustainable beginning on July 1, 2018. Please see our current report on Form 8-K filed on September 28, 2017, with the Securities and Exchange Commission for more detail. The Agreement constitutes a tax-free exchange and is attached as Exhibit 6.2. The promissory note executed as part of the Agreement is attached as Exhibit 6.3. The parties also entered into a Royalty Agreement that is attached as Exhibit 6.4.

 

5 

 

 

Sustainable Resources holds licenses to produce a unique patented mobile and stationary water filtration system that was designed to be both an emergency response water filtration system, as well as, a permanent solution where drinkable water is not available for Government entities, companies and organizations. The self-contained and self-powered water filtration system can be mobilized to a site and within 30 minutes, and will produce drinking quality water from flood waters, surface and fresh water, desalinating ocean and/or brackish waters. This mid-range, 30,000 gallon per day system has also found a huge application in known contaminated water sources where water clarity, water borne disease and high bacteria content exist, and where mobile, self-contained systems are applicable to bring clean water to the population wherever they are located. The system can dispense water in bulk, by container or in half liter plastic bags to suit the situation.

 

On October 31, 2019 the Company entered into a Share Exchange Agreement by and between the Company and Foundation Farms, Corp.; wherein, the Company exchanged 100,000 shares of Series A Preferred Stock for 60% (60,000) shares of Foundation Farms, Corp., thereby, becoming a 60% owned subsidiary of the Company. Foundation Farms, Corp., is a vertical aeroponics corporation that is going to build and operate urban farms in and near large urban centers.

 

The Company plans on producing revenue from the sales of produce that is organically grown through our urban farms. Our urban farms will utilize vertical indoor growing units, which house vertical grow columns that are designed for the production of aeroponic leafy greens, vegetables, micro-greens, fruiting plants, decorative / edible flowers and herbs. Our urban farms can also be adapted for a variety of other uses such as horticulture research, medicinal plant production, pharmaceutical plant production, and plant cloning.

 

Our fiscal year-end date is December 31.

 

Our mailing address is 208 East 51st Street, Suite 170, New York, NY 10022. Our telephone number is 212-508-2130. Our websites are www.sustainableresourcescorp.com, www.foundationfarms.com and our email address is Yves@GMEInnotainment.com.

 

We do not incorporate the information on or accessible through our websites into this Offering Circular, and you should not consider any information on, or that can be accessed through, our websites a part of this Offering Circular.

 

We do not incorporate the information on or accessible through our websites into this Offering Circular, and you should not consider any information on, or that can be accessed through, our websites a part of this Offering Circular.

 

Section 15(g) of the Securities Exchange Act of 1934

 

Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.

 

6 

 

 

Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one-page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as bid and offer quotes, a dealers spread and broker/dealer compensation; the broker/dealer compensation, the broker/dealers’ duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers’ rights and remedies in cases of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Securities Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.

 

Dividends

 

The Company has not declared or paid a cash dividend to stockholders since it was organized and does not intend to pay dividends in the foreseeable future. The board of directors presently intends to retain any earnings to finance our operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon the Company’s earnings, capital requirements and other factors.

 

Trading Market

 

Our Common Stock trades in the OTCMarkets Pink Open Market Sheets under the symbol “GMEV”.

 

7 

 

 

THE OFFERING

 


 

Issuer:   GME Innotainment, Inc.
     
Securities offered:   A maximum of 10,000,000,000 shares of our common stock, par value $0.001 (“Common Stock”) at an offering price of $0.001 per share (the “Offered Shares”). (See “Distribution.”)
     
Number of shares of Common Stock outstanding before the offering   1,486,207,485 shares issued and outstanding as of May 12, 2021
     
Number of shares of Common Stock to be outstanding after the offering   11,486,207,485 shares, if the maximum amount of Offered Shares are sold
     
Price per share:   $0.001
     
Maximum offering amount:   10,000,000,000 shares at $0.001 per share, or $10,000,000 (See “Distribution.”)
     
Trading Market:   Our Common Stock is trading on the OTC Markets Pink Open Market Sheets division under the symbol “GMEV.”
     
Use of proceeds:   If we sell all of the shares being offered, our net proceeds (after our estimated offering expenses) will be $9,977,000. We will use these net proceeds for working capital and other general corporate purposes.
     
Risk factors:   Investing in our Common Stock involves a high degree of risk, including:

Immediate and substantial dilution.

Limited market for our stock.

See “Risk Factors.” 

 

8 

 

 

RISK FACTORS

 


 

RISK FACTORS

 

The purchase of the Company’s Common Stock involves substantial risks. You should carefully consider the following risk factors in addition to any other risks associated with this investment. The Shares offered by the Company constitute a highly speculative investment and you should be in an economic position to lose your entire investment. The risks listed do not necessarily comprise all those associated with an investment in the Shares and are not set out in any particular order of priority. Additional risks and uncertainties may also have an adverse effect on the Company’s business and your investment in the Shares. An investment in the Company may not be suitable for all recipients of this Offering Circular. You are advised to consult an independent professional adviser or attorney who specializes in investments of this kind before making any decision to invest. You should consider carefully whether an investment in the Company is suitable in the light of your personal circumstances and the financial resources available to you.

 

The discussions and information in this Offering Circular may contain both historical and forward-looking statements. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company’s business, please be advised that the Company’s actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results may differ from the Company’s current expectations.

 

Before investing, you should carefully read and carefully consider the following risk factors:

 

Our business and future operations may be adversely affected by epidemics and pandemics, such as the recent COVID-19 outbreak.

 

We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases, which could result in a widespread health crisis that could adversely affect general commercial activity and the economies and financial markets of the country as a whole. For example, the recent outbreak of COVID-19, which began in China, has been declared by the World Health Organization to be a “pandemic,” has spread across the globe, including the United States of America. A health epidemic or pandemic or other outbreak of communicable diseases, such as the current COVID-19 pandemic, poses the risk that we, or potential business partners may be disrupted or prevented from conducting business activities for certain periods of time, the durations of which are uncertain, and may otherwise experience significant impairments of business activities, including due to, among other things, operational shutdowns or suspensions that may be requested or mandated by national or local governmental authorities or self-imposed by us, our customers or other business partners. While it is not possible at this time to estimate the impact that COVID-19 could have on our business, potential customers, potential suppliers or other current or potential business partners, the continued spread of COVID-19, the measures taken by the local and federal government, actions taken to protect employees, and the impact of the pandemic on various business activities could adversely affect our results of operations and financial condition.

 

9 

 

 

The price of our common stock may continue to be volatile.

 

The trading price of our common stock has been and is likely to remain highly volatile and could be subject to wide fluctuations in response to a range of factors, some of which are beyond our control or unrelated to our operating performance. In addition to the factors discussed in this “Risk Factors” section and elsewhere, these factors include: the operating performance of similar companies; the overall performance of the equity markets; the announcements by us or our competitors of acquisitions, business plans, or commercial relationships; threatened or actual litigation; changes in laws or regulations relating to our businesses; any major change in our board of directors or management; publication of research reports or news stories about us, our competitors, or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; large volumes of sales of our shares of common stock by existing stockholders; and general political and economic conditions.

 

In addition, the stock market in general, and the market for developmental related companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies securities. This litigation, if instituted against us, could result in very substantial costs; divert our management’s attention and resources; and harm our business, operating results, and financial condition.

 

There are doubts about our ability to continue as a going concern.

 

The Company is an early-stage enterprise and has commenced principal operations. The Company had no revenues and has incurred net losses from operations for the years ended December 31, 2020 and December 31, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources, such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations, or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.

 

The Company intends to overcome the circumstances that impact its ability to remain a going concern through a combination of the growth of revenues, with interim cash flow deficiencies being addressed through additional equity and debt financing. The Company anticipates raising additional funds through public or private financing, strategic relationships or other arrangements in the near future to support its business operations; however, the Company may not have commitments from third parties for a sufficient amount of additional capital. The Company cannot be certain that any such financing will be available on acceptable terms, or at all, and its failure to raise capital when needed could limit its ability to continue its operations. The Company’s ability to obtain additional funding will determine its ability to continue as a going concern. Failure to secure additional financing in a timely manner and on favorable terms would have a material adverse effect on the Company’s financial performance, results of operations and stock price and require it to curtail or cease operations, sell off its assets, seek protection from its creditors through bankruptcy proceedings, or otherwise. Furthermore, additional equity financing may be dilutive to the holders of the Company’s common stock, and debt financing, if available, may involve restrictive covenants, and strategic relationships, if necessary, to raise additional funds, and may require that the Company relinquish valuable rights. Please see Financial Statements – Note 3. Going Concern for further information.

 

10 

 

 

Risks Relating to the Company and Its Business

 

The Company Has A History of Losses

 

The Company has suffered losses since its inception and there can be no assurance that the Company’s proposed plan of business can be realized in the manner contemplated and, if it cannot be, shareholders may lose all or a substantial part of their investment. There is no guarantee that it will ever realize any significant operating revenues or that its operations will ever be profitable.

 

The Company Is Dependent Upon Its Management, Key Personnel and Consultants to Execute the Business Plan

 

The Company’s success is heavily dependent upon the continued active participation of the Company’s current executive officers as well as other key personnel and consultants. Loss of the services of one or more of these individuals could have a material adverse effect upon the Company’s business, financial condition or results of operations. Further, the Company’s success and achievement of the Company’s growth plans depend on the Company’s ability to recruit, hire, train and retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in the healthy living, urban farming, and water filtration industries is intense, 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 the Company’s activities, could have a materially adverse effect on it. The inability to attract and retain the necessary personnel, consultants and advisors could have a material adverse effect on the Company’s business, financial condition or results of operations.

 

If we are not able to sell our produce to customers or acquire land to build our Foundation Farms, then our business will not be able to grow.

 

We may not be able to raise sufficient capital to acquire land to build for our Foundation Farms, develop our Foundation Farms, expand production capacity, or market our organic produce and plants effectively. If we are not able to sell our o or complete the construction of our Foundation Farms and grow our organic produce and related products in order to sell them to customers, we may not be able to generate sales, and as a result, we may never become profitable and our business prospects will suffer.

 

We may not be able to successfully compete against companies with substantially greater resources.

 

The industries (organic produce & water filtration) in which we operate in general are subject to intense and increasing competition. Some of our competitors may have greater capital resources, facilities, and diversity of product lines, which may enable them to compete more effectively in this market. Our competitors may devote their resources to developing and marketing products that will directly compete with our product lines. Due to this competition, there is no assurance that we will not encounter difficulties in obtaining revenues and market share or in the positioning of our products. There are no assurances that competition in our respective industries will not lead to reduced prices for our products. If we are unable to successfully compete with existing companies and new entrants to the market this will have a negative impact on our business and financial condition.

 

11 

 

 

Technological change and competition may render our potential products obsolete.

 

The water purification industry continues to undergo rapid change, competition is intense, and we expect it to continually increase. Competitors may succeed in developing technologies and products that are more effective or affordable than any that we are developing or that would render our technology and products obsolete or noncompetitive. Many of our competitors have substantially greater experience, financial and technical resources and production and development capabilities than we do. Accordingly, some of our competitors may succeed in obtaining regulatory approval for products more rapidly or effectively than we can for technologies and products that are more effective and/or affordable than any that we are developing.

 

We may fail to appropriately assess the suitability of our Foundation Farms vertical farming system in a particular space.

 

We plan to build our indoor vertical growing facilities near to areas that we believe will have large interest in purchasing our organic produce and related products. Although we plan to assess the particular space to assess the location and its benefits, there is no guarantee that we will be able to choose a beneficial location. Furthermore, although we plan to build our indoor vertical farming system to comply with applicable local and federal regulations including but not limited to building safety, electrical safety and security guidelines, there is no guarantee that we will be able to do so. As a result, our brand image may be harmed, and our business and results of operations may suffer.

 

Our results of operations could be adversely affected as a result of asset impairments.

 

Our results of operations and financial condition could be adversely affected by impairments to goodwill, other intangible assets, receivables, long-lived assets or investments. For example, when we acquire a business, we record goodwill in an amount equal to the amount we paid for the business minus the fair value of the net tangible assets and other identifiable intangible assets of the acquired business. Goodwill and other intangible assets that have indefinite useful lives cannot be amortized, but instead must be tested at least annually for impairment. Any future impairments, including impairments of goodwill, intangible assets, long-lived assets or investments, could have a material adverse effect on our financial condition and results of operations for the period in which the impairment is recognized.

 

Servicing our debt will require a significant amount of cash, and we may not have sufficient cash flow from our business to pay our debt.

 

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the outstanding convertible notes, 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 operations in the future sufficient to service our debt and 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 restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

 

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We face significant competition for our Foundation Farms in the organic farming industry.

 

The organic farming industry is highly competitive, and we compete with a number of other companies that provide organic produce to the consumer already. Our ability to compete successfully in the case of our Foundation Farms and our vertical farming systems and to manage our planned growth will depend primarily upon the following factors:

 

  maintaining continuity in our management and key personnel;
  ability to react to competitive product and pricing pressures;
  the strength of our brand;
  increasing the productivity of our future sales employees;
  effectively marketing and selling our organic produce;
  acquiring new customers for our organic produce;
  ability to maintain our equipment;
  developing and improving our operational, financial and management controls;
  developing and improving our information reporting systems and procedures; and
  the design and functionality of our vertical farming systems.

 

Many of our competitors have greater financial, technical, product development, marketing and other resources than we do. These organizations may be better known than we are and may have more customers or users than we do. We cannot provide assurance that we will be able to compete successfully against these organizations, which may lead to lower customer satisfaction, decreased demand for our solutions, loss of market share or reduction of operating profits.

 

Our products may infringe the intellectual property rights of third parties, and third parties may infringe our proprietary rights, either of which may result in lawsuits, distraction of management and the impairment of our business.

 

As the number of patents, copyrights, trademarks and other intellectual property rights in our industry increases, products based on our technology may increasingly become the subject of infringement claims. Third parties could assert infringement claims against us in the future. Infringement claims with or without merit could be time consuming, result in costly litigation, cause product shipment delays or require us to enter into royalty or licensing agreements. Royalty or licensing agreements, if required, might not be available on terms acceptable to us, or at all. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Litigation to determine the validity of any claims, whether or not the litigation is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel from productive tasks. If there is an adverse ruling against us in any litigation, we may be required to pay substantial damages, discontinue the use and sale of infringing products, expend significant resources to develop non-infringing technology or obtain licenses to infringing technology. Our failure to develop or license a substitute technology could prevent us from selling our products.

 

We will face substantial competition in marketing our Water Filtration Units.

 

We will experience competition from a large number of more established firms in the market for water purification systems. Many of these companies are much larger and have substantially greater financial resources than us. In addition, our potential competitors in many cases already have customers to which they have sold water purification systems and these systems have an operating track record, in contrast to our water filtration units which are a relatively new production the market.

 

13 

 

 

Although Dependent Upon Certain Key Personnel, The Company Does Not Have Any Key Man Life Insurance Policies On Any Such People

 

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

 

The Company Is Subject To Income Taxes As Well As Non-Income Based Taxes, Such As Payroll, Sales, Use, Value-Added, Net Worth, Property And Goods And Services Taxes.

 

Significant judgment is required in determining our provision for income taxes and other tax liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although the Company believes that our tax estimates will be reasonable: (i) there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our income tax provisions, expense amounts for non-income based taxes and accruals and (ii) any material differences could have an adverse effect on our consolidated financial position and results of operations in the period or periods for which determination is made.

 

The Company Is Not Subject To Sarbanes-Oxley Regulations And Lack The Financial Controls And Safeguards Required Of Public Companies.

 

The Company does not have the internal infrastructure necessary, and is not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. There can be no assurances that there are no significant deficiencies or material weaknesses in the quality of our financial controls. The Company expects to incur additional 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.

 

The Company Has Engaged In Certain Transactions With Related Persons.

 

Please see the section of this Offering Circular entitled “Interest of Management and Others in Certain Related-Party Transactions and Agreements”

 

Changes In Employment Laws Or Regulation Could Harm The Company’s Performance.

 

Various federal and state labor laws govern the Company’s relationship with our employees and affect operating costs. 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.

 

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The Company’s Bank Accounts Will Not Be Fully Insured

 

The Company’s regular bank accounts has federal insurance that is limited to a certain amount of coverage. It is anticipated that the account balances in each account may exceed those limits at times. In the event that any of Company’s banks should fail, the Company may not be able to recover all amounts deposited in these bank accounts.

 

The Company’s Business Plan Is Speculative

 

The Company’s present business and planned business are speculative and subject to numerous risks and uncertainties. There is no assurance that the Company will generate significant revenues or profits.

 

The Company Will Likely Incur Debt

 

The Company has incurred debt and expects to incur future debt in order to fund operations. Complying with obligations under such indebtedness may have a material adverse effect on the Company and on your investment.

  

The Company’s Expenses Could Increase Without a Corresponding Increase in Revenues

 

The Company’s operating and other expenses could increase without a corresponding increase in revenues, which could have a material adverse effect on the Company’s consolidated financial results and on your investment. Factors which could increase operating and other expenses include, but are not limited to (1) increases in the rate of inflation, (2) increases in taxes and other statutory charges, (3) changes in laws, regulations or government policies which increase the costs of compliance with such laws, regulations or policies, (4) significant increases in insurance premiums, and (5) increases in borrowing costs.

 

The Company Will Be Reliant On Key Suppliers

 

The Company intends to enter into agreements with key suppliers and will be reliant on positive and continuing relationships with such suppliers. Termination of those agreements, variations in their terms or the failure of a key supplier to comply with its obligations under these agreements (including if a key supplier were to become insolvent) could have a material adverse effect on the Company’s consolidated financial results and on your investment.

 

Increased Costs Could Affect The Company

 

An increase in the cost of raw materials or energy could affect the Company’s profitability. Commodity and other price changes may result in unexpected increases in the cost of raw materials, glass bottles and other packaging materials used by the Company. The Company may also be adversely affected by shortages of raw materials or packaging materials. In addition, energy cost increases could result in higher transportation, freight and other operating costs. The Company may not be able to increase its prices to offset these increased costs without suffering reduced volume, sales and operating profit, and this could have an adverse effect on your investment.

 

15 

 

 

Inability to Maintain and Enhance Product Image

 

It is important that the Company maintains and enhances the image of its existing and new products. The image and reputation of the Company’s products may be impacted for various reasons including litigation, complaints from regulatory bodies resulting from quality failure, illness or other health concerns. Such concerns, even when unsubstantiated, could be harmful to the Company’s image and the reputation of its products. From time to time, the Company may receive complaints from customers regarding products purchased from the Company. The Company may in the future receive correspondence from customers requesting reimbursement. Certain dissatisfied customers may threaten legal action against the Company if no reimbursement is made. The Company may become subject to product liability lawsuits from customers alleging injury because of a purported defect in products or sold by the Company, claiming substantial damages and demanding payments from the Company. The Company is in the chain of title when it manufactures, supplies or distributes products, and therefore is subject to the risk of being held legally responsible for them. These claims may not be covered by the Company’s insurance policies. Any resulting litigation could be costly for the Company, divert management attention, and could result in increased costs of doing business, or otherwise have a material adverse effect on the Company’s business, results of operations, and financial condition. Any negative publicity generated as a result of customer complaints about the Company’s products could damage the Company’s reputation and diminish the value of the Company’s brand, which could have a material adverse effect on the Company’s business, results of operations, and financial condition, as well as your investment. Deterioration in the Company’s brand equity (brand image, reputation and product quality) may have a material adverse effect on its consolidated financial results as well as your investment.

 

If We Are Unable To Protect Effectively Our Intellectual Property, We May Not Be Able To Operate Our Business, Which Would Impair Our Ability To Compete

 

Our success will depend on our ability to obtain and maintain meaningful intellectual property protection for any such intellectual property. The names and/or logos of Company brands (whether owned by the Company or licensed to us) may be challenged by holders of trademarks who file opposition notices, or otherwise contest trademark applications by the Company for its brands. Similarly, domains owned and used by the Company may be challenged by others who contest the ability of the Company to use the domain name or URL. Such challenges could have a material adverse effect on the Company’s consolidated financial results as well as your investment.

 

Computer, Website or Information System Breakdown Could Affect The Company’s Business

 

Computer, website and/or information system breakdowns as well as cyber security attacks could impair the Company’s ability to service its customers leading to reduced revenue from sales and/or reputational damage, which could have a material adverse effect on the Company’s consolidated financial results as well as your investment.

 

Changes In The Economy Could Have a Detrimental Impact On The Company

 

Changes in the general economic climate could have a detrimental impact on consumer expenditure and therefore on the Company’s revenue. It is possible that recessionary pressures and other economic factors (such as declining incomes, future potential rising interest rates, higher unemployment and tax increases) may adversely affect customers’ confidence and willingness to spend. Any of such events or occurrences could have a material adverse effect on the Company’s consolidated financial results and on your investment.

 

16 

 

 

The Amount Of Capital The Company Is Attempting To Raise In This Offering Is Not Enough To Sustain The Company’s Current Business Plan

 

In order to achieve the Company’s near and long-term goals, the Company will need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If we are not able to raise sufficient capital in the future, we will not be able to execute our business plan, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer all or substantially all of our remaining assets, which could cause you to lose all or a portion of your investment.

 

Additional Financing May Be Necessary For The Implementation Of Our Growth Strategy

 

The Company may require additional debt and/or equity financing to pursue our growth and business strategies. These include, but are not limited to enhancing our operating infrastructure and otherwise respond to competitive pressures. Given our limited operating history and existing losses, there can be no assurance that additional financing will be available, or, if available, that the terms will be acceptable to us. Lack of additional funding could force us to curtail substantially our growth plans. Furthermore, the issuance by us of any additional securities pursuant to any future fundraising activities undertaken by us would dilute the ownership of existing shareholders and may reduce the price of our Shares.

 

Our Employees, Executive Officers, Directors And Insider Shareholders Beneficially Own Or Control A Substantial Portion Of Our Outstanding Shares

 

Our employees, executive officers, directors and insider shareholders beneficially own or control a substantial portion of our outstanding type of stock, which may limit your ability and the ability of our other shareholders, whether acting alone or together, to propose or direct the management or overall direction of our Company. Additionally, this concentration of ownership could discourage or prevent a potential takeover of our Company that might otherwise result in an investor receiving a premium over the market price for his Shares. The majority of our currently outstanding Shares of stock is beneficially owned and controlled by a group of insiders, including our employees, directors, executive officers and inside shareholders. Accordingly, our employees, directors, executive officers and insider shareholders may have the power to control the election of our directors and the approval of actions for which the approval of our shareholders is required. If you acquire our Shares, you will have no effective voice in the management of our Company. Such concentrated control of our Company may adversely affect the price of our Shares. Our principal shareholders may be able to control matters requiring approval by our shareholders, including the election of directors, mergers or other business combinations. Such concentrated control may also make it difficult for our shareholders to receive a premium for their Shares in the event that we merge with a third party or enter into different transactions, which require shareholder approval. These provisions could also limit the price that investors might be willing to pay in the future for our Shares.

 

Our Operating Plan Relies In Large Part Upon Assumptions And Analyses Developed By The Company. If These Assumptions Or Analyses Prove To Be Incorrect, The Company’s Actual Operating Results May Be Materially Different From Our Forecasted Results

 

Whether actual operating results and business developments will be consistent with the Company’s expectations and assumptions as reflected in its forecast depends on a number of factors, many of which are outside the Company’s control, including, but not limited to:

 

17 

 

 

  whether the Company can obtain sufficient capital to sustain and grow its business
     
  our ability to manage the Company’s growth
     
  whether the Company can manage relationships with key vendors and advertisers
     
  demand for the Company’s products and services
     
  the timing and costs of new and existing marketing and promotional efforts
     
  competition
     
  the Company’s ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel
     
  the overall strength and stability of domestic and international economies
     
  consumer spending habits

 

Unfavorable changes in any of these or other factors, most of which are beyond the Company’s control, could materially and adversely affect its business, consolidated results of operations and consolidated financial condition.

 

To Date, The Company Has Had Operating Losses And May Not Be Initially Profitable For At Least The Foreseeable Future, And Cannot Accurately Predict When It Might Become Profitable

 

The Company has been operating at a loss since the Company’s inception, but has recently operated at a profit. The Company may not be able to generate significant revenues in the future. In addition, the Company expects to incur substantial operating expenses in order to fund the expansion of the Company’s business. As a result, the Company expects to continue to experience substantial negative cash flow for at least the foreseeable future and cannot predict when, or even if, the Company might become profitable.

 

The Company May Be Unable To Manage Their Growth Or Implement Their Expansion Strategy

 

The Company may not be able to expand the Company’s product and service offerings, the Company’s markets, or implement the other features of the Company’s business strategy at the rate or to the extent presently planned. The Company’s projected growth will place a significant strain on the Company’s administrative, operational and financial resources. If the Company is unable to successfully manage the Company’s future growth, establish and continue to upgrade the Company’s operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, the Company’s consolidated financial condition and consolidated results of operations could be materially and adversely affected.

 

18 

 

 

The Company Relies Upon Trade Secret Protection To Protect Its Intellectual Property; It May Be Difficult And Costly To Protect The Company’s Proprietary Rights And The Company May Not Be Able To Ensure Their Protection

 

The Company currently relies on trade secrets. While the Company uses reasonable efforts to protect these trade secrets, the Company cannot assure that its employees, consultants, contractors or advisors will not, unintentionally or willfully, disclose the Company’s trade secrets to competitors or other third parties. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, the Company’s competitors may independently develop equivalent knowledge, methods and know-how. If the Company is unable to defend the Company’s trade secrets from others use, or if the Company’s competitors develop equivalent knowledge, it could have a material adverse effect on the Company’s business. Any infringement of the Company’s proprietary rights could result in significant litigation costs, and any failure to adequately protect the Company’s proprietary rights could result in the Company’s competitors offering similar products, potentially resulting in loss of a competitive advantage and decreased revenue. Existing patent, copyright, trademark and trade secret laws afford only limited protection. In addition, the laws of some foreign countries do not protect the Company’s proprietary rights to the same extent as do the laws of the United States. Therefore, the Company may not be able to protect the Company’s proprietary rights against unauthorized third-party use. Enforcing a claim that a third party illegally obtained and is using the Company’s trade secrets could be expensive and time consuming, and the outcome of such a claim is unpredictable. Litigation may be necessary in the future to enforce the Company’s intellectual property rights, to protect the Company’s trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources and could materially adversely affect the Company’s future operating results.

 

The Company’s Business Model Is Evolving

 

The Company’s business model is unproven and is likely to continue to evolve. Accordingly, the Company’s initial business model may not be successful and may need to be changed. The Company’s ability to generate significant revenues will depend, in large part, on the Company’s ability to successfully market the Company’s products to potential users who may not be convinced of the need for the Company’s products and services or who may be reluctant to rely upon third parties to develop and provide these products. The Company intends to continue to develop the Company’s business model as the Company’s market continues to evolve.

 

The Company Needs to Increase Brand Awareness

 

Due to a variety of factors, the Company’s opportunity to achieve and maintain a significant market share may be limited. Developing and maintaining awareness of the Company’s brand name, among other factors, is critical. Further, the importance of brand recognition will increase as competition in the Company’s market increases. Successfully promoting and positioning the Company’s brand, products and services will depend largely on the effectiveness of the Company’s marketing efforts. Therefore, the Company may need to increase the Company’s financial commitment to creating and maintaining brand awareness. If the Company fails to successfully promote the Company’s brand name or if the Company incurs significant expenses promoting and maintaining the Company’s brand name, it would have a material adverse effect on the Company’s consolidated results of operations.

 

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The Company Faces Competition In The Company’s Markets From A Number Of Large And Small Companies, Some Of Which Have Greater Financial, Research And Development, Production And Other Resources Than Does The Company

 

In many cases, the Company’s competitors have longer operating histories, established ties to the market and consumers, greater brand awareness, and greater financial, technical and marketing resources. The Company’s ability to compete depends, in part, upon a number of factors outside the Company’s control, including the ability of the Company’s competitors to develop alternatives that are superior. If the Company fails to successfully compete in its markets, or if the Company incurs significant expenses in order to compete, it would have a material adverse effect on the Company’s consolidated results of operations.

 

A Data Security Breach Could Expose The Company To Liability And Protracted And Costly Litigation, And Could Adversely Affect The Company’s Reputation And Operating Revenues

 

To the extent that the Company’s activities involve the storage and transmission of confidential information, the Company and/or third-party processors will receive, transmit and store confidential customer and other information. Encryption software and the other technologies used to provide security for storage, processing and transmission of confidential customer and other information may not be effective to protect against data security breaches by third parties. The risk of unauthorized circumvention of such security measures has been heightened by advances in computer capabilities and the increasing sophistication of hackers. Improper access to the Company’s or these third parties’ systems or databases could result in the theft, publication, deletion or modification of confidential customer and other information. A data security breach of the systems on which sensitive account information is stored could lead to fraudulent activity involving the Company’s products and services, reputational damage, and claims or regulatory actions against us. If the Company is sued in connection with any data security breach, the Company could be involved in protracted and costly litigation. If unsuccessful in defending that litigation, the Company might be forced to pay damages and/or change the Company’s business practices or pricing structure, any of which could have a material adverse effect on the Company’s operating revenues and profitability. The Company would also likely have to pay fines, penalties and/or other assessments imposed as a result of any data security breach.

 

The Company’s Employees May Engage In Misconduct Or Improper Activities

 

The Company, like any business, is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with laws or regulations, provide accurate information to regulators, comply with applicable standards, report financial information or data accurately or disclose unauthorized activities to the Company. In particular, sales, marketing and business arrangements are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve improper or illegal activities which could result in regulatory sanctions and serious harm to the Company’s reputation.

 

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Limitation On Director Liability

 

The Company may provide for the indemnification of directors to the fullest extent permitted by law and, to the extent permitted by such law, eliminate or limit the personal liability of directors to the Company and its shareholders for monetary damages for certain breaches of fiduciary duty. Such indemnification may be available for liabilities arising in connection with this Offering. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

Risks Relating to This Offering and Investment

 

The Company May Undertake Additional Equity or Debt Financing That May Dilute The Shares In This Offering

 

The Company may undertake further equity or debt financing, which may be dilutive to existing shareholders, including you, or result in an issuance of securities whose rights, preferences and privileges are senior to those of existing shareholders, including you, and also reducing the value of Shares subscribed for under this Offering.

 

An Investment In The Shares Is Speculative And There Can Be No Assurance Of Any Return On Any Such Investment

 

An investment in the Company’s Shares is speculative, and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.

 

The Shares Are Offered On A “Best Efforts” Basis And The Company May Not Raise The Maximum Amount Being Offered

 

Since the Company is offering the Shares on a “best efforts” basis, there is no assurance that the Company will sell enough Shares to meet its capital needs. If you purchase Shares in this Offering, you will do so without any assurance that the Company will raise enough money to satisfy the full Use Of Proceeds To Issuer which the Company has outlined in this Offering Circular or to meet the Company’s working capital needs.

 

If The Maximum Offering Is Not Raised, It May Increase The Amount Of Long-Term Debt Or The Amount Of Additional Equity It Needs To Raise

 

There is no assurance that the maximum amount of Shares in this offering will be sold. If the maximum Offering amount is not sold, we may need to incur additional debt or raise additional equity in order to finance our operations. Increasing the amount of debt will increase our debt service obligations and make less cash available for distribution to our shareholders. Increasing the amount of additional equity that we will have to seek in the future will further dilute those investors participating in this Offering.

 

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We Have Not Paid Dividends In The Past And Do Not Expect To Pay Dividends In The Future, So Any Return On Investment May Be Limited To The Value Of Our Shares

 

We have never paid cash dividends on our Shares and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our Shares will depend on earnings, financial condition and other business and economic factors affecting it at such time that management may consider relevant. If we do not pay dividends, our Shares may be less valuable because a return on your investment will only occur if its stock price appreciates.

 

The Company May Not Be Able To Obtain Additional Financing

 

Even if the Company is successful in selling the maximum number of Shares in the Offering, the Company may require additional funds to continue and grow its business. The Company may not be able to obtain additional financing as needed, on acceptable terms, or at all, which would force the Company to delay its plans for growth and implementation of its strategy which could seriously harm its business, financial condition and results of operations. If the Company needs additional funds, the Company may seek to obtain them primarily through additional equity or debt financings. Those additional financings could result in dilution to the Company’s current shareholders and to you if you invest in this Offering.

 

The Offering Price Has Been Arbitrary Determined

 

The offering price of the Shares has been arbitrarily established by the Company based upon its present and anticipated financing needs and bears no relationship to the Company’s present financial condition, assets, book value, projected earnings, or any other generally accepted valuation criteria. The offering price of the Shares may not be indicative of the value of the Shares or the Company, now or in the future.

 

The Management Of The Company Has Broad Discretion In Application of Proceeds

 

The management of the Company has broad discretion to adjust the application and allocation of the net proceeds of this offering in order to address changed circumstances and opportunities. As a result of the foregoing, the success of the Company will be substantially dependent upon the discretion and judgment of the management of the Company with respect to the application and allocation of the net proceeds hereof.

 

An Investment in the Company’s Shares Could Result In A Loss of Your Entire Investment

 

An investment in the Company’s Shares offered in this Offering involves a high degree of risk and you should not purchase the Shares if you cannot afford the loss of your entire investment. You may not be able to liquidate your investment for any reason in the near future.

 

There Is No Assurance The Company Will Be Able To Pay Distributions To Shareholders

 

While the Company may choose to pay distributions at some point in the future to its shareholders, there can be no assurance that cash flow and profits will allow such distributions to ever be made.

 

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There a Limited Public Trading Market for the Company’s Shares

 

At present, the Company’s common stock is quoted on OTCMarkets.com under the trading symbol “GMEV.” Our common stock experiences fluctuation in volume and trading prices. There is no consistent and active trading market for the Company’s securities and the Company cannot assure that a consistent trading market will develop. OTCMarkets.com provides significantly less liquidity than a securities exchange such as the NASDAQ Stock Market. Prices for securities traded solely on OTCMarkets.com may be difficult to obtain and holders of the Shares and the Company’s securities may be unable to resell their securities at or near their original price or at any price. In any event, except to the extent that investors’ Shares may be registered on a Form S-1 Registration Statement with the Securities and Exchange Commission in the future, there is absolutely no assurance that Shares could be sold under Rule 144 or otherwise until the Company becomes a current public reporting company with the Securities and Exchange Commission and otherwise is current in the Company’s business, financial and management information reporting, and applicable holding periods have been satisfied.

 

As an issuer of a “penny stock,” the protection provided by the federal securities laws relating to forward-looking statements does not apply to us.

 

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.

 

Our issuance of additional shares of Common Stock, or options or warrants to purchase those shares, would dilute your proportionate ownership and voting rights.

 

We are entitled under our articles of incorporation to issue up to 10,000,000,000 shares of common stock. We have issued and outstanding, as of May 15, 2021, 1,486,207,485 shares of common stock. In addition, we are entitled under our Articles of Incorporation to issue “blank check” preferred stock. Our board may generally issue shares of common stock, preferred stock, options, or warrants to purchase those shares, without further approval by our shareholders based upon such factors as our board of directors may deem relevant at that time. It is likely that we will be required to issue a large amount of additional securities to raise capital to further our development. It is also likely that we will issue a large amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under our stock plans. We cannot give you any assurance that we will not issue additional shares of common stock, or options or warrants to purchase those shares, under circumstances we may deem appropriate at the time.

 

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The Company Has Made Assumptions In Its Projections and In Forward-Looking Statements That May Not Be Accurate

 

The discussions and information in this Offering Circular may contain both historical and “forward- looking statements” which can be identified by the use of forward-looking terminology including the terms “believes,” “anticipates,” “continues,” “expects,” “intends,” “may,” “will,” “would,” “should,” or, in each case, their negative or other variations or comparable terminology. You should not place undue reliance on forward-looking statements. These forward-looking statements include matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Offering Circular, based on past trends or activities, should not be taken as a representation that such trends or activities will continue in the future. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company’s business, please be advised that the Company’s actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results to differ from its current expectations. The differences may be caused by a variety of factors, including but not limited to adverse economic conditions, lack of market acceptance, reduction of consumer demand, unexpected costs and operating deficits, lower sales and revenues than forecast, default on leases or other indebtedness, loss of suppliers, loss of supply, loss of distribution and service contracts, price increases for capital, supplies and materials, inadequate capital, inability to raise capital or financing, failure to obtain customers, loss of customers and failure to obtain new customers, the risk of litigation and administrative proceedings involving the Company or its employees, loss of government licenses and permits or failure to obtain them, higher than anticipated labor costs, the possible acquisition of new businesses or products that result in operating losses or that do not perform as anticipated, resulting in unanticipated losses, the possible fluctuation and volatility of the Company’s operating results and financial condition, adverse publicity and news coverage, inability to carry out marketing and sales plans, loss of key executives, changes in interest rates, inflationary factors, and other specific risks that may be referred to in this Offering Circular or in other reports issued by us or by third-party publishers.

 

You Should Be Aware Of The Long-Term Nature Of This Investment

 

Because the Shares have not been registered under the Securities Act or under the securities laws of any state or non-United States jurisdiction, the Shares may have certain transfer restrictions. It is not currently contemplated that registration under the Securities Act or other securities laws will be effected. Limitations on the transfer of the Shares may also adversely affect the price that you might be able to obtain for the Shares in a private sale. You should be aware of the long-term nature of your investment in the Company. You will be required to represent that you are purchasing the Securities for your own account, for investment purposes and not with a view to resale or distribution thereof.

 

Neither The Offering Nor The Securities Have Been Registered Under Federal Or State Securities Laws, Leading To An Absence Of Certain Regulation Applicable To The Company

 

The Company also has relied on exemptions from securities registration requirements under applicable state and federal securities laws. Investors in the Company, therefore, will not receive any of the benefits that such registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms of this Offering on their own or in conjunction with their personal advisors.

 

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The Shares In This Offering Have No Protective Provisions.

 

The Shares in this Offering have no protective provisions. As such, you will not be afforded protection, by any provision of the Shares or as a Shareholder in the event of a transaction that may adversely affect you, including a reorganization, restructuring, merger or other similar transaction involving the Company. If there is a ‘liquidation event’ or ‘change of control’ the Shares being offered do not provide you with any protection. In addition, there are no provisions attached to the Shares in the Offering that would permit you to require the Company to repurchase the Shares in the event of a takeover, recapitalization or similar transaction.

 

You Will Not Have Significant Influence On The Management Of The Company

 

Substantially all decisions with respect to the management of the Company will be made exclusively by the officers, directors, managers or employees of the Company. You will have a very limited ability, if at all, to vote on issues of Company management and will not have the right or power to take part in the management of the Company and will not be represented on the board of directors or by managers of the Company. Accordingly, no person should purchase Shares unless he or she is willing to entrust all aspects of management to the Company.

 

No Guarantee of Return on Investment

 

There is no assurance that you will realize a return on your investment or that you will not lose your entire investment. For this reason, you should read this Form 1-A, Offering Circular and all exhibits and referenced materials carefully and should consult with your own attorney and business advisor prior to making any investment decision.

 

We may become involved in securities class action litigation that could divert management’s attention and harm our business.

 

The stock market in general, and the shares of early stage companies in particular, have experienced extreme price and volume fluctuations. These fluctuations have often been unrelated or disproportionate to the operating performance of the companies involved. If these fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. If the market price or volume of our shares suffers extreme fluctuations, then we may become involved in this type of litigation, which would be expensive and divert management’s attention and resources from managing our business.

 

As a public company, we may also from time to time make forward-looking statements about future operating results and provide some financial guidance to the public markets. Our management has limited experience as a management team in a public company and as a result, projections may not be made timely or set at expected performance levels and could materially affect the price of our shares. Any failure to meet published forward-looking statements that adversely affect the stock price could result in losses to investors, stockholder lawsuits or other litigation, sanctions or restrictions issued by the SEC.

 

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We are classified as an “emerging growth company” as well as a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors.

 

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

 

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act.

 

We could remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $1.07 billion as of the last business day of our most recently completed second fiscal quarter, and (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

 

Notwithstanding the above, we are also currently a “smaller reporting company.” Specifically, similar to “emerging growth companies,” “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze our results of operations and financial prospects.

 

Because directors and officers currently and for the foreseeable future will continue to control GME Innotainment, Inc., it is not likely that you will be able to elect directors or have any say in the policies of GME Innotainment, Inc.

 

Our shareholders are not entitled to cumulative voting rights. Consequently, the election of directors and all other matters requiring shareholder approval will be decided by majority vote. The directors, officers and affiliates of GME Innotainment, Inc., beneficially own a majority of our outstanding common stock voting rights. Due to such significant ownership position held by our insiders, new investors may not be able to affect a change in our business or management, and therefore, shareholders would have no recourse as a result of decisions made by management.

 

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In addition, sales of significant amounts of shares held by our directors, officers or affiliates, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

 

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our Securities. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors.” 

 

IN ADDITION TO THE RISKS LISTED ABOVE, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY THE MANAGEMENT. IT IS NOT POSSIBLE TO FORESEE ALL RISKS THAT MAY AFFECT THE COMPANY. MOREOVER, THE COMPANY CANNOT PREDICT WHETHER THE COMPANY WILL SUCCESSFULLY EFFECTUATE THE COMPANY’S CURRENT BUSINESS PLAN. EACH PROSPECTIVE PURCHASER IS ENCOURAGED TO CAREFULLY ANALYZE THE RISKS AND MERITS OF AN INVESTMENT IN THE SECURITIES AND SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH ANALYSIS, AMONG OTHER FACTORS, THE RISK FACTORS

 

Statements Regarding Forward-looking Statements

 


 

This Disclosure Statement contains various "forward-looking statements." You can identify forward-looking statements by the use of forward-looking terminology such as "believes," "expects," "may," "will," "would," "could," “should," "seeks," "approximately," "intends," "plans," "projects," "estimates" or "anticipates" or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements may be impacted by a number of risks and uncertainties.

 

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our Securities. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors.”

 

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USE OF PROCEEDS

 

If we sell all of the shares being offered, our net proceeds (after our estimated offering expenses) will be $9,977,000. We will use these net proceeds for the following:

 

Shares Offered(% Sold)  10,000,000,000
Shares Sold
(100%)
  7,500,000,000
Shares Sold
(75%)
 

5,000,000,000

Shares Sold

(50%)

  2,500,000,000
Shares Sold
(25%)
Gross Offering Proceeds  $10,000,000   $7,500,000   $5,000,000   $2,500,000 
Approximate Offering Expenses (1)                    
Misc. Expenses   3,000    3,000    3,000    3,000 
Legal and Accounting   20,000    20,000    20,000    20,000 
Total Offering Expenses   23,000    23,000    23,000    23,000 
Total Net Offering Proceeds   9,977,000    7,477,000    4,977,000    2,477,000 
Principal Uses of Net Proceeds (2)                    
Employee/Officers & Directors / Independent Contractor Compensation   660,000    660,000    660,000    660,000 
Marketing   250,000    150,000    100,000    75,000 
Office Supplies   5,000    5,000    5,000    5,000 
Website   30,000    30,000    30,000    30,000 
Website Ongoing Development   20,000    20,000    20,000    20,000 
Travel   10,000    10,000    10,000    10,000 
Purchase of Water Filtration Units   1,125,000    750,000    600,000    375,000 
Purchase of vertical indoor growing units   7,777,000    5,752,000    3,452,000    1,202,000 
Legal, IP & Compliance   100,000    100,000    100,000    100,000 
Total Principal Uses of Net Proceeds   9,977,000    7,477,000    4,977,000    2.,477,000 
Amount Unallocated   -0-    -0-    -0-    -0- 

  

The precise amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors.

 

As indicated in the table above, if we sell only 75%, or 50%, or 10% of the shares offered for sale in this offering, we would expect to use the resulting net proceeds for the same purposes as we would use the net proceeds from a sale of 100% of the shares, and in approximately the same proportions, until such time as such use of proceeds would leave us without working capital reserve. At that point we would expect to modify our use of proceeds by limiting our expansion.

 

The expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve and change. The amounts and timing of our actual expenditures, specifically with respect to working capital, may vary significantly depending on numerous factors. The precise amounts that we will devote to each of the foregoing items, and the timing of expenditures, will vary depending on numerous factors. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

 

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In the event we do not sell all of the shares being offered, we may seek additional financing from other sources in order to support the intended use of proceeds indicated above. If we secure additional equity funding, investors in this offering would be diluted. In all events, there can be no assurance that additional financing would be available to us when wanted or needed and, if available, on terms acceptable to us.

 

The Company reserves the right to change the use of proceeds set out herein based on the needs of the ongoing business of the Company and the discretion of the Company’s management. The Company may reallocate the estimated use of proceeds among the various categories or for other uses if management deems such a reallocation to be appropriate.

 

DILUTION

 


 

The term ‘dilution’ refers to the reduction (as a percentage of the aggregate Shares outstanding) that occurs for any given share of stock when additional Shares are issued. If all of the Shares in this offering are fully subscribed and sold, the Shares offered herein will constitute approximately 87% of the total Shares of stock of the Company. The Company anticipates that subsequent to this offering the Company may require additional capital and such capital may take the form of Common Stock, other stock or securities or debt convertible into stock. Such future fund raising will further dilute the percentage ownership of the Shares sold herein in the Company.

 

If you invest in our Common Stock, your interest will be diluted immediately to the extent of the difference between the offering price per share of our Common Stock and the pro forma net tangible book value per share of our Common Stock after this offering. As of the date of this Offering, the net tangible book value of the Company was approximately $(3,890,599), based on the number of Shares of Common Stock of 1,486,207,485 issued and outstanding. as of the date of this Offering Circular, that equates to a net tangible book value of approximately $(0.0027) per share of Common Stock on a pro forma basis. Net tangible book value per share consists of shareholders’ equity adjusted for the retained earnings (deficit), divided by the total number of Shares of Common Stock outstanding. The pro forma net tangible book value, assuming full subscription in this Offering, would be $.00002 per share of Common Stock.

  

Thus, if the Offering is fully subscribed, the net tangible book value per share of Common Stock owned by our current shareholders will have immediately increased by approximately $0.0032 without any additional investment on their part and the net tangible book value per Share for new investors will be immediately diluted to $0.00005 per Share. These calculations do not include the costs of the offering, and such expenses will cause further dilution.

  

The following table illustrates this per Share dilution:

 

The following table illustrates the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the shares offered for sale in this offering (after deducting estimated offering expenses of $23,000):

 

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Percentage of shares offered that are sold   100%     75%     50%     25%  
Price to the public charged for each share in this offering   $ 0.001     $ 0.001     $ 0.001     $ 0.001  
Historical net tangible book value per share as of March 31, 2021 (1)     (0.0027 )     (0. 0027 )     (0. 0027 )     (0. 0027 )
Increase in net tangible book value per share attributable to new investors in this offering (2)     .0032       .0031       .0029       .0024  
Net tangible book value per share, after this offering     .0005       .0004       .0002       0.0004  
Dilution per share to new investors   $ 0.0005     $ 0.0006     $ 0.0008     $ 0.0014  

   

  (1) Based on net tangible book value as of March 31, 2021 of $(3,890,599) and 1,486,207,485 outstanding shares of Common stock as of March 31, 2021.
     
  (2) After deducting estimated offering expenses of $23,000.

 

The following table summarizes, on a pro forma basis as of March 31, 2021 the number of shares of shares of Common Stock that would be issued, assuming the sale of all of the Common Stock offered, the total consideration paid and the average price per Common Share paid by the existing stockholders and by new investors purchasing Common Stock in the Offering, assuming sale of all 10,000,000,000 Shares of Common Stock.

 

   Existing Shareholders  Investors Purchasing Offered Shares (1)  Total (1)
Shares purchased   1,486,207,485    10,000,000    11,486,207,485 
Total consideration  $1,512,947   $10000,000.00   $11,512,947 
Average price  $0.001   $0.001   $0.001 

  

(1) Before deduction of estimated Offering expenses.

 

There is no material disparity between the price of the Shares in this Offering and the effective cash cost to officers, directors, promoters and affiliated persons for shares acquired by them in a transaction during the past year, or that they have a right to acquire.

 

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DISTRIBUTION

 

This Offering Circular is part of an Offering Statement that we filed with the SEC, using a continuous offering process. Periodically, as we have material developments, we will provide an Offering Circular supplement that may add, update or change information contained in this Offering Circular. Any statement that we make in this Offering Circular will be modified or superseded by any inconsistent statement made by us in a subsequent Offering Circular supplement. The Offering Statement we filed with the SEC includes exhibits that provide more detailed descriptions of the matters discussed in this Offering Circular. You should read this Offering Circular and the related exhibits filed with the SEC and any Offering Circular supplement, together with additional information contained in our annual reports, semi-annual reports and other reports and information statements that we will file periodically with the SEC. See the section entitled “Additional Information” below for more details.

 

Pricing of the Offering

 

Prior to the Offering, there has been a limited public market for the Offered Shares. The public offering price was determined by the Company. The principal factors considered in determining the public offering price include:

 

  the information set forth in this Offering Circular and otherwise available;
  our history and prospects and the history of and prospects for the industry in which we compete;
  our past and present financial performance;
  our prospects for future earnings and the present state of our development;
  the general condition of the securities markets at the time of this Offering;
  the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and
  other factors deemed relevant by us.

 

Offering Period and Expiration Date

 

This Offering will start on or after the Qualification Date and will terminate at the Company’s discretion or, on the Termination Date.

 

Procedures for Subscribing

 

When you decide to subscribe for Offered Shares in this Offering, you should:

 

Contact us via phone or email.

 

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  1. Electronically receive, review, execute and deliver to us a subscription agreement; and
     
  2. Deliver funds directly by check wire or electronic funds transfer via ACH to the specified account maintained by us.

 

Any potential investor will have ample time to review the subscription agreement, along with their counsel, prior to making any final investment decision. We shall only deliver such subscription agreement upon request after a potential investor has had ample opportunity to review this Offering Circular.

 

Right to Reject Subscriptions. After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to the escrow account, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.

 

Acceptance of Subscriptions. Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the shares subscribed at closing. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.

 

No Escrow

 

The proceeds of this offering will not be placed into an escrow account. We will offer our Common Stock on a best effort’s basis primarily through an online platform. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds at Management’s discretion.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of our operations together with our consolidated financial statements and the notes thereto appearing elsewhere in this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations, whose actual outcomes involve risks and uncertainties. Actual results and the timing of events may differ materially from those stated in or implied by these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors”, “Cautionary Statement regarding Forward-Looking Statements” and elsewhere in this Offering Circular. Please see the notes to our Financial Statements for information about our Critical Accounting Policies and Recently Issued Accounting Pronouncements.

 

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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.

 

Results for the Year Ended December 30, 2019 through December 31, 2020

 

Working Capital  For the period ended March 31,
2021
$
  December 31, 2020
$
Cash   32,657    4,468 
Current Assets   108,985    80,796 
Current Liabilities   2,015,232    1,300,542 
Working Capital (Deficit)   (1,906,247)   (1,219,746)

  

Cash Flows  For the year ended December 31,
2020
$
  December 31, 2019
$
Cash Flows from (used in) Operating Activities   (237,274)   (20,094)
Cash Flows from (used in) Investing Activities        
Cash Flows from (used in) Financing Activities   241,728    10,000 
Net Increase (decrease) in Cash During Period   4,454    (10,094)

  

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Operating Revenues

 

Revenues were $- and $-, for the years ended December 31, 2020 and December 31, 2019, respectively. 

 

Cost of Revenues

 

Cost of revenues was $- and $-, for the years ended December 31, 2020 and December 31, 2019, respectively. 

 

Gross Profit

 

Gross profit was $- and $-, for the years ended December 31, 2020 and December 31, 2019, respectively. 

 

General and Administrative Expenses

 

General and Administrative expenses are comprised of the following:

 

   2020  2019  Difference
          
Water purification  $202,494   $61,289   $141,205 
Agriculture   510,000    114,952    395,048 
Total  $712,494   $186,241   $536,253 

 

The increased level of expenses is due to the following:

 

Water purification- Accrual for back salaries

 

Agriculture- the increase in expenses were due to increased consulting expenses as the company is expanding upon its Aeropod product.

 

Other Income (Expense)

 

General and Administrative expenses are comprised of the following:

 

   2020  2019  Difference
          
Gain on extinguishment of debt  $4,485,281   $   $4,485,281 
Interest expense   287,928    (772.857)   1,050,785 
Financing fee penalty       (730,000)   730,000 
Other   (28,332)   (5,892)   (22,440)
Total  $4,743,878   $(1,508,749)  $6,252,627 

 

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Net Loss

 

Our net income for the year ended December 31, 2020 was $4,235,383) compared with a net loss of $(1,649,009) for the year ended December 31, 2020.

 

Liquidity and Capital Resources

 

The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by related and third parties through capital investment and borrowing of funds.

 

At March 31, 2021, the Company had total current assets of $108,985 compared to $80,796 at December 31, 2020.

 

At March 31, 2021, the Company had total current liabilities of $2,015,232 compared to $1,300,542 at December 31, 2020. Current liabilities consisted primarily of the accrued expenses, due to related party, settlement reserves and notes payable to a third party. The decrease in our current liabilities was attributed to the gain on extinguishment of debt.

 

We had negative working capital of $(1,906,247) as of March 31, 2021 compared to a negative working capital of $(1,219,746) as of December 31, 2020.

 

Cashflow from Operating Activities

 

During the year ended December 31, 2019, cash provided by (used in) operating activities was $(237,274) compared to $(20,094) for the year ended December 31, 2020. The increase in the amounts of cash used in operating activities was primarily due to expenses for the agriculture business.

 

Cashflow from Investing Activities

 

During the year ended December 31, 2019, cash provided by (used in) investing activities was $nil compared to $nil for the year ended December 31, 2020.

 

Cashflow from Financing Activities

 

During the year ended December 31, 2020, cash provided by (used in) financing activity was $241,7280 compared to $10,000 provided during the year ended December 31, 2019.

 

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Extinguishment of debt due to Statute of Limitations expiration and reconciliation of balances

 

On April 23, 2013, the Company executed a convertible promissory note with Evolution Capital Fund I, LP (“Evolution Capital Fund”) for $50,000. The note has a maturity date of January 22, 2014. On March 26, 2020, the Company received an opinion from its Legal Counsel that the Statute of Limitations in regard to this indebtedness had expired, and as such the Company was no longer legally obligated to pay the amounts owed. As of December 31, 2019, the Company had accrued a total indebtedness to Evolution Capital Fund of $4,500,981, comprised of a note balance of $2,843,746 and accrued interest of $1,658,235. The entire balance was written off in the quarter ended March 31, 2020, and a related gain on extinguishment of debt was recorded as well. In addition, the Company reviewed its other outstanding note with the Evolution Group and determined that $39,000 of penalty had been accrued incorrectly. Also, after a reconciliation of its outstanding indebtedness, it had been determined that a $30,000 note to Leslie Kessler was no longer outstanding. As such the total gain on extinguishment and reconciliation of balances was $4,485.281.

 

Issuance of Shares under the Liabilities Purchase Agreement

 

Through March 31, 2021, the Company issued 741,467,327 shares of common stock to retire $728,412 of liabilities under the Liabilities Purchase Agreement:

 

As of May 31, 2020, there were 1,486,207,485 shares of common stock issued and outstanding.

  

Going Concern

 

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive business activities. For these reasons, we have stated in our financial statements that there is substantial doubt that we will be able to continue as a going concern without further financing.

 

The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs for the next fiscal year and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. As of March 31, 2021, the Company total liabilities of $4,090,715, and if the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

Future Financings.

 

We will continue to rely on equity sales of the Company’s common shares in order to continue to fund business operations. Issuances of additional shares will result in dilution to existing shareholders. There is no assurance that the Company will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our business plan of selling our water filtration systems, and operating our subsidiary Foundation Farms and selling the produce therefrom.

 

Since inception, we have financed our cash flow requirements through issuance of common stock and loans to third parties. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of revenues. Additionally, we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. In the future we will need to generate sufficient revenues from sales in order to eliminate or reduce the need to sell additional stock or obtain additional loans. There can be no assurance we will be successful in raising the necessary funds to execute our business plan.

 

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We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth.

 

To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade our business model and website, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

 

Goodwill Impairment

 

We are required to assess our goodwill for impairment at least annually for each reporting unit that carries goodwill. We may elect to first do a qualitative assessment to determine whether it is more likely than not that a reporting unit’s fair value is in excess of its carrying value. If the qualitative assessment concludes that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment is performed. If the fair value is determined to be less than its carrying value, we record goodwill impairment equal to the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

 

Critical Accounting Policies.

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

Management regularly evaluates the accounting policies and estimates that are used to prepare the financial statements. A complete summary of these policies is included in Note 1 and Note 2 of the Company’s unaudited financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

Off-Balance Sheet Arrangements

 

We have no significant 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 stockholders.

 

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Recently Issued Accounting Pronouncements

 

The Company has implemented all new 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.

 

Quantitative and Qualitative Disclosures about Market Risk

 

In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.

 

Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

  

Relaxed Ongoing Reporting Requirements

 

Upon the completion of this Offering, we expect to elect to become a public reporting company under the Exchange Act. If we elect to do so, we will be required to publicly report on an ongoing basis as an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act of 2012, which we refer to as the JOBS Act) under the reporting rules set forth under the Exchange Act. For so long as we remain an “emerging growth company”, we may take advantage of certain exemptions from various reporting requirements that are applicable to other Exchange Act reporting companies that are not “emerging growth companies”, including but not limited to:

 

  not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
    
  taking advantage of extensions of time to comply with certain new or revised financial accounting standards;
    
  being permitted to comply with reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and
    
  being exempt from the requirement to hold a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

 

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We expect to take advantage of these reporting exemptions until we are no longer an emerging growth company. We would remain an “emerging growth company” for up to five years, although if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an “emerging growth company” as of the following June 30.

 

If we elect not to become a public reporting company under the Exchange Act, we will be required to publicly report on an ongoing basis under the reporting rules set forth in Regulation A for Tier 1 issuers. The ongoing reporting requirements under Regulation A are more relaxed than for “emerging growth companies” under the Exchange Act. The differences include, but are not limited to, being required to file only an exit / termination report, rather than annual and quarterly reports.

 

In either case, we will be subject to public reporting requirements that are less rigorous than Exchange Act rules for companies that are not “emerging growth companies”, and our stockholders could receive less information than they might expect to receive from more mature public companies.

 

Summary

 

Company Overview and Plan of Operation

 

Corporate History

 

GME Innotainment, Inc. (the “Company,” “we,” “us,” “our,” or “GMEV”) was incorporated in Florida on July 8, 1983 and adopted the current name on July 8, 2015. Prior to December 1, 2015, the Company owned twenty-one subsidiaries. On December 1, 2015, the Company entered into an agreement selling all assets and liabilities.

 

On March 29, 2016, Lisa Demmons acquired 18,755,932 shares of stock from Kwong Kwan Yin Roy for a promissory note in the amount of $25,000. Based on 26,433,094 outstanding shares of common stock, this transaction resulted in Ms. Demmons having a 65.97% of outstanding shares and voting rights.

 

On March 29, 2016, Kwong Kwan Yin Roy resigned as Chief Executive Officer, Chief Financial Officer, and Director.

 

On March 29, 2016, a majority voting block of shareholders appointed and elected Lisa Demmons as Chief Executive Officer and Director, respectively. Before becoming GME’s CEO, Ms. Demmons, who is 47 years old, worked as an attorney in Salt Lake City, Utah. In 1998, Ms. Demmons earned her Juris Doctor from Willamette University. In 2000, Ms. Demmons earned a master’s degree in International Management from ASU’s Thunderbird School of Global Management. 1993, Ms. Demmons received her bachelor’s degree from the University of Puget Sound in Political Science.

 

On May 22, 2017, GME issued 25,000,000 shares Lisa Demmons as partial compensation for her acting as Chief Executive Officer and Director. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.

 

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On July 10, 2017, Lisa Demmons resigned as Chief Executive Officer, Chief Financial Officer, and Director.

 

On July 10, 2017, a majority voting block of shareholders appointed and elected Matthew Miller as Chief Executive Officer, Chief Financial Officer and Director. Mr. Miller, 53, received his juris doctorate from the J. Reuben Clark Law school at BYU in 1993 and graduated with a B.S. and B.A. from Utah State University in 1988. He currently practices law in Provo, Utah, specializing in labor law, immigration law, estate planning and criminal defense. From 2001 to this year, he served as the president and CEO of Revolution Manufacturing, a company that developed and distributed snow sports sportswear products ranging from snowboards, binding, skis, parkas, gloves, and masks.

 

On September 17, 2017, the Company acquired 100% of the outstanding stock of Sustainable Resources, Inc. (“Sustainable”) and assumed certain debt of sustainable in exchange for a promissory note for $3,000,000, due in five years, bearing interest of 5%. Sustainable was incorporated in Delaware on April 24, 2015.

 

On September 25, 2017, in connection with the Securities Exchange Agreement, Lisa Demmons assigned 43,755,932 shares of common stock in the Company to Yves Michel. Based on the 64,629,912 shares of outstanding shares of the Company’s common stock as of August 31, 2017, this transaction resulted in Mr. Michel holding 67.7% of outstanding shares and voting rights of the Company.

 

On September 25, 2017, Matthew Miller resigned as Chief Executive Officer, Chief Financial Officer, and Director of the Company.

 

For purposes of financial reporting, we are treating Sustainable as the surviving entity and financial statements assume Sustainable had been acquired as of January 1, 2017. Sustainable is the only operating entity of the Company.

 

Acquisition of Sustainable Resources On September 25, 2017, the Company entered into a Securities Exchange Agreement with PureSafe Water Systems, Inc. (“Seller”) through which the Company purchased 100% of the outstanding common stock of Sustainable Resources Corporation, a Delaware corporation (“Sustainable”), in exchange for the issuance by the Company of a $3,000,000 non-convertible promissory note bearing a 5% per annum interest rate with a five year term. As part of the Agreement, the Company granted to Seller a twelve (12) month option to purchase up to thirty percent (30%) of the Company’s then outstanding common stock (at time of exercise of option by Seller) at a price equal to seventy five percent (75%) of the average of trading prices during the first thirty (30) days following the closing. The Agreement constitutes a tax-free exchange. Yves Michel shall be appointed to as officer and director of the Company at an annual salary of $150,000, plus a commission of 6.5% of all Gross Sales generated by him. The parties also entered into a Royalty Agreement that provides for the delivery of a five percent royalty of the gross revenue earned by Sustainable beginning on July 1, 2018. Please see our form 8-K filed on September 28, 2017 with the Securities and Exchange Commission for more detail.

 

On October 31, 2019 the Company entered into a Share Exchange Agreement by and between the Company and Foundation Farms, Corp.; wherein, the Company exchanged 100,000 shares of Series A Preferred Stock for 60% (60,000) shares of Foundation Farms, Corp., thereby, becoming a 60% owned subsidiary of the Company. Foundation Farms, Corp., is a vertical aeroponics corporation that is going to build and operate urban farms in and near large urban centers.

 

On November 15, 2019, the Company amended its articles of incorporation to authorize one million (1,000,000) shares of its authorized stock as Preferred Stock and designated one hundred thousand (100,000) of those shares as Series A Preferred Shares.

 

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The shares of Series A Preferred Stock have a par value of $0.001 and each share is convertible into 3,621 shares of common stock (the “Conversion Ratio”). The holders of shares of the Series A Preferred Stock shall be entitled to receive dividends out of any assets legally available, to the extent permitted by Florida law, at an annual rate equal to 8% of the Series A Liquidation Value of such shares of Series A Preferred Stock, and shall accrue from the date of issuance of such shares of Series A Preferred Stock, payable quarterly in common stock valued at the closing trade price per share on the last trading day of the calendar quarter.

 

The holders of Series A Preferred Stock rank senior to the Company’s common stock and will vote together with the holders of the Company’s common stock on an as-converted basis on each matter submitted to a vote of holders of common stock (whether at a meeting of shareholders or by written consent). In any such vote, the number of votes that may be cast by a holder shall be equal to one (1) vote for each share of common stock into which such holder’s outstanding shares of Series A Preferred Stock may be converted. Each holder shall be entitled to notice of all shareholder meetings (or requests for written consent) in accordance with the Company’s bylaws. As a result of the issuance of the Series A Preferred Stock, there was a change in control of the Company as of the date of consummation of the Merger.

 

On January 10, 2020, the Company amended its articles of incorporation to increase the authorized amount of common shares from 374,000,000 to 1,999,000,000 common shares.

 

The Company plans on producing revenue from the sales of our water filtration units, organic and sustainably grown produce through our vertical urban farms. Our urban farms will utilize Vertical indoor growing units, which are vertical grow columns that are designed for the production of aeroponic leafy greens, vegetables, micro-greens, fruiting plants, decorative / edible flowers and herbs. Our urban farms can also be adapted for a variety of other uses such as horticulture research, medicinal plant production, pharmaceutical plant production, and plant cloning.

 

Overview

 

Sustainable Resources Corporation

 

Sustainable Resources holds licenses to produce a unique patented mobile and stationary water filtration system that was designed to be both an emergency response water filtration system, as well as, a permanent solution where drinkable water is not available for Government entities, companies and organizations. The self-contained and self-powered water filtration system can be mobilized to a site and within 30 minutes will produce drinking quality water from flood waters, surface and fresh water, desalinating ocean and/or brackish waters. This mid-range, 30,000 gallon per day system has also found a huge application in known contaminated water sources where water clarity, water borne disease and high bacteria content exist, and where mobile, self-contained systems are applicable to bring clean water to the population wherever they are located. The system can dispense water in bulk, by container or in half liter plastic bags to suit the situation.

 

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Foundation Farms, Corp.

 

Foundation Farms, Corp., plans to engage in aeroponic urban farming, employing the use of our Vertical indoor growing units and related technology for organic farming that is based on sustainable agriculture with non-genetically modified organisms, as well as providing locally sourced fresh produce as our core priority. With our Vertical indoor growing units small footprint, we can set them up in urban settings and be able to meet urban fresh food supply challenges.

 

Urban agriculture can be defined as growing fruits, herbs, and vegetables in cities, a process that is accompanied by many other complementary activities such as processing and distributing food, collecting and reusing food waste, water, and educating, organizing, and employing local residents. Urban agriculture, a new and emerging industry, is integrated in individual urban communities and neighborhoods by making use of underutilized indoor and outdoor space.

 

Through the use of our Vertical indoor growing units systems we will create a local sustainable agriculture that will produce food, or other plant products using farming techniques that protect the environment, public health, and our communities.

 

Sustainable Resources – License Agreement

 

On March 31, 2016, the Company entered into a License Agreement with Puresafe Water Systems, Inc., for the perpetual, exclusive worldwide basis for certain patents, products, trade secrets and technologies related to the design and manufacture of mobile water purification systems (“SR Agreement”). The Licensed Intellectual Property (“Licensed Intellectual Property”) means (i) the licensed patents, (ii) all trade secrets, proprietary information and other intellectual property currently developed or currently under development or developed in the future by Puresafef Water Systems, Inc. and/or any of its subsidiaries that it currently owns or has transferable rights to including, without limitation, in each instance, all specifications, engineering drawings, schematics, bills of materials, software source code and algorithms, wiring diagrams, test procedures, assembly drawings, and other documents or files that would be required to manufacture, test and/or improve such products and services with no limitations (collectively, the “Proprietary Information”), and (iii) the Puresafe Water Systems, Inc., Improvements. The terms and conditions of this Agreement, the term of the license granted hereunder (the “License Term”) shall expire at the end of the term of the last to expire licensed patent or unless terminated pursuant to the SR Agreement. The Company shall pay Puresafe Water Systems, Inc., a royalty equal to three percent (3%) of net sales with respect to royalty bearing products sold with respect to which the Company has received final payment during each calendar quarter after the date hereof, such royalty to be payable in accordance with the terms of this SR Agreement.

 

Patent

 

As per the SR Agreement we are able to use of U.S. Patent No. 8,900,459 B2, an invention entitled “Versatile Water Purification Systems and Methods,” which was issued on December 2, 2014 (the “Patent”). We will use the Patent process to purify contaminated water through a multimedia filter to produce filtered water, into a plurality of reverse osmosis columns to produce osmosis water, and into a buffer tank. The SR Agreement permits the Company to use the Patent, as per the terms of the SR Agreement.

 

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Termination

 

The SR Agreement may be terminated prior to the end of the license term upon the mutual written consent of the Company and Puresafe Water Systems, Inc.

 

The foregoing summary description of the terms of the SR Agreement may not contain all information that is of interest to the reader. The summary description of the SR Agreement also contains customary events of termination and cancellation. For further information regarding the terms and conditions of the SR Agreement, this reference is made to such agreement, which are filed as Exhibit 6.0 hereto and is incorporated herein by this reference.

 

Foundation Farms -- License Purchase Agreement

 

On October 10, 2019, the Company and Grow Solutions Holdings, Inc. a Nevada Company (“Grow Solutions”), entered into the Pure Roots Modular Grow Units & License Purchase Agreement (“LP Agreement”).

 

The Company obtained from Grow Solutions a vertical indoor grow modular unit and license in order to achieve maximum growing / operating efficiency, along with growing expertise, brand use and knowledge transfer (in regards to any advancements in growing techniques and nutritional formulas). After the first Urban Farm is operational for a period of three (3) months, The Company will commit to purchasing six more Urban Farms (each farm consisting of 3 Modular grow units for the purpose of growing of non-cannabis plants and 1 modular pre/post processing unit) on a three month after operation interval and that the Company will chose the locations within the Company’s geographic region (defined in LP Agreement) for installation for the purchase price of each Urban Farm is as described in the Purchase Order & License Acquisition Fee section.

 

Training.

 

Grow Solutions shall provide, at no additional charge, the Company with up to ten (10) in person training (8 hr day) sessions (that do not have to be used continuously) that will be sufficient to enable the Company’s relevant staff to use, clean, repair, troubleshoot, understand, and suggest ways to help further develop and modify the Urban Farm Units. Each purchase of an Urban Farm will come with the Training Period, as aforementioned.

 
Purchase Order & License Acquisition Fee.

 

The aggregate consideration for the Purchase of the modular grow units, License, the available Maintenance agreement, and other rights and benefits granted to the Company (“Urban Farm”) in this LP Agreement shall be One Million Five Hundred Thousand Canadian Dollars (CDN $1,500,000) (the “Pure Roots Urban Farm License Acquisition Fee”). Because, the Company is purchasing the Urban Farm, Grow Solutions shall wave the Geographical Exclusivity License Fee of two million dollars ($2,000,000) and grant the Company the license to the Geographic Region in order to allow the Company to expand their operations in the most expedient manner. The payment by the Company shall be made in the following manner:

 

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  a.$25,000 as a refundable deposit, at the signing of this LP Agreement, in order for Grow Solutions to release the purchase order to the Company (refundable until the $300,000 deposit has been transferred);
    
  b.$50,000 as a refundable deposit three days after receiving the Purchase Order, in order for Grow Solutions to release the operation and training manuals, schedules, etc. (refundable until the $300,000 deposit has been transferred);
    
  c.The Company will visit the headquarters and manufacturing site in Saskatoon, SK.
    
  d.The Company will have their legal and accounting professionals approve the final documentation
    
  e.$300,000 will then be deposited (non-refundable) for the purchase of the Urban Farm, after the License Agreement and Purchase Agreement have been finalized;
    
  f.$200,000 will then be deposited (non-refundable) upon 50% completion of the building of the Urban Farm;
    
  g.$175,000 remaining, will be deposited (non-refundable) upon the delivery and full set-up of the Urban Farm at the Company site;
    
  h.The Remaining $750,000 (of the initial $1,500,000) with 8% interest per annum will be paid to Grow Solutions over the following five (5) year period, paid monthly from the Company to The Company, beginning three months after first delivery of the Urban Farm, and after satisfaction of the conditions set forth in Section 5.2. After the full Pure Roots Urban Farm & License Acquisition Fee has been paid the Company will then grant Urban Farms Corp a 10% royalty on Gross Revenue in perpetuity (lifetime royalties) of the operation of those Pure Roots Urban Farms by the Company.

 

Following the first purchase of the Urban Farm, the Company will commit to purchase Six (6) more Urban Farms for a purchase price of $1,500,000 each in the first two years of this LP Agreement in order to maintain exclusivity over the Geographic Region. If the Company does not purchase Six (6) Urban Farms over the first two years of this LP Agreement then the exclusivity of the Geographic Region is waved and becomes a right of first refusal on all projects within the Geographic Region for an additional 12 months after the exclusivity is waved, where the Company would have to match any offers in order to gain use of the proposed purchase.

 

The Company will commit to purchasing each of the six (6) Urban Farms after three (3) months of operation of the last Urban Farm to be purchased. Example, if Urban Farm 1 is operational February 28, 2020, the three-month period begins upon that operation date (February 28, 2020) and at the end of that three-month period May 31, 2020, the Company would be required to have purchased their next Urban Farm in order to maintain exclusivity. During the first two (2) years the Company may catch up and complete the Six (6) Urban Farm purchases by the end of the two (2) year period in order to maintain exclusivity.

 

The Company may also pay the $750,000 financed portion of the purchase price any time before the five (5) year period and not be liable for the interest payments that would have occurred had the $750,000 financed portion been outstanding for the total five (5) year period. The Company’s obligation to pay the Pure Roots Urban Farm License Acquisition Fee is conditioned on the closing in full of the transactions contemplated by the proposed Purchase and Manufacturing Agreements. The Pure Roots Urban Farm License Acquisition Fee will be paid exclusively as per this LP Agreement. As per the LP Agreement there will also be a royalty of 10% of the gross revenue in perpetuity, in respect of all Company operations using the Urban Farm and/or brand and products designed by the Grow Solutions, if any; after the full purchase price of $1,500,000 has been paid, for as long as the Company operates the Urban Farm.

 

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Termination

 

If any of the Purchase Agreements are terminated, or if the transactions contemplated by this LP Agreement are not closed, then this Agreement shall also terminate at the same time. For the avoidance of doubt, the respective obligations of each Party to consummate the transactions contemplated by this Agreement shall be subject to the express condition that closings shall be conducted with respect to the transactions contemplated by the Purchase Agreements.

 

The foregoing summary description of the terms of the LP Agreement may not contain all information that is of interest to the reader. The summary description of the LP Agreement also contains customary events of termination and cancellation. For further information regarding the terms and conditions of the LP Agreement, this reference is made to such agreement, which are filed as Exhibit 6.6 hereto and is incorporated herein by this reference.

 

Our Strategy

 

Sustainable Resources, Corporation

 

Our management understands that, to be successful, we will need to create an effective sales organization to promote our brand and product attributes through a variety of outlets and formats with clear branding messages. With this in mind, our marketing plan is based on the following key components:

 

  Strategic Alliances –. The Company will reach out and initialize strategic alliances in the water filtration and safety industries and market our products through such allegiances.
     
  Direct Marketing and Sales – The marketing and sales plan will initially focus on short term developed business opportunities where money is currently available. The sales effort will be by both direct sales, development of an international dealer distribution network, and through the assistance of sales consultants and representatives.

 

Referencing our goals, we are also redirecting the sales effort so that it will no longer predominantly rely on one sector of the economy. We will now aim to expand our product to the oil and gas sector, as well as many government and municipalities; agricultural, and industrial businesses. We are reviewing the entire approach to the product with an aim to deepen and diversify our distribution channels, lower our cost of production, improve the Company’s profit margin on sales and maintain an inventory of units for immediate sale.

 

Foundation Farms, Corp.

 

Our Company will seek to acquire unused urban land and place our vertical indoor growing units on that land making it suitable for organic, sustainable, and non-GMO farming. At the same time, we intend to launch the first of our indoor urban produce markets that will also sell smoothies made from our produce. In addition to operating our own urban farms, we may seek to license or franchise our farm products to third parties, such as restaurants, or grocery markets.

 

Foundation Farms, Corp. will bring urban farming to any city in the world and uses our Vertical indoor growing units to grow fresh, healthy foods for consumers to purchase every day. This retail concept offers multiple ways for consumers to access fresh and healthy microgreens: live greens that are still growing in compostable trays, freshly made smoothies featuring harvested-to-order microgreens, freshly cut salads that are also harvested- to-order, and juices made with our vertical indoor growing unit grown greens.

 

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The primary target market for the Foundation Farms, Corp. are the cities where fresh produce cannot be grown easily or at all due to the weather conditions (to dry, hot or cold) as well as whole food and grocery stores, markets, and suppliers to restaurants. Growing fresh and nutritious leafy greens despite all weather constrictions, the Foundation Farms, Corp. will be one of the most irreplaceable stores in the area.

 

Our Vertical indoor growing unit systems mitigate the risks associated with growing vegetables, herbs, microgreens, and fruits. Vertical indoor growing units can be designed to incorporate retail areas and be situated at ground level, on rooftops in urban areas, or in virtually any geographic location. Revenues from our Foundation Farms, Corp. we predict will mainly be generated from the sale of fresh produce, herbs, flowers, smoothies and salads.

 

Foundation Farms, Corp. – Beyond Organic / Hyper Local – Advantages

 

We intend to develop a global network of small commercial growers interested in contract growing for the Foundation Farms, Corp. brand who will be dedicated to our maxim Beyond Organic / Hyper Local . This brand will differentiate itself by growing produce locally so it is fresh, and where possible, alive to increase shelf life for both retailers and consumers year-round. The revenues of growers and retailers benefit from higher out-of-season prices. The Company is also developing the sustainableresourcescorp.com and foundationfarmscorp.com websites to process orders to promote our brand, consisting of a diversified range of organic fruits, herbs, microgreens, and vegetables. Social media assets, the website, and print-on-demand recipes will be used to promote our crops, chefs, and restaurants that use Foundation Farms, Corp. produce. Revenues will be generated from the sale of Foundation Farms, Corp. – branded material as well as distribution and processing fees. Below are some more advantages to our Foundation Farms, Corp.:

 

Supply Local Markets

 

With transportation and food distribution costs expected to rise in the foreseeable future and with consumers increasingly interested in buying locally, there is an opportunity to supply growing environments such as the Vertical indoor growing unit to commercial growers within or close to urban markets. As costs associated to food distribution increase over time, more consumers will become interested in supporting local growers.

  

Smaller Footprint

 

With increasing populations and migration to urban areas, land costs in and around urban areas are expected to continue to rise over the coming decades. Because energy and food costs and demand are expected to rise in the foreseeable future, there is an opportunity to supply commercially viable growing environments that occupy a smaller footprint that is located in or around urban areas.

 

More Productive Year-Round

 

With climate change the increased risk of droughts, floods, cold and hot temperatures will continue to impact the availability of food year-round. As a result, there is a significant opportunity to supply a growing system such as the Vertical indoor growing units that can grow produce year-round, provide more crops per year, and enjoy the profits associated with out-of-season production. In addition, there is an opportunity to supply Vertical indoor growing units to areas not traditionally used to grow fresh produce because of inhospitable climate.

 

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Healthier

 

With climate change and the consequential adverse weather conditions expected to compromise food security, there is an opportunity to supply Vertical indoor growing units that can be controlled to provide a healthier growing environment that limits exposure to pathogens, root rot, humidity, fungi, algae, and excessive cold or heat.

 

Improved Growing System

 

With the increased cost of land and need to generate profits, there is an opportunity to supply growing systems to commercial farmers that will achieve higher plant densities than currently available, allow the development of healthier roots, and that use less water and nutrient solution.

 

Lower Cost Branding Solution for Local Suppliers

 

Smaller commercial growers cannot afford to brand their produce in the same way as larger commercial growers that have sophisticated websites that incorporate social media, professional packaging designs, and access to shelf space in supermarkets. As a result, there is an opportunity to allow smaller commercial growers to market their produce under a shared brand. This eventuality is accomplished by allowing smaller commercial growers to grow under contract for the Company and to market produce directly under the Foundation Farms, Corp. brand.

 

Growing Systems

 

Most traditional greenhouse operations grow plants on horizontal surfaces; train plants to grow upwards and may suspend or stack plants in racks to form multiple layers. Because artificial lighting solutions are so costly, lights are placed high above the plants to maximize coverage. We believe that growing horizontally is not an efficient use of space.

 

Aeroponic Tower Design

 

Our vertical indoor urban farm solution that uses vertical grow towers instead of horizontal growing, will be designed and made by a third-party. These towers will allow for the ideal amount of plants within the grow environment to flourish and produce the highest quality crop in the shortest time frame possible.

 

This use of a vertical column grow system allows plants to grow on multiple layers, positions lights closer to the plants, creates an ideal micro-climate for plants, and delivers light directly to leaves. In addition, the aeroponic nutrient delivery system oxygenates plant roots, delivers optimum droplet size for nutrient uptake, and only uses 20% of water and nutrients used by hydroponic systems.

 

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Our Competition

 

Vertical Farming Competition

 

The vertical farming industry is estimated to reach $3.88 Billion by 2020, at a CAGR of 30.7% between 2015 and 2020 based on a report by MarketsandMarkets, the world’s No. 2 firm in terms of annually published premium market research reports. There are several Companies operating vertical farms that are offering licensing and franchises based on proprietary systems and production methods. Our primary competitors are AeroFarms, Growcer, CropBox, and Edenworks. The following is a description of each competitor.

 

AeroFarms®: Founded in 2004, AeroFarms is an indoor agriculture group that uses aeroponics, LED lights, and growth algorithms. Its patented aeroponics growing system is a closed-loop system that does not use natural light or soil. The company claims the system uses 95% less water than field farming and 40% less than hydroponics.

 

Growcer is a Canadian organization that has developed a horizontal stacked hydroponics system to produce their crops. This is a widely used hydroponics method simply put into a shipping container. The horizontal grow shelves are stacked on top of one another making it a task to service and harvest higher levels of growth.

 

Crop Box is very similar to the Growcer system utilizing a stacked horizontal grow method. This method limits the variety of produce that can be grown. Crop Box markets their product as a “farm inside of a shipping container.”

 

Edenworks: Founded in 2013, Edenworks is creating a scalable local food supply. It operates aquaponic ecosystems that it claims use 95% less water than conventional farms, no pesticides, and no genetically modified organisms. The Brooklyn-based company services the local Whole Foods with two varietals of microgreens.

 

Currently there are several vertical, hydroponics companies in the market. However, we believe our system is logistically affordable while still delivering a competitive harvest and offering what we believe is a significant reduction of water and energy usage compared to conventional farming methods.

 

We will be a small competitor in the industry. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do.

 

Mobile Water Filtration Competition

 

We have identified the need for providing potable drinking water during emergencies as well as a permanent solution to populations that have little mobility because of infrastructure failures and need drinking water immediately to sustain life. It is anticipated that individual Sustainable Resources Water Filtration units will be delivered by the owners to areas where the populations are clustered so that potable drinking water in disinfected portable containers can be provided in an efficient manner.

 

This is a far different market than that addressed by a large segment of the industry which has concentrated on the multi-billion-dollar municipal water treatment sector, or the small end of the marketplace for inexpensive more personal water filtration needs. The municipal solution requires significant investment for infrastructure development ( e.g., building plants and laying miles of distribution pipes). Products for residential or remote developing world markets do not offer the performance or features to meet the needs of the first response market or the needs of the underdeveloped nations of the world. In summary, although we face competition from numerous competitors, we believe the combined capability of water decontamination and delivery system of our Sustainable Resources Water Filtration unit is unique to the market.

 

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We have identified the following types of mobile water purification systems, and the companies that manufacture them, where the products are competitive with our Sustainable Resources Mobile Water Purification System.

 

There are four categories of existing water purification units:

 

  1. The first are those which are essentially very large, not very mobile, almost “fixed” installation units used primarily for long term solutions with a significant amount of lead time. Manufacturers include: GE, Siemens, and Severn Trent, all of which manufacture large containerized systems.
     
  2. The second group includes those products that are smaller, cheaper, lighter in weight, but still unable to respond quickly because of their limited purification capabilities (the unit needs to be prepared in advance for the type of contamination it will face.) Manufacturers are: Ecospheres Technology, Lenntech, Testa/Viwa and Lifekeeper. None of these systems would fall into our mobile category.
     
  3. The third group is the category made up of specialty units designed to be either much lower cost, use only green power (with the significant limitations caused by that), or meet a specialized and limited need. Manufacturers include Mobile MaxPure, Bi Pure Water and Rodi which, while they have a trailer mounted system, have no onboard power source.
     
  4. The fourth group includes those companies which have similar claims and design characteristics as our Sustainable Resources water filtration units. These manufacturers include: Global Water Group which manufactures different size systems with options which include the trailer, generator, treatment, and salinity options; Nirosoft, which manufactures systems capable of processing different sources; LifeStream, which has a soft side trailer; and Aquapura Tempest, which has different types of units depending on the source.

 

Marketing

 

Sustainable Resources Corporation.

 

Water Treatment Needs

 

Demand is driven by area water shortages where local governments or municipalities lease equipment for short or long-term durations. Demand is increased by natural emergencies such as drought, floods earthquakes, etc.

 

Target Organizations and Industries:

 

  Federal/State and Local Offices of Emergency Management
  Federal/State Department of Homeland Security
  Department of Public Works and Safety
  Hospitals and Universities
  Oil and Gas Exploration as well as Mining

 

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Foundation Farms, Corp.

 

We expect to hire sales representatives who we can train to help us sell our organically and locally grown produce to restaurants, groceries and directly to the end consumer. We also plan to attend relevant farming conferences and trade shows where we hope to meet potential strategic partners, vendors and customers. We will also market our produce through our website and social media sites. As we gain experience through these different marketing initiatives, we will make adjustments to spend more on those that we believe are most effective. Once we have demonstrated viable marketing options, we will seek to expand our business both nationally and internationally.

 

Target Markets

 

Today, an increasing number of food consumers want to know where and how their food is produced and are thus concerned about aspects such as the environmental impacts of food production, carbon footprints, and sustainability. Our Foundation Farms will appeal to a growing number of people and entities that wish to tap into this consumer market trend.

 

Governmental Regulation and Certification

 

We are not aware of any governmental regulations or approvals for any of our products or services.

 

Environmental Laws and Regulations

 

Our operations and properties are subject to laws and regulations relating to environmental protection, including those governing air emissions, water discharges and waste management, and workplace health and safety. In addition, certain of our products are regulated by the U.S. Environmental Protection Agency and comparable state regulatory agencies. For a discussion of risks related to compliance with environmental and health and safety laws and risks related to past or future releases of, or exposures to, hazardous substances, please refer to the section entitled “Risk Factors—Risks Related to Our Businesses.”

 

Seasonality

 

We do not expect any seasonality in our business.

 

Property

 

Our mailing address is 208 East 51st Street, Suite 170, New York, NY 10022. Our telephone number is (212) 508-2130.

 

Employees

 

Other than our Officers and Directors we have no full-time employees of our business or operations who are employed at will by GME Innotainment, Inc. We anticipate adding additional employees in the next 12 months, as needed. We do not feel that we would have any unmanageable difficulty in locating needed staff.

 

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Intellectual Property

 

We may rely on a combination of patent, trademark, copyright, and trade secret laws in the United States as well as confidentiality procedures and contractual provisions to protect our proprietary technology, databases, and our brand.

 

We have a policy of requiring key employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting relationship with us. Our employee agreements also require relevant employees to assign to us all rights to any inventions made or conceived during their employment with us. In addition, we have a policy of requiring individuals and entities with which we discuss potential business relationships to sign non-disclosure agreements. Our agreements with clients include confidentiality and non-disclosure provisions.

 

Legal 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. These matters may include product liability, intellectual property, employment, personal injury cause by our employees, and other general claims. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

  

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

 

As of December 31, 2019, the GME Innotainment, Inc. had no full-time employees, who were not an executive officer of the Company, and no part-time employees.

 

The following table sets forth information regarding our executive officers, directors and significant employees, including their ages as of December 31, 2019:

 

Name   Position   Age Date of Appointment   Approx. Hours Per Week
Yves R. Michel   President, CEO, CFO, Treasurer, Secretary and Director   54 September 25, 2017   50
Darcy Rai   Director   28 November 1, 2019   45
Ryan Veillet   Director   28 November 1, 2019   45

 

Yves R. Michel (54) is our current Chief Executive Officer, Chief Financial Officer and Director, Prior to that, Mr. Michel was the President and Chief Operating Officer for PureSafe™ Water Systems, Inc., as well as the President of Sustainable. Mr. Michel joined the organization in 2015 as the Director of Global Sales & Marketing and subsequently became the President and COO. He was responsible for overseeing the daily operations of the organization. Mr. Michel was also the former Commissioner of Economic Development and Workforce Housing for the County of Suffolk, New York, which is the ninth largest County in the United States that spans 900 square miles and has a population of 1.5 million people. Mr. Michel was also the Chief Executive Officer of the Brookhaven Industrial Development Agency and Deputy Director of Economic Development for the Town of Brookhaven. With more than 25 years of private sector experience, Mr. Michel was Vice President of Sales and Distribution for the Americas with REALVIZ Corporation, and also held executive positions at Hewlett-Packard, Autodesk and Silicon Graphics, Inc. Due to Mr. Michel’s broad corporate experience at all levels and his knowledge of our water filtration systems we believe that Mr. Michel an excellent choice to be our CEO, CFO and Director.

 

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Darcy Rai (28) is a Director of the Company. During 2012 through 2016, Mr. Rai achieved his Bachelor of Business Administration in Marketing Management. From 2016 - 2019, Mr. Rai began working at Urban Analytics a business analysis firm. Some of his responsibilities there include providing training and support for group and individuals in the areas of execution strategies for product demonstrations, client communications and relationship maintenance, assists in marketing communications and development. Mr. Rai also works at solving gaps in business operations through his solution-based approach; wherein, he works to identify business inefficiencies, develops efficient solutions to those inefficiencies and through the automation of tasks. Due to Mr. Rai’s experience and knowledge in business administration, training and then supporting groups of employees and his drive, the Company is very excited to have Mr. Rai join our board of directors and run our subsidiary Foundation Farms, Corp.

 

Ryan Veillet (28) is a Director of the Company. Mr. Viellet worked for Dynasty Farms until 2015. While there Mr. Veillet’s roles included plant and animal care and maintaining the farm property. From 2015 through 2019 Mr. Veillet went to the Waldorf University and obtained his bachelor’s degree, majoring in Business Management. From May 2019 through to current Mr. Viellet has operated his own consulting firm RJ Consulting, Ltd., where he provides comprehensive assistance in the areas of accounting, financial management and marketing. The Company believes that with Mr. Veillet’s business management knowledge and his work experience on a farm that he will be a terrific addition to the Company’s board of directors and operate our Foundation Farms Corp., subsidiary.

 

None of our officers or directors in the last five years has been the subject of any conviction in a criminal proceeding or named as a defendant in a pending criminal proceeding (excluding traffic violations and other minor offenses), the entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such person’s involvement in any type of business, securities, commodities, or banking activities; a finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, the Commodity Futures Trading Commission, or a state securities regulator of a violation of federal or state securities or commodities law, which finding or judgment has not been reversed, suspended, or vacated; or the entry of an order by a self-regulatory organization that permanently or temporarily barred, suspended or otherwise limited such person’s involvement in any type of business or securities activities.

 

The following encompasses the relationships amongst our Officers, Directors and beneficial shareholders. Gurminder Rai, is the sister of one of our Directors, Darcy Rai. Ryan Veillet one of our Directors, is the grandson of Sharon Branconnier who is the mother of Jolene Branconnier. Jaide Branconnier is the daughter of Jolene Branconnier and granddaughter of Sharon Branconnier, there are no other family relationships among and between our directors, officers, persons nominated or chosen by the Company to become directors or officers, or beneficial owners of more than ten percent (10%) of any class of the Company’s equity securities.

 

EXECUTIVE COMPENSATION

 

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to our named Executive Officers paid by us during the year ended December 31, 2020, in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):

 

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SUMMARY COMPENSATION TABLE

 

Name and Principal
Position
  Year  Salary
($)
  Bonus
($)
  Stock
Awards
($)
  Option
Awards
($)
  Non-Equity
Incentive Plan
Compensation
($)
  Non-
Qualified
Deferred
Compensation
Earnings
($)
  All Other
Compensation
($)
  Totals
($)
                            
Yves R. Michel, President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director   2020   $150,000    0    0    0    0    0    0   $150,000 
    2019   $150,000    0    0    0    0    0    0   $150,000 
Darcy Rai, Director   2018   $150,000    0    0    0    0    0    0   $150,000 
    2019   $0    0    0    0    0    0    0   $0 
Ryan Veillet, Director   2018   $0    0    0    0    0    0    0   $0 
Officers / Directors   2019   $0    0    0    0    0    0    0   $0 
 as a Group (3 Persons):   2018   $150,000    0    0    0    0    0    0   $150,000 
    2019   $150,000    0    0    0    0    0    0   $ 150,000  

 

Narrative Disclosure to Summary Compensation Table

 

There are no compensatory plans or arrangements, including payments to be received from the Company with respect to any executive Officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

 

Outstanding Equity Awards at Fiscal Year-End

 

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No executive Officer received any equity awards, or holds exercisable or unexercisable options, as of the year ended December 31, 2020.

 

OPTION AWARDS   STOCK AWARDS  
Name   Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
    Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
    Option
Exercise
Price ($)
    Option
Expiration
Date
    Number
of
Shares
or Units
of Stock
that
have not
Vested
(#)
    Market
Value of
Shares
or Units
of Stock
that
have not
Vested
($)
    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
that have
not
Vested
($)
    Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
that have
not Vested
($)
 
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)  
None     0       0       0       0       0       0       0       0       0  

 

Long-Term Incentive Plans

 

There are no arrangements or plans in which the Company would provide pension, retirement or similar benefits for our Director or executive Officer.

 

Compensation Committee

 

The Company currently does not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.

 

Compensation of Directors

 

Directors are permitted to receive fixed fees and other compensation for their services as Directors. The Board of Directors has the authority to fix the compensation of Directors. No amounts have been paid to, or accrued to, Directors in such capacity.

 

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Director Independence

 

The Board of Directors is currently composed of three members. Yves R. Michel, Darcy Rai and Ryan Veillet do not qualify as an independent Directors in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the Director is not, and has not been for at least three years, one of the Company’s employees and that neither the Director, nor any of his family members has engaged in various types of business dealings with us. In addition, the Board of Directors has not made a subjective determination as to each Director that no relationships exist which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director, though such subjective determination is required by the NASDAQ rules. Had the Board of Directors made these determinations, the Board of Directors would have reviewed and discussed information provided by the Directors and the Company with regard to each Director’s business and personal activities and relationships as they may relate to the Company and its management.

 

Security Holders Recommendations to Board of Directors

 

The Company welcomes comments and questions from the shareholders. Shareholders can direct communications to the Chief Executive Officer, Yves R. Michel, at our executive offices. However, while the Company appreciates all comments from shareholders, it may not be able to individually respond to all communications. Management attempts to address shareholder questions and concerns in press releases and documents filed with the SEC so that all shareholders have access to information about the Company at the same time. Yves R. Michel collects and evaluates all shareholder communications. All communications addressed to the Director and executive Officer will be reviewed by Yves R. Michel, unless the communication is clearly frivolous.

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

During the last two full fiscal years and the current fiscal year or any currently proposed transaction, except for the following there is no transaction involving the Company, in which the amount involved exceeds the lesser of $50,000 or one percent of the average of the Company’s total assets at year-end for its last three fiscal years.

 

On October 31, 2019, the Company acquired licenses that represent the intellectual property associated with Foundation Farms Corp. Specifically, the license is for the modular growth units, known as AeroPods, which will be used to grow non-cannabis plants for local production.

 

Licenses at December 31, 2020 and December 31, 2019 are as follows:

 

    December 31 2020     December 31
2019
 
                 
Licenses   $ 75,000     $ 75,000  

   

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Disclosure of Conflicts of Interest

 

There are no conflicts of interest between the Company and any of its officers or directors

 

Stock Options

 

We have not issued and do not have outstanding any options to purchase shares of our Common Stock. We do not have any stock option plans.

 

Share Purchase Warrants

 

None.

 

Indemnification of Directors and Officers

 

Our Bylaws, as amended, provide to the fullest extent permitted by Florida law that our directors or officers shall not be personally liable to us or our shareholders for damages for breach of such director’s or officer’s fiduciary duty. The effect of this provision of our Articles of Incorporation, as amended, is to eliminate our rights and our shareholders (through shareholders’ derivative suits on behalf of our 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 of Incorporation, as amended, are necessary to attract and retain qualified persons as directors and officers.

 

The Florida Business Corporation Act 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 or she 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 or her in connection with such action if he or she acted in good faith and in a manner he or she 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 or her conduct was unlawful.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

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In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid one of our directors, officers or controlling persons in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

Review, Approval or Ratification of Transactions with Related Parties

 

We have planned to adopt a related-party transactions policy under which our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our Common Stock, and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related-party transaction with us without the consent of our audit committee. If the related party is, or is associated with, a member of our audit committee, the transaction must be reviewed and approved by another independent body of our Board of Directors, such as our governance committee. Any request for us to enter into a transaction with a related party in which the amount involved exceeds $50,000 and such party would have a direct or indirect interest must first be presented to our audit committee for review, consideration and approval. If advance approval of a related-party transaction was not feasible or was not obtained, the related-party transaction must be submitted to the audit committee as soon as reasonably practicable, at which time the audit committee shall consider whether to ratify and continue, amend and ratify, or terminate or rescind such related-party transaction. All of the transactions described above were reviewed and considered by, and were entered into with the approval of, or ratification by, our Board of Directors.

 

During the last two full fiscal years and the current fiscal year or any currently proposed transaction, there are transactions involving the issuer, in which the amount involved exceeds the lesser of $50,000 or one percent of the average of the issuer’s total assets at year-end for its last three fiscal years, except compensation awarded to executives.

 

Disclosure of Conflicts of Interest

 

There are no conflicts of interest between the Company and any of its officers or directors.

 

Legal/Disciplinary History

 

None of GME Innotainment, Inc.’s Officers or Directors have been the subject of any criminal proceeding or named as a defendant in a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

None of GME Innotainment, Inc.’s Officers or Directors have been the subject of any entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such person’s involvement in any type of business, securities, commodities, or banking activities;

 

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None of GME Innotainment, Inc.’s Officers or Directors have been the subject of any finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, the Commodity Futures Trading Commission, or a state securities regulator of a violation of federal or state securities or commodities law, which finding or judgment has not been reversed, suspended, or vacated; and

 

None of GME Innotainment, Inc.’s Officers or Directors has been the subject of any entry of an order by a self-regulatory organization that permanently or temporarily barred, suspended or otherwise limited such person’s involvement in any type of business or securities activities.

 

Board Composition

 

Our board of directors currently consists of three members. Each director of the Company serves until the next annual meeting of stockholders and until his successor is elected and duly qualified, or until his earlier death, resignation or removal. Our board is authorized to appoint persons to the offices of Chairman of the Board of Directors, President, Chief Executive Officer, one or more vice presidents, a Treasurer or Chief Financial Officer and a Secretary and such other offices as may be determined by the board.

 

We have no formal policy regarding board diversity. In selecting board candidates, we seek individuals who will further the interests of our stockholders through an established record of professional accomplishment, the ability to contribute positively to our collaborative culture, knowledge of our business and understanding of our prospective markets.

 

Board Leadership Structure and Risk Oversight

 

The board of directors oversees our business and considers the risks associated with our business strategy and decisions. The board currently implements its risk oversight function as a whole. Each of the board committees when established will also provide risk oversight in respect of its areas of concentration and reports material risks to the board for further consideration.

 

Code of Business Conduct and Ethics

 

Prior to one year from the date of this Offering’s qualification, we plan on adopting a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. We will post on our website a current copy of the code and all disclosures that are required by law or market rules in regard to any amendments to, or waivers from, any provision of the code.

 

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PRINCIPAL STOCKHOLDERS

 

The following table sets forth certain information known to us regarding beneficial ownership of our capital stock as of May 15, 2020 for (i) all executive officers and directors as a group and (ii) each person, or group of affiliated persons, known by us to be the beneficial owner of more than ten percent (10%) of our capital stock. The percentage of beneficial ownership in the table below is based on 230,118,278 shares of common stock deemed to be outstanding as of May 15, 2020.

 

Name of
Officer/Director and
Control Person
  Affiliation with Company   Number of shares
owned
    Share
type/class
  Ownership
Percentage of Class
Outstanding
 
Yves R. Michel   Officer / Director     43,755,932     Common Stock     3 %
Darcy Rai   Director     11,000     Series A Preferred     11 %
Ryan Veillet   Director     11,000     Series A Preferred     11 %
Officers / Directors         43,755,932     Common Stock     57 %
as a Group         22,000 (1)   Series A Preferred     22 %

 

  (1) The shares of Series A Preferred Stock have a par value of $0.001 and each share is convertible into 3,621 shares of common stock (the “Conversion Ratio”). The holders of shares of the Series A Preferred Stock shall be entitled to receive dividends out of any assets legally available, to the extent permitted by Florida law, at an annual rate equal to 8% of the Series A Liquidation Value of such shares of Series A Preferred Stock, and shall accrue from the date of issuance of such shares of Series A Preferred Stock, payable quarterly in common stock valued at the closing trade price per share on the last trading day of the calendar quarter.

 

The holders of Series A Preferred Stock rank senior to the Company’s common stock and will vote together with the holders of the Company’s common stock on an as-converted basis on each matter submitted to a vote of holders of common stock (whether at a meeting of shareholders or by written consent). In any such vote, the number of votes that may be cast by a holder shall be equal to one (1) vote for each share of common stock into which such holder’s outstanding shares of Series A Preferred Stock may be converted. Each holder shall be entitled to notice of all shareholder meetings (or requests for written consent) in accordance with the Company’s bylaws. As a result of the issuance of the Series A Preferred Stock, there was a change in control of the Company as of the date of consummation of the Merger.

 

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DESCRIPTION OF SECURITIES

 

The Company’s Authorized Stock

 

We are authorized to issue One Billion Nine Hundred Ninety Nine Million (1,999,000,000) shares of common stock with a par value of $0.001 per share (the “Common Stock”) and one million (1,000,000) shares of preferred stock with a par value of $0.001 per share (the “Preferred Stock”), of which 100,000 such shares have been designated as Series A Preferred Stock.

 

Common Stock

 

No shareholders of the Corporation holding Common Stock have any preemptive or other right to subscribe for any additional unissued or treasury shares of stock or for other securities of any class.

 

Subject to the rights of holders of Preferred Stock, holders of Common Stock shall be entitled to receive such cash dividends as may be declared thereon by the Board from time to time out of assets of funds of the Corporation legally available, therefore.

 

Cumulative Voting. Except as otherwise required by applicable law, there shall be no cumulative voting on any matter brought to a vote of stockholders of the Corporation.

 

Except as otherwise required by the Florida Business Corporation Act, the Articles of Incorporation, or any designation for a class of Preferred Stock (which may provide that an alternate vote is required), (i) all shares of capital stock of the Corporation shall vote together as one class on all matters submitted to a vote of the shareholders of the Corporation; and (ii) the affirmative vote of a majority of the voting power of all outstanding shares of voting stock entitled to vote in connection with the applicable matter shall be required for approval of such matter.

 

Adoption of Bylaws. In the furtherance and not in limitation of the powers conferred by statute and the Articles of Incorporation, the Board is expressly authorized to adopt, repeal, rescind. alter or amend in any respect the bylaws of the Corporation.

 

Shareholder Amendment of Bylaws. The Bylaws may also be adopted, repealed, rescinded, altered or amended in any respect by the stockholders of the Corporation, but only by the affirmative vote of the holders of not less than a majority of the voting power of all outstanding shares of voting stock, regardless of class and voting together as a single voting class.

 

Removal of Directors. Except as may otherwise be provided in connection with rights to elect additional directors under specified circumstances, which may be granted to the holders of any class or series of Preferred Stock, any director may be removed from office only by the affirmative vote of the holders of not less than a majority of the voting power of the issued and outstanding stock entitled to vote. Failure of an incumbent director to be nominated to serve an additional term of office shall not be deemed a removal from office requiring any stockholder vote.

 

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Preferred Stock

 

The powers, preferences, rights, qualifications, limitations and restrictions pertaining to the Preferred Stock, or any series thereof, shall be such as may be fixed, from time to time, by the Board in its sole discretion. Authority to do so being hereby expressly vested in the Board. The authority of the Board with respect to each such series of Preferred Stock will include, without limiting the generality of the foregoing, the determination of any or all of the following:

 

The number of shares of any series and the designation to distinguish the shares of such series from the shares of all other series: (1) the voting powers, if any, of the shares of such series and whether such voting powers are full or limited: (2) the redemption provisions, if any, applicable to such series, including the redemption price or prices to be paid; (3) whether dividends, if any, will be cumulative or noncumulative, the dividend rate or rates of such series and the dates and preferences of dividends on such series: (4) the rights of such series upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of. the Corporation: (5) the provisions, if any, pursuant to which the shares of such series are convertible into, or exchangeable for, shares of any other class or classes of any other series of the same other any other class or classes of stock or any other security, of the Corporation or any other corporation or entity, and the rates or other determinants of conversion or exchange applicable thereto; (6) the right, if any, to subscribe for or to purchase any securities of the Corporation or any other corporation or other entity; (7) the provisions, if any. of a sinking fund applicable to such series: and (8) any other relative, participating, optional or other powers, preferences or rights, and any qualifications, limitations or restrictions thereof. of such series.

 

Series A Preferred Stock.

 

The Company has Designated 100,000 shares as Series A Preferred Shares. The shares of Series A Preferred Stock have a par value of $0.001 and each share is convertible into 3,621 shares of common stock (the “Conversion Ratio”). The holders of shares of the Series A Preferred Stock shall be entitled to receive dividends out of any assets legally available, to the extent permitted by Florida law, at an annual rate equal to 8% of the Series A Liquidation Value of such shares of Series A Preferred Stock, and shall accrue from the date of issuance of such shares of Series A Preferred Stock, payable quarterly in common stock valued at the closing trade price per share on the last trading day of the calendar quarter.

  

DIVIDEND POLICY

 

We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings for use in the operation of our business and do not intend to declare or pay any cash dividends in the foreseeable future. Any further determination to pay dividends on our capital stock will be at the discretion of our Board of Directors, subject to applicable laws, and will depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our Board of Directors considers relevant.

 

61 

 

 

SECURITIES OFFERED

 

Current Offering

 

GME Innotainment, Inc. (“GME Innotainment, Inc.,” “We,” or the “Company”) is offering up to $1,500,000 total of Securities, consisting of Common Stock, $0.001 par value (the “Common Stock” or collectively the “Securities”).

 

Transfer Agent

 

Our transfer agent is TranShare Corporation., whose address is 2849 Executive Drive, Suite 200, Clearwater, FL 33762, telephone number (303) 662-1112, and email info@transhare.com.

 

The transfer agent is registered under the Exchange Act and operates under the regulatory authority of the SEC and FINRA.

 

SHARES ELIGIBLE FOR FUTURE SALE

 

Prior to this Offering, there has been a limited market for our Common Stock. Future sales of substantial amounts of our Common Stock, or securities or instruments convertible into our Common Stock, in the public market, or the perception that such sales may occur, could adversely affect the market price of our Common Stock prevailing from time to time. Furthermore, because there will be limits on the number of shares available for resale shortly after this Offering due to contractual and legal restrictions described below, there may be resales of substantial amounts of our Common Stock in the public market after those restrictions lapse. This could adversely affect the market price of our Common Stock prevailing at that time.

 

Rule 144

 

In general, a person who has beneficially owned restricted shares of our Common Stock for at least twelve months, in the event we are a reporting company under Regulation A, or at least six months, in the event we have been a reporting company under the Exchange Act for at least 90 days before the sale, would be entitled to sell such securities, provided that such person is not deemed to be an affiliate of ours at the time of sale or to have been an affiliate of ours at any time during the 90 days preceding the sale. A person who is an affiliate of ours at such time would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of shares that does not exceed the greater of the following:

 

  1% of the number of shares of our Common Stock then outstanding; or the average weekly trading volume of our Common Stock during the four calendar weeks preceding the filing by such person of a notice on Form 144 with respect to the sale;

 

provided that, in each case, we are subject to the periodic reporting requirements of the Exchange Act for at least 90 days before the sale. Rule 144 trades must also comply with the manner of sale, notice and other provisions of Rule 144, to the extent applicable.

 

62 

 

 

LEGAL MATTERS

 

Certain legal matters with respect to the shares of common stock offered hereby will be passed upon by Matheau J. W. Stout, Esq. of Hunt Valley, MD.

 

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

 

SECURITIES BEING OFFERED

 

The Company is offering Shares of its Common Stock. Except as otherwise required by law, the Company’s Articles of Incorporation or Bylaws, each Shareholder shall be entitled to one vote for each Share held by such Shareholder on the record date of any vote of Shareholders of the Company. The Shares of Common Stock, when issued, will be fully paid and non-assessable. Since it is anticipated that at least for the next 12 months the majority of the Company’s voting power will be held by Management through their combined beneficial ownership of 43,755,932 shares of Common Stock, and 22,000 shares of Series A Preferred Stock, the holders of Common Stock issued pursuant to this Offering Circular should not expect to be able to influence any decisions by management of the Company through the voting power of such Common Stock.

 

The Company does not expect to create any additional classes of Common Stock during the next 12 months, but the Company is not limited from creating additional classes which may have preferred dividend, voting and/or liquidation rights or other benefits not available to holders of its common stock.

 

The Company does not expect to declare dividends for holders of Common Stock in the foreseeable future. Dividends will be declared, if at all (and subject to rights of holders of additional classes of securities, if any), in the discretion of the Company’s Board of Directors. Dividends, if ever declared, may be paid in cash, in property, or in shares of the capital stock of the Company, subject to the provisions of law, the Company’s Bylaws and the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sums as the Board of Directors, in its absolute discretion, deems proper as a reserve for working capital, to meet contingencies, for equalizing dividends, for repairing or maintaining any property of the Company, or for such other purposes as the Board of Directors shall deem in the best interests of the Company.

 

The minimum subscription that will be accepted from an investor is $10,000 for the purchase of ten million (10,000,000) Shares (the ‘Minimum Subscription’).

 

A subscription for $10,000 or more in the Shares may be made only by tendering to the Company the executed Subscription Agreement (electronically or in writing) delivered with the subscription price in a form acceptable to the Company, via check, wire, credit or debit card, or ACH. The execution and tender of the documents required, as detailed in the materials, constitutes a binding offer to purchase the number of Shares stipulated therein and an agreement to hold the offer open until the Expiration Date or until the offer is accepted or rejected by the Company, whichever occurs first.

 

63 

 

 

The Company reserves the unqualified discretionary right to reject any subscription for Shares, in whole or in part. If the Company rejects any offer to subscribe for the Shares, it will return the subscription payment, without interest or reduction. The Company’s acceptance of your subscription will be effective when an authorized representative of the Company issues you written or electronic notification that the subscription was accepted.

 

There are no liquidation rights, preemptive rights, conversion rights, redemption provisions, sinking fund provisions, impacts on classification of the Board of Directors where cumulative voting is permitted or required related to the Common Stock, provisions discriminating against any existing or prospective holder of the Common Stock as a result of such Shareholder owning a substantial amount of securities, or rights of Shareholders that may be modified otherwise than by a vote of a majority or more of the shares outstanding, voting as a class defined in any corporate document as of the date of filing. The Common Stock will not be subject to further calls or assessment by the Company. There are no restrictions on alienability of the Common Stock in the corporate documents other than those disclosed in this Offering Circular. The Company has engaged TranShare to serve as the transfer agent and registrant for the Shares. For additional information regarding the Shares, please review the Company’s Bylaws, which are attached to this Offering Circular.

 

DISQUALIFYING EVENTS DISCLOSURE

 

Recent changes to Regulation A promulgated under the Securities Act prohibit an issuer from claiming an exemption from registration of its securities under such rule if the issuer, any of its predecessors, any affiliated issuer, any director, executive officer, other officer participating in the offering of the interests, general partner or managing member of the issuer, any beneficial owner of 20% or more of the voting power of the issuer’s outstanding voting equity securities, any promoter connected with the issuer in any capacity as of the date hereof, any investment manager of the issuer, any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of the issuer’s interests, any general partner or managing member of any such investment manager or solicitor, or any director, executive officer or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor has been subject to certain “Disqualifying Events” described in Rule 506(d)(1) of Regulation D subsequent to September 23, 2013, subject to certain limited exceptions. The Company is required to exercise reasonable care in conducting an inquiry to determine whether any such persons have been subject to such Disqualifying Events and is required to disclose any Disqualifying Events that occurred prior to September 23, 2013 to investors in the Company. The Company believes that it has exercised reasonable care in conducting an inquiry into Disqualifying Events by the foregoing persons and is aware of the no such Disqualifying Events.

 

It is possible that (a) Disqualifying Events may exist of which the Company is not aware and (b) the SEC, a court or other finder of fact may determine that the steps that the Company has taken to conduct its inquiry were inadequate and did not constitute reasonable care. If such a finding were made, the Company may lose its ability to rely upon exemptions under Regulation A, and, depending on the circumstances, may be required to register the Offering of the Company’s Common Stock with the SEC and under applicable state securities laws or to conduct a rescission offer with respect to the securities sold in the Offering.

 

64 

 

 

ERISA CONSIDERATIONS

 

Trustees and other fiduciaries of qualified retirement plans or IRAs that are set up as part of a plan sponsored and maintained by an employer, as well as trustees and fiduciaries of Keogh Plans under which employees, in addition to self-employed individuals, are participants (together, “ERISA Plans”), are governed by the fiduciary responsibility provisions of Title 1 of the Employee Retirement Income Security Act of 1974 (“ERISA”). An investment in the Shares by an ERISA Plan must be made in accordance with the general obligation of fiduciaries under ERISA to discharge their duties (i) for the exclusive purpose of providing benefits to participants and their beneficiaries; (ii) with the same standard of care that would be exercised by a prudent man familiar with such matters acting under similar circumstances; (iii) in such a manner as to diversify the investments of the plan, unless it is clearly prudent not do so; and (iv) in accordance with the documents establishing the plan. Fiduciaries considering an investment in the Shares should accordingly consult their own legal advisors if they have any concern as to whether the investment would be inconsistent with any of these criteria.

 

Fiduciaries of certain ERISA Plans which provide for individual accounts (for example, those which qualify under Section 401(k) of the Code, Keogh Plans and IRAs) and which permit a beneficiary to exercise independent control over the assets in his individual account, will not be liable for any investment loss or for any breach of the prudence or diversification obligations which results from the exercise of such control by the beneficiary, nor will the beneficiary be deemed to be a fiduciary subject to the general fiduciary obligations merely by virtue of his exercise of such control. On October 13, 1992, the Department of Labor issued regulations establishing criteria for determining whether the extent of a beneficiary’s independent control over the assets in his account is adequate to relieve the ERISA Plan’s fiduciaries of their obligations with respect to an investment directed by the beneficiary. Under the regulations, the beneficiary must not only exercise actual, independent control in directing the particular investment transaction, but also the ERISA Plan must give the participant or beneficiary a reasonable opportunity to exercise such control, and must permit him to choose among a broad range of investment alternatives.

 

Trustees and other fiduciaries making the investment decision for any qualified retirement plan, IRA or Keogh Plan (or beneficiaries exercising control over their individual accounts) should also consider the application of the prohibited transactions provisions of ERISA and the Code in making their investment decision. Sales and certain other transactions between a qualified retirement plan, IRA or Keogh Plan and certain persons related to it (e.g., a plan sponsor, fiduciary, or service provider) are prohibited transactions. The particular facts concerning the sponsorship, operations and other investments of a qualified retirement plan, IRA or Keogh Plan may cause a wide range of persons to be treated as parties in interest or disqualified persons with respect to it. Any fiduciary, participant or beneficiary considering an investment in Shares by a qualified retirement plan IRA or Keogh Plan should examine the individual circumstances of that plan to determine that the investment will not be a prohibited transaction. Fiduciaries, participants or beneficiaries considering an investment in the Shares should consult their own legal advisors if they have any concern as to whether the investment would be a prohibited transaction.

 

65 

 

 

Regulations issued on November 13, 1986, by the Department of Labor (the “Final Plan Assets Regulations”) provide that when an ERISA Plan or any other plan covered by Code Section 4975 (e.g., an IRA or a Keogh Plan which covers only self-employed persons) makes an investment in an equity interest of an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act of 1940, the underlying assets of the entity in which the investment is made could be treated as assets of the investing plan (referred to in ERISA as “plan assets”). Programs which are deemed to be operating companies or which do not issue more than 25% of their equity interests to ERISA Plans are exempt from being designated as holding “plan assets.” Management anticipates that we would clearly be characterized as an “operating” for the purposes of the regulations, and that it would therefore not be deemed to be holding “plan assets.”

 

Classification of our assets of as “plan assets” could adversely affect both the plan fiduciary and management. The term “fiduciary” is defined generally to include any person who exercises any authority or control over the management or disposition of plan assets. Thus, classification of our assets as plan assets could make the management a “fiduciary” of an investing plan. If our assets are deemed to be plan assets of investor plans, transactions which may occur in the course of its operations may constitute violations by the management of fiduciary duties under ERISA. Violation of fiduciary duties by management could result in liability not only for management but also for the trustee or other fiduciary of an investing ERISA Plan. In addition, if our assets are classified as “plan assets,” certain transactions that we might enter into in the ordinary course of our business might constitute “prohibited transactions” under ERISA and the Code.

 

Under Code Section 408(i), as amended by the Tax Reform Act of 1986, IRA trustees must report the fair market value of investments to IRA holders by January 31 of each year. The Service has not yet promulgated regulations defining appropriate methods for the determination of fair market value for this purpose. In addition, the assets of an ERISA Plan or Keogh Plan must be valued at their “current value” as of the close of the plan’s fiscal year in order to comply with certain reporting obligations under ERISA and the Code. For purposes of such requirements, “current value” means fair market value where available. Otherwise, current value means the fair value as determined in good faith under the terms of the plan by a trustee or other named fiduciary, assuming an orderly liquidation at the time of the determination. We do not have an obligation under ERISA or the Code with respect to such reports or valuation although management will use good faith efforts to assist fiduciaries with their valuation reports. There can be no assurance, however, that any value so established (i) could or will actually be realized by the IRA, ERISA Plan or Keogh Plan upon sale of the Shares or upon liquidation of us, or (ii) will comply with the ERISA or Code requirements.

 

The income earned by a qualified pension, profit sharing or stock bonus plan (collectively, “Qualified Plan”) and by an individual retirement account (“IRA”) is generally exempt from taxation. However, if a Qualified Plan or IRA earns “unrelated business taxable income” (“UBTI”), this income will be subject to tax to the extent it exceeds $1,000 during any fiscal year. The amount of unrelated business taxable income in excess of $1,000 in any fiscal year will be taxed at rates up to 36%. In addition, such unrelated business taxable income may result in a tax preference, which may be subject to the alternative minimum tax. It is anticipated that income and gain from an investment in the Shares will not be taxed as UBTI to tax exempt shareholders, because they are participating only as passive financing sources.

  

66 

 

 

INVESTOR ELIGIBILITY STANDARDS

 

The Shares will be sold only to a person who is not an accredited investor if the aggregate purchase price paid by such person is no more than 10% of the greater of such person’s annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. In the case of sales to fiduciary accounts (Keogh Plans, Individual Retirement Accounts (IRAs) and Qualified Pension/Profit Sharing Plans or Trusts), the above suitability standards must be met by the fiduciary account, the beneficiary of the fiduciary account, or by the donor who directly or indirectly supplies the funds for the purchase of Shares. Investor suitability standards in certain states may be higher than those described in this Offering Circular. These standards represent minimum suitability requirements for prospective investors, and the satisfaction of such standards does not necessarily mean that an investment in the Company is suitable for such persons.

 

Each investor must represent in writing that he/she meets the applicable requirements set forth above and in the Subscription Agreement, including, among other things, that (i) he/she is purchasing the Shares for his/her own account and (ii) he/she has such knowledge and experience in financial and business matters that he/she is capable of evaluating without outside assistance the merits and risks of investing in the Shares, or he/she and his/her purchaser representative together have such knowledge and experience that they are capable of evaluating the merits and risks of investing in the Shares. Transferees of Shares will be required to meet the above suitability standards.

 

67 

 

 

EXPERTS

 


  

The consolidated financial statements of the Company appearing elsewhere in this Offering Circular have been prepared by management and have not been reviewed by an independent accountant.

 

68 

 

 

WHERE YOU CAN FIND MORE INFORMATION

 


 

We have filed with the SEC a Regulation A Offering Statement on Form 1-A under the Securities Act with respect to the shares of common stock offered hereby. This Offering Circular, which constitutes a part of the Offering Statement, does not contain all of the information set forth in the Offering Statement or the exhibits and schedules filed therewith. For further information about us and the common stock offered hereby, we refer you to the Offering Statement and the exhibits and schedules filed therewith. Statements contained in this Offering Circular regarding the contents of any contract or other document that is filed as an exhibit to the Offering Statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the Offering Statement. Upon the completion of this Offering, we will be required to file periodic reports, proxy statements, and other information with the SEC pursuant to the Securities Exchange Act of 1934. You may read and copy this information at the SEC’s Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, including us, that file electronically with the SEC. The address of this site is www.sec.gov.

 

69 

 

 

PART III—EXHIBITS

 

Index to Exhibits

 

Number   Exhibit Description
     
2.1   Articles of Incorporation as Amended
     
2.2   Bylaws
     
3.1   Specimen Stock Certificate
     
3.2   Subscription Agreement
     
6.0   License Agreement by and between the Company and PureSafe Water Systems, Inc., dated March 31, 2016.
     
6.1   Contract for Purchase and Sale of Assets and Liabilities by and between the Company and Kwong Kwan Yin Roy, dated April 20, 2016
     
6.2   Securities Exchange Agreement by and between the Company and PureSafe Water Systems, Inc., dated September 25, 2017.
     
6.3   Promissory Note by and between the Company and PureSafe Water Systems, Inc., dated September 25, 2017
     
6.4   Royalty Agreement by and between the Company and PureSafe Water Systems, Inc., dated September 25, 2017.
     
6.5   Share Exchange Agreement by and between the Company and Foundation Farms Corp., dated October 16, 2019.
     
6.6   License and Purchase Agreement by and between Foundation Farms Corp., and Grow Solutions Holdings, Inc., dated October 10, 2019.
     
11.1   Consent of Law Office of Matheau J. W. Stout, Esq. (included in Exhibit 12.1)
     
12.1   Opinion of Law Office of Matheau J. W. Stout, Esq.

 

70 

 

 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, New York on July 26, 2021.

 

(Exact name of issuer as specified in its charter): GME Innotainment, Inc.

 

This Offering Statement has been signed by the following persons in the capacities and on the dates indicated.

 

By: /s/ Yves R. Michel  
  Yves R. Michel, Chief Executive Officer (Principal Executive Officer).  
     
(Date): July 26, 2021  

 

/s/ Yves R. Michel  
Yves R. Michel, Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer).  
   
(Date): July 26, 2021  

 

SIGNATURES OF DIRECTORS:     
     
/s/ Yves R. Michel   July 26, 2021
Yves R. Michel, Director   Date
     
/s/ Darcy Rai   July 26, 2021
Darcy Rai, Director   Date
     
/s/ Ryan Veillet   July 26, 2021
Ryan Veillet, Director   Date

  

71

 

 

GME INNOTAINMENT, INC.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

March 31, 2021

 

Index to the Condensed Consolidated Financial Statements (Unaudited)

 

Page
   
   
Condensed Consolidated Financial Statements:  
   
Condensed Consolidated Balance Sheet at March 31, 2021 and December 31, 2020 F-2
   
Condensed Consolidated Statement of Operations for the three months ended March 31, 2021 and March 31, 2020 F-3
   
Condensed Consolidated Statement of Stockholders’ Deficit for the three months ended March 31, 2021 F-4
   
Condensed Consolidated Statement of Stockholders’ Deficit for the three months ended March 31, 2020 F-5
   
Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2021 and March 31, 2020 F-6
   
Notes to the Condensed Consolidated Financial Statements F-7

 

F-1

 

 

GME INNOTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

    March 31,   December 31,
    2021   2020
CURRENT ASSETS                
                 
Cash and cash equivalents   $ 32,657     $ 4,468  
Other receivables     1,050       1,050  
                 
Deferred financing costs and other prepaid expenses     75,278       75,278  
Total Current Assets     108,985       80,796  
                 
OTHER ASSETS                
Due to related parties     75,000       75,000  
                 
Goodwill     3,715,696       3,715,696  
Total Assets   $ 3,899,682     $ 3,871,493  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
CURRENT LIABILITIES                
Accrued expenses   $ 988,804     $ 955,874  
Accrued interest     53,968       70,766  
Notes payable, net of derivative liability           36,477  
Due to related parties     75,000       75,000  
                 
Derivative liabilities     897,461       162,426  
Total Current Liabilities     2,015,232       1,300,542  
NON-CURRENT LIABILITIES                
Amounts due under Liabilities Purchase Agreement     2,075,483       2,075,483  
Notes payable-non-current portion           202,201  
Non-current liabilities     2,075,483       2,274,684  
Total Liabilities     4,090,715       3,578,226  
                 
STOCKHOLDERS’ DEFICIT                
Preferred Stock Series A, 100,000 and -0- shares outstanding at March 31, 2021 and 2020, par value $.001, 100,000 shares authorized Common stock; par value of $.01 10,000,000,000 shares authorized; 1,486,207,485 and 1,235,658,085 shares issued and outstanding at     100       100  
                 
March 31, 2021 and December 31, 2020, respectively     14,862,075       12,356,581  
Additional paid in capital     (3,121,618 )     (811,918 )
Accumulated deficit     (11,630,610 )     (11,001,516 )
Total Stockholders’ Deficit attributable to common stockholders     109,947       543,247  
Non-controlling interest     (300,981 )     (249,981 )
Total stockholders’ deficit     (191,034 )     293,266  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT   $ 3,899,682     $ 3,871,493  

 

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

 

F-2

 

 

 GME INNOTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

    For the Three Months Ended March 31,
     
    2021   2020
         
REVENUES   $     $  
COST OF REVENUES            
                 
GROSS MARGIN            
                 
OPERATING EXPENSES                
                 
General and Administrative expenses     178,782       142,500  
                 
Total Operating Expenses     178,782       142,500  
                 
OPERATING INCOME (LOSS)     (178,782 )     (142,500 )
                 
OTHER INCOME (EXPENSE)                
Gain on Extinguishment of debt and accrued interest and reconciliation of accounts           4,569,981  
Interest expense     (4,955 )     (31,574 )
Beneficial conversion feature expense     (496,231 )      
Amortization of Original issue discount     (126 )     (469 )
Total Other Income (Expense)     (501,312 )     4,537,939  
                 
NET INCOME (LOSS) BEFORE INCOME TAXES AND NON- CONTROLLING INTEREST     (680,095 )     4,395,439  
Provision for Income Taxes            
Non-controlling interest     51,000       51,000  
                 
NET (LOSS)   $ (629,095 )   $ 4,446,439  
                 
BASIC EARNINGS INCOME/(LOSS) PER SHARE   $ (.00 )   $ 0.04  
                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING BASIC     1,451,656,163       102,568,426  

 

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

 

F-3

 

 

GME Innotainment, Inc.

and Subsidiaries

Consolidated Statement of Stockholders’ Deficit 

Three months ended March 31, 2021

(unaudited)

 

    Preferred Stock,           Additional   Non-       Total
    Series A   Common Stock   Paid-in   controlling   Accumulated   Equity
    Quantity   Amount   Quantity   Amount   Capital   Interest   Deficit   (Deficit)
                                 
Balance, December 31, 2020     100,000     $ 100       1,235,658,085     $ 12,356,581       (811,918 )     (249,981 )     (11,001,516 )     (293,266 )
                                                                 
Shares sold pursuant to Liability Purchase agreement                 172,328,000       1,723,280       (1,550,952 )                 172,328  
                                                                 
Shares issued for extinguishment of accrued interest                 78,221,400       78,214       (758,748 )                 23,466  
                                                                 
Non- controlling interest share of majority owned subsidiary income                                     (51,000 )             (51,000 )
                                                                 
Net loss for the three months ended March 31, 2021                                         (629,095 )     (629,095 )
                                                                 
Balance, March 31, 2021     100,000     $ 100       1,486,207,485     $ 14,862,075     $ (3,121,618 )   $ (300,981 )   $ (11,630,610 )   $ (191,034 )

 

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

 

F-4

 

  

GMEV Innotainment, Inc.

and Subsidiaries

Consolidated Statement of Stockholders’ Deficit

March 31, 2020

(Unauditied)

 

    Preferred Stock,           Additional   Non-       Total
    Series A   Common Stock   Paid-in   controlling   Accumulated   Equity
    Quantity   Amount   Quantity   Amount   Capital   Interest   Deficit   (Deficit)
                                 
Balance, December 31, 2019     100,000     $ 100       86,695,638     $ 866,956       9,447,309       (45,981 )     (15,236,899 )     (4,968,515 )
                                                                 
Issuance of shares not yet sold under the 3(a)(10) program                     41,758,795       417,588       (417,588 )                      
                                                                 
Non-controlling interest                                             (51,000 )             (51,000 )
                                                                 
Net income for the three months ended March 31, 2020                                                     4,446,439       4,446,439  
                                                                 
Balance, March 31, 2020     100,000     $ 100       128,454,433     $ 1,284,544     $ 9,029,720     $ (96,981 )   $ (10,790,460 )   $ (573,076 )

 

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

 

F-5

 

 

GME INNOTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

 

    For the Three Months
    Ended
    March 31,
    2021   2020
OPERATING ACTIVITIES                
Net Income/(Loss)   $ (629,095 )   $ 4,454,009  
Adjustments to reconcile net (loss) to net cash used from operating activities:                
Gain on extinguishment of debt, accrued interest and reconciliation of accounts           (4,569,981 )
Accrued interest and legal fees on extinguishment of debt     23,466        
Beneficial conversion feature expense     496,231        
Amortization of original issue discount     126       468  
                 
Non-controlling interest     (204,000 )     (51,000 )
Changes in operating assets and liabilities:                
Accrued interest     (16,798 )     112,500  
Accrued expenses and other payables     32,930       31,574  
Net Cash (Used) From Operating Activities     (144,139 )     (30,000 )
                 
INVESTING ACTIVITIES                
Net Cash (Used) Investing Activities            
                 
FINANCING ACTIVITIES                
Proceeds from issuance of shares under Regulation A financing     172,328          
Payments on settlement liability            
Payments on convertible notes              
Proceeds from convertible notes payable           37,500  
Net Cash provided by Financing Activities     172,328       37,500  
Net Increase (Decrease) in Cash and Cash Equivalents     28,189       7,500  
Cash and Cash Equivalents, Beginning of Period     4,468       14  
Cash and Cash Equivalents, End of Period   $ 32,657     $ 7,514  
Cash paid during the period for:                
Interest   $     $  
Taxes   $     $  
                 
Shares issued for funds received by creditors pursuant to Regulation A   $ 172,328     $  
Note issued for Liability Purchase Agreement   $     $ 100,000  

 

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

 

F-6

 

 

GME INNOTAINMENT, INC.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2020


 

NOTE 1- NATURE OF OPERATIONS

 

Corporate History

 

GME Innotainment, Inc. (the “Company,” “we,” “us,” “our,” or “GMEV”) was incorporated in Florida on July 8, 1983 and adopted the current name on July 8, 2015. Prior to December 1, 2015, the Company owned twenty-one subsidiaries. On December 1, 2015, the Company entered into an agreement selling all assets and liabilities.

 

On September 25, 2017, the Company acquired 100% of the outstanding stock of Sustainable Resources, Inc. (“Sustainable”) the Company and assumed certain debt of the Company in exchange for a promissory note for $3,000,000, due in five years, bearing interest of 5%. Sustainable was incorporated in Delaware on April 24, 2015. For purposes of financial reporting, we are treating Sustainable as the surviving entity and financial statements assume Sustainable had been acquired as of January 1, 2017.

 

On November 6, 2019, The Company acquired a controlling interest of 60% in Foundation Farms, Corp., which specializes in the operation of highly sophisticated organic fruit, herb and vegetable indoor cultivation units that provide organic locally grown vegetables year-round to its customers. Infrastructure installations at the Company’s facilities expect to occur during the first half of 2020.

 

A newly issued security, Preferred Series A was issued to the owners of Foundation Farms Corp. in consideration of their interest. Each share of Series A Preferred Stock shall be convertible into 3,468 shares of Common Stock at the option of a Holder for a period of eighteen (18) months from the Issuance Date.

 

Acquisition of Sustainable Resources

 

On September 25, 2017, the Company entered into a Securities Exchange Agreement through which the Company purchased 100% of the outstanding common stock of Sustainable Resources Corporation, a Delaware corporation (“Sustainable”), in exchange for the issuance by the Company of a $3,000,000 non-convertible promissory note bearing a 5% per annum interest rate with a five-year term. As part of the Agreement, the Company granted to Seller a twelve (12) month option to purchase up to thirty percent (30%) of the Company’s then outstanding common stock (at time of exercise of option by Seller) at a price equal to seventy five percent (75%) of the average of trading prices during the first thirty (30) days following the closing. The Agreement constitutes a tax-free exchange.

 

The parties also entered into a Royalty Agreement that provides for the delivery of a five percent royalty of the gross revenue earned by Sustainable beginning on July 1, 2018.

 

Please see our form 8-K filed on September 28, 2017 with the Securities and Exchange Commission for more detail.

 

F-7

 

 

Operations of Sustainable Resources

 

Sustainable holds licenses to produce a unique patented mobile and stationary water filtration system that was designed to be both an emergency response water filtration system as well as a permanent solution where drinkable water is not available for Government entities, companies and organizations. The self-contained and self-powered water filtration system can be mobilized to a site and within 30 minutes will produce drinking quality water from flood waters, surface and fresh water, desalinating ocean and/or brackish waters. This mid-range, 30,000 gallon per day system has also found a huge application in known contaminated water sources where water clarity, water borne disease and high bacteria content exist, and where mobile, self-contained systems are applicable to bring clean water to the population wherever they are located. The system can dispense water in bulk, by container or in half liter plastic bags to suit the situation.

 

Acquisition of Foundation Farms, Corp.

 

On November 6, 2019, the Company entered into a Securities Exchange Agreement through which the Company purchased 60% of the outstanding common stock of Sustainable Resources Corporation, a Delaware corporation (“Sustainable”), in exchange for the issuance of 100,000 shares of Series A Preferred stock.

 

Operations of Foundation Farms, Corp.

 

Foundation Farms, Corp., plans to engage in aeroponic urban farming, employing the use of our Vertical indoor growing units and related technology for organic farming that is based on sustainable agriculture with non-genetically modified organisms, as well as providing locally sourced fresh produce as our core priority. With our Vertical indoor growing units small footprint, we can set them up in urban settings and be able to meet urban fresh food supply challenges. Besides freshness, other advantages are increased antioxidants, greater nutrition and less ecological waste leading to more sustainable farming. The Company through the use of its E- ROOTS technology will provide a more energy efficient and climate-controlled environment to provide its output.

 

Urban agriculture can be defined as growing fruits, herbs, and vegetables in cities, a process that is accompanied by many other complementary activities such as processing and distributing food, collecting and reusing food waste, water, and educating, organizing, and employing local residents. Urban agriculture, a new and emerging industry, is integrated in individual urban communities and neighborhoods by making use of underutilized indoor and outdoor space. Through the use of our Vertical indoor growing systems we will create a local sustainable agriculture that will produce food, or other plant products using farming techniques that protect the environment, public health, and our communities. In the end, we grow, harvest and sell food locally within 24 hours of harvesting. There are no wholesalers or distributors to deal with.

 

During the first quarter of 2021, the Company founded a new subsidiary Foundation Farms Corp (2021) (“FF2021”) FF2021 was formed to be a supplier for the Company’s future vertical farms. Specifically, FF2021 will provide proven hydroponics tower technology. FF2021 is also responsible for establishing E-ROOTS Centres where farmers can meet and greater food security and sustainable production can be enhanced. The first production of leafy greens has begun at the Company’s Red Deer area plant. Phase one of production had been completed and we believe the harvest will be completed by the end of May.

 

F-8

 

 

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company prepares its consolidated financial statements are prepared in conformity with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of GMEV and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, allowance for accounts receivable, depreciable lives of the web site, valuation of warrants and beneficial conversion feature debt discounts, valuation of derivatives, and valuation of share-based payments.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

 

Property, Equipment and Depreciation

 

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of three years for computer equipment, five years for office furniture and fixtures, and the lesser of the lease term or the useful life of the leased equipment. Leasehold improvements, if any, would be amortized over the lesser of the lease term or the useful life of the improvements. Expenditures for maintenance and repairs along with fixed assets below our capitalization threshold are expensed as incurred.

 

Accounting for Derivatives

 

The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.

 

F-9

 

 

Impairment of Long-Lived Assets

 

The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets”. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

 

Fair Value of Financial Instruments

 

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses, deposits received from customers for layaway sales and short-term loans the carrying amounts approximate fair value due to their short maturities.

 

We follow accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. 

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

 

Revenue Recognition

 

The Company recognized revenue for our services in accordance with ASC 605-10, “Revenue Recognition in Financial Statements.” Under these guidelines, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured.

 

Restatements

 

All financial statements for prior periods have been restated to more accurately present Financial condition. There has been no profit and loss impact on any prior period statements.

 

F-10

 

 

Stock-Based Compensation

 

The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.

 

Income Taxes

 

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes”. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases.

 

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled.

 

The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return. The Company has no liability for uncertain tax positions as of December 31, 2020. Interest and penalties in any, related to unrecognized tax benefits would be recognized as interest expense. The Company does not have any accrued interest or penalties associated with unrecognized tax benefits, nor were any significant interest expense recognized during the six months ended December 31, 2020 and 2019.

 

Net Earnings (Loss) Per Share

 

In accordance with ASC 260-10, “Earnings Per Share,” basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period.

 

Segment Information

 

In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company has two operating segments as of December 31, 2020, Water purification and Agriculture.

 

F-11

 

 

NOTE 3 – GOING CONCERN

 

The Company has not generated substantial revenues and has recurring net losses. For the three months ended March 31, 2021 and 2020, net income (loss) weas $(629,095) and $4,459,009, respectively. The net income for the three months ended March 31, 2020 was due to gain on extinguishment of debt which did not recur in the quarter ended March 31, 2021.

 

In addition, as of March 31, 2021, the Company had an accumulated deficit and stockholders’ equity of ($11,630,610) and ($191,034) respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to continue its operations is dependent on the execution of management’s plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the consolidated financial statements.

 

There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Company’s current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.

 

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company is attempting to commence explorations and generate revenue; however, the Company’s future cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy in the exploration and development of its unproved properties and the Company’s ability to raise additional funds, until such time it is able to generate sufficient revenue to support its operations, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and in its ability to raise additional funds, until such time the Company can generate sufficient revenues to support its operations.

 

F-12

 

 

In the event the Company is unable to raise funding in the near term, we will not be able to pay our liabilities. In the event we are unable to raise adequate funding in the future for our operations and to pay our outstanding debt obligations, and if our current creditors elect to foreclose on the outstanding debts then owed, we would be forced to liquidate our assets or may be forced to seek bankruptcy protection, which could result in the value of our outstanding securities declining in value or becoming worthless.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 4- LICENSES

 

Licenses represent the intellectual property associated with Foundation Farms Corp. Specifically, the license is for the modular growth units, known as AeroPods, which will be used to grow non-cannabis plants for local production.

 

Licenses at March 31, 2021 and December 31, 2020 are as follows:

 

    March 31   December 31
    2021   2020
Licenses     $ 75,000     $ 75,000  

 

NOTE 5 – ENTRY INTO A DEFINITIVE AGREEMENT AND GOODWILL

 

Sustainable Resources

 

On September 25, 2017, the Company entered into a Securities Exchange Agreement through which the Company purchased 100% of the outstanding common stock of Sustainable Resources Corporation, a Delaware corporation (“Sustainable”), in exchange for the issuance by the Company of a $3,000,000 non-convertible promissory note bearing a 5% per annum interest rate with a five-year term. As part of the Agreement, the Company granted to Seller a twelve (12) month option to purchase up to thirty percent (30%) of the Company’s then outstanding common stock (at time of exercise of option by Seller) at a price equal to seventy five percent (75%) of the average of trading prices during the first thirty (30) days following the closing. The Agreement constitutes a tax-free exchange.

 

The parties also entered into a Royalty Agreement that provides for the delivery of a five percent royalty of the gross revenue earned by Sustainable beginning on July 1, 2018.

 

Sustainable’s assets, acquired liabilities assumed and residual goodwill at their respective acquisition dates are summarized as follows:

 

Liabilities assumed    
Note payable   $ 3,000,000 *
Deferred revenue     154,500  
Notes payable     75,500  
Accrued expenses     4,900  
Total liabilities     3,234,990  
Total liabilities (continued from prior page)     3,234,990  
Assets attached Cash     19,294  
Original calculation of Goodwill   $ 3,215,696  

 

F-13

 

 

Foundation Farms Corp.

 

On November 6, 2019, the Company entered into a Securities Exchange Agreement through which the Company purchased 60% of the outstanding common stock of Foundation Farms Corp., a Canadian Company (the “FFC”), having its principal office in Langley, BC. in exchange for the issuance of 100,000 shares of Series A Preferred stock.

 

FFC’s assets, acquired liabilities assumed and residual goodwill at their respective acquisition dates are summarized as follows:

 

Liabilities assumed    
Accrued expenses   $ 206,933  
Related party liability     25,000  
Total liabilities     231,933  
Assets attached License     25,000  
Net deficit     206,933  
Worth of assets     293,067  
Goodwill   $ 500,000  

 

Balances of goodwill are as follows for March 31, 2021 and December 31, 2020

 

    March 31,  
2021
  December 31,   2020
Sustainable Resources   $ 3,215,696     $ 3,215,696  
Foundation Farms Corp.,     500,000       500,000  
Goodwill   $ 3,715,696     $ 3,715,696  

 

F-14

 

 

NOTE 6 – NOTES PAYABLE, NET OF DERIVATIVE LIABILITY

 

The balances of convertible notes payable at March 31, 2021 and December 31, 2020 are as follows:

 

        Balance at   Balance at
Issuer/Noteholder   Issuance date   31-Mar-21   31-Dec-20
             
Russell Davenport   01-Feb-17   $ 10,000     $ 10,000  
Various investors   17-Sep-17     196,075       196,075  
Gaye Bergstrom   27-Sep-17     10,000       10,000  
Alpha Capital Anstalt   17-Oct-17     50,000       50,000  
Alpha Capital Anstalt   13-Dec-18     30,000       30,000  
Livingston Asset Management, LLC   01-Jan-19     100,000       100,000  
Oscaleta Partners, LLC   21-Jul-19     5,000       5,000  
                     
        $ 401,075     $ 401,075  
Original issue discount accrued         126        
Total       $ 401,201     $ 401,075  
Transferred to derivative liability         (401,201 )     (162,426 )
Total debt               238,649  
Less: Non-current portion               (202,201 )
Current portion       $     $ 36,448  

 

Russell Davenport Note- February 1, 2017

 

On February 1, 2017, the Company executed a note payable with Russell Davenport for $10,000. The note is non-interest bearing and was due on February 28, 2018. As of March 31, 2021, and December 31, 2020, the principal value was $10,000.

 

Various investors note- September 17, 2017

 

On September 17, 2017, the Company acquired 100% of the outstanding stock of Sustainable Resources, Inc. and assumed certain debt of Sustainable in exchange for a promissory note for $3,000,000, bearing interest of 5%. Approximately $2.8 million of this liability was assigned to Liabilities under the Liabilities Purchase Agreement. Approximately $200,000 on this note remains as of December 31, 2020 and December 31, 2019 and is due on September 17, 2022.

 

Gaye Bergstrom Note- September 27, 2017

 

On September 27, 2017, the Company executed a note payable with Gaye Bergstrom for $10,000. The note carries an interest rate of 5% and is due on October 2, 2019. As of December 31, 2020, and December 31, 2019, the principal value was $10,000.

 

F-15

 

 

Alpha Capital Anstalt Note- October 17, 2017

 

On October 17, 2017, the Company executed a note payable with Alpha Capital Anstalt for $50,000. The note carries an interest of 5% and is due on October 16, 2022. As of December 31, 2020, and December 31, 2019, the principal value was $50,000.

 

Alpha Capital Anstalt Note- December 18, 2018

 

On December 18, 2018, the Company executed a convertible note payable with Alpha Capital Anstalt for $10,000 for $25,010 in cash plus a $4,990 original issue discount. The note bears interest of 10%, payable quarterly and matures on December 31, 2019. The note is convertible at the lower of a) $.005 or b) a 50% discount based on the closing bid prices for the twenty (20) trading days immediately preceding the date of conversion. As of December 31, 2020, and December 31, 2019, the principal value was $30,000 and $30,000, respectively.

 

Livingston Asset Management Note- January 1, 2019

 

On January 1, 2019, the Company executed a convertible note payable with Livingston Asset Management LLC for $100,000 as a fee for the Liability Purchase Agreement. The note bears interest of 10%, payable quarterly and matures on November 20, 2019. The note is convertible at a 50% discount based on the closing bid prices for the twenty (20) trading days immediately preceding the date of conversion. As of December 31, 2020, and December 31, 2019, the principal value was $100,000 and $100,000, respectively. The note has been recorded as a deferred financing cost and will be amortized into expense as the Company reduces its liability under the Liability Purchase Agreement. See Note 11 below.

 

Oscaleta Partners, LLC Note- July 12, 2019

 

On July 12, 2019, the Company executed a convertible note payable with Oscaleta Partners LLC for $5,000 in cash. The note bears interest of 5%, payable quarterly and matures on May 1, 2024. The note is convertible at a 40% discount based on the closing bid prices for the five (5) trading days immediately preceding the date of conversion. As of December 31, 2020, and December 31, 2019, the principal value was $5,000 and $5,000, respectively.

 

NOTE 7- ACCRUED EXPENSES

 

Accrued expenses at December 31, 2020 and December 31, 2019 are as follows:

 

    March 31  
2021
  December 31   2020
Accrued expenses   $ 988,804     $ 955,874  

 

A summary of accrued expenses is as follows:

 

    March 31  
2020
  December 31   2020
Officer salaries   $ 220,000     $ 220,000  
Foundation Farms Corp. accruals     764,804       731,874  
Accrued expenses at Sustainable     4,000       4,000  
Total accrued expenses   $ 988,804     $ 955,874  

 

F-16

 

 

Foundation Farms Corp. accruals are mostly consulting expenses, travel, meals, vehicle usage, hotels, business meetings, advertisement and promotion.

 

NOTE 8- ACCRUED INTEREST

Accrued interest at March 31, 2021 and December 31, 2020 are as follows:

 

  March 31   December 31
    2021   2020
                 
Accrued interest   $ 53,968     $ 70,766  

 

A reconciliation of accrued interest follows below:

 

    March 31   December 31,
    2021   2020
September 17, 2017 Note   $ 50,951       47,399  
Other     3,017       23,367  
Total accrued interest   $ 53,968     $ 70,766  

 

NOTE 9- DUE TO RELATED PARTIES

 

The related party liability relates to a consultant to the Company who provides the intellectual property for Foundation Farms Corp., See Note 4 above.

 

    March 31   December 31
    2021   2020
                 
Due to Related parties   $ 75,000     $ 75,000  

 

NOTE 10- AMOUNTS DUE UNDER LIABILITIES PURCHASE AGREEMENT

 

On December 17, 2018, the United States District Court for the Southern District of Maryland, Northern Division (the “Court”) entered an Order Granting Approval of Settlement Agreement and Stipulation (the “Order”) in the matter titled Livingston Asset Management LLC (“Livingston”) vs GME Innotainment, Inc. (the “Company”). The Order Granting Approval of Settlement Agreement and Stipulation between the Company and Livingston (the “Stipulation”), provides for settlement of claims against the Company in the aggregate amount of $2,803,896 for past due amounts owed to creditors in connection with attorney’s fees, consulting fees, unpaid wages, and Acquisition services which Livingston acquired from third party claim holders by means of the issuance by the Company of Settlement Shares sufficient to pay down such claims. Pursuant to the terms of the settlement agreement, the remittance amount shall be the proceeds received less the prevailing discount, which is 50%.

 

Through March 31, 2021, the Company issued 741,467,327 shares of common stock to retire $728,412 of liabilities under the Liabilities Purchase Agreement:

 

F-17

 

 

As of March 31, 2021 and December 31, 2020, the balances owed under the Liabilities Purchase agreement are as follows:

 

Original balance   $ 2,803,896  
Less: Payments     (728,412 )
Balance at March 31, 2020 and December 31, 2020   $ 2,075,484  

 

NOTE 11- DERIVATIVE LIABILITY

 

The Company’s derivative liabilities as of March 31, 2021 and December 31, 2020 are as follows:

 

  The debt conversion feature embedded in the various Convertible Promissory Notes which contain “down round” provisions that would be triggered if the Company issued instruments with rights to the Company’s common stock at prices below this exercise price.

 

    March 31,  
2021
  December 31,   2020
Note conversion feature liabilities   $ 897,461     $ 162,426  
Total   $ 897,461     $ 162,426  

 

The following is the Company’s derivative liability measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020:

 

    March 31,  
2021
  December 31   2020
Level One   $ -0-     $ -0-  
Level Two   $ -0-     $ -0-  
Level Three   $ 897,461     $ 162,426  

 

As a result of the application of ASC No. 815, the fair value of the conversion feature is summarized as follows:

 

Derivative liability balance at December 31, 2020   $ 162,426  
Difference between face value of debt and derivative liability     238,804  
Fair value mark to market adjustment – March 31, 2021     496,231  
Derivative liability balance at March 31, 2021   $ 897,461  

 

NOTE 12 – STOCKHOLDERS’ DEFICIT

 

As of March 31, 2021, and December 31, 2020, the Company had 1,486,207,485,085and 1,235,658,085 shares outstanding, respectively. Common shares authorized are 10,000,000,000 as of March 31, 2021. Par value is $.01 per share.

 

F-18

 

 

Regulation A Offering

 

In June 2020, the Company received approval from the United States Security and Exchange Commission to file an offering circular pursuant to Regulation A of the Securities Act of 1933. The Offering allows for the issuance of up to 1,500,000,000 shares to raise $1,500,000 throughout the life of the offering. During the quarter ended March 31, 2021 the Company issued another 172,328,000 shares to raise $172,328.

 

Share issuance

 

Share issuance for the two-year period ended December 31, 2020 follows below:

 

On January 24, 2019, the Company issued 5,079,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On May 24, 2019, the Company issued 2,086,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 7, 2019, the Company issued 5,079,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 7, 2019, the Company issued 2,033,850 shares of common stock to Oscaleta Partners LLC for the extinguishment of $838.95 of convertible debt.

 

On January 7, 2020, the Company issued 7,200,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On February 24, 2020, the Company issued 9,288,450 shares of common stock to Trillium Partners LP under the Liabilities Purchase Agreement.

 

On February 27, 2020, the Company issued 10,215,225 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

On March 5, 2020, the Company issued 5,659,120 shares of common stock to Trillium Partners LP under the Liabilities Purchase Agreement.

 

On March 25, 2020, the Company issued 3,500,000 shares of common stock to Trillium Partners LP under the Liabilities Purchase Agreement.

 

On March 31, 2020, the Company issued 5,896,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

F-19

 

 

On April 14, 2020, the Company issued 5,890,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On April 21, 2020, the Company issued 6,641,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On April 23, 2020, the Company issued 13,300,099 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

On April 28, 2020, the Company issued 8,615,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On April 29, 2020, the Company issued 6,659,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On May 1, 2020, the Company issued 16,786,394 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

On May 5, 2020, the Company issued 11,208,427 shares of common stock to Trillium Partners LP under the Liabilities Purchase Agreement.

 

On May 7, 2020, the Company issued 11,850,925 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

On May 14, 2020, the Company issued 20,713,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On May 27, 2020, the Company issued 14,636,687 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

On June 1, 2020, the Company issued 6,764,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 3, 2020, the Company issued 9,988,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 5, 2020, the Company issued 14,912,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 12, 2020, the Company issued 10,028,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 25, 2020, the Company issued 28,000,000 shares of common stock to Trillium Partners LP for $28,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

F-20

 

 

On July 6, 2020, the Company issued 28,000,000 shares of common stock to Trillium Partners LP for $28,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On July 15, 2020, the Company issued 34,000,000 shares of common stock to Trillium Partners LP for $34,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On July 22, 2020, the Company issued 15,000,000 shares of common stock to PAG Group, LLC for $15,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On July 24, 2020, the Company issued 38,714,000 shares of common stock to Trillium Partners LP for $38,714 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On August 11, 2020, the Company issued 38,800,000 shares of common stock to Trillium Partners LP for $38,800 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On August 31, 2020, the Company issued 18,200,000 shares of common stock to Trillium Partners LP for $18,200 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On September 3, 2020, the Company issued 23,200,000 shares of common stock to Trillium Partners LP for $23,200 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On September 4, 2020, the Company issued 10,000,000 shares of common stock to PAG Group, LLC for $10,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On September 16, 2020, the Company issued 31,699,000 shares of common stock to Trillium Partners LP for $31,699 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On September 20, 2020, the Company issued 16,145,000 shares of common stock to Trillium Partners LP for $16,145 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On October 2, 2020, the Company issued 21,287,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On October 9, 2020, the Company issued 52,593,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On October 16, 2020, the Company issued 63,509,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On October 23, 2020, the Company issued 4,303,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On November 11, 2020, the Company issued 50,000,000 shares of common stock to PAG Group LLC under the Liabilities Purchase Agreement.

 

F-21

 

 

On November 16, 2020, the Company issued 81,640,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On November 20, 2020, the Company issued 65,488,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On November 24, 2020, the Company issued 81,874,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On December 3, 2020, the Company issued 90,000,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On December 14, 2020, the Company issued 50,000,000 shares of common stock to PAG Group LLC under the Liabilities Purchase Agreement.

 

On December 16, 2020, the Company issued 71,022,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On December 23, 2020, the Company issued 35,767,120 shares of common stock to Livingston Asset Management LLC for the extinguishment of $8,192 of accrued interest and $750 in fees.

 

Issuance of Preferred stock

 

On November 6, 2019, The Company acquired a controlling interest of 60% in Foundation Farms, Corp., which specializes in the operation of highly sophisticated organic fruit, herb and vegetable indoor cultivation units that provide organic locally grown vegetables year-round to its customers. Infrastructure installations at the Company’s facilities expect to occur during the first half of 2020.

 

A newly issued security, Preferred Series A was issued to the owners of Foundation Farms Corp. in consideration of their interest. Each share of Series A Preferred Stock shall be convertible into 3,468 shares of Common Stock at the option of a Holder for a period of eighteen (18) months from the Issuance Date.

 

The shares of Series A Preferred Stock have a par value of $0.001 and each share is convertible into 3,621 shares of common stock (the “Conversion Ratio”). The holders of shares of the Series A Preferred Stock shall be entitled to receive dividends out of any assets legally available, to the extent permitted by Florida law, at an annual rate equal to 8% of the Series A Liquidation Value of such shares of Series A Preferred Stock and shall accrue from the date of issuance of such shares of Series A Preferred Stock, payable quarterly in common stock valued at the closing trade price per share on the last trading day of the calendar quarter.

 

The holders of Series A Preferred Stock rank senior to the Company’s common stock and will vote together with the holders of the Company’s common stock on an as-converted basis on each matter submitted to a vote of holders of common stock (whether at a meeting of shareholders or by written consent). In any such vote, the number of votes that may be cast by a holder shall be equal to one (1) vote for each share of common stock into which such holder’s outstanding shares of Series A Preferred Stock may be converted. Each holder shall be entitled to notice of all shareholder meetings (or requests for written consent) in accordance with the Company’s bylaws. As a result of the issuance of the Series B Preferred Stock, there was a change in control of the Company as of the date of consummation of the Merger.

 

F-22

 

 

NOTE 13- GAIN ON EXTINGUISHMENT OF DEBT, ACCRUED INTEREST AND RECONCILIATION OF ACCOUNTS

 

On April 23, 2013, the Company executed a convertible promissory note with Evolution Capital Fund I, LP (“Evolution Capital Fund”) for $50,000. The note has a maturity date of January 22, 2014. On March 26, 2020, the Company received an opinion from its Legal Counsel that the Statute of Limitations in regards to this indebtedness had expired, and as such the Company was no longer legally obligated to pay the amounts owed. As of December 31, 2019, the Company had accrued a total indebtedness to Evolution Capital Fund of $4,500,981, comprised of a note balance of $2,843,746 and accrued interest of $1,658,235 . The entire balance was written off in the quarter ended December 31, 2020, and a related gain on extinguishment of debt was recorded as well. In addition, the Company reviewed its other outstanding note with the Evolution Group and determined that $39,000 of penalty had been accrued incorrectly. Also, after a reconciliation of its outstanding indebtedness, it had been determined that a $30,000 note to Leslie Kessler was no longer outstanding. This amount was offset by the $84,700 loss on the Evolution settlement. As such the total gain on extinguishment of debt, accrued interest and reconciliation of balances was $4,485,281.

 

NOTE 14- SEGMENT REPORTING

 

The Company has two segments; a) Water purification and b) Agriculture.

 

Balance sheet information as of March 31, 2021:

  

    Water   Purification   Agriculture   Corporate   Total
                     
Assets                                
Cash   $ 32,657     $     $     $ 32,657  
Other receivable     1,050                   1,050  
                                 
Deferred financing costs   and other prepaid expenses                 75,278       75,278  
Total current assets   $ 33,707     $     $ 75,278     $ 108,985  
                                 
License           75,000             75,000  
Goodwill     3,215,696       500,000             3,715,696  
                                 
Total Assets   $ 3,249,403     $ 575,000     $ 75,278     $ 3,899,682  
                                 
Liabilities                                
Accrued expenses   $ 224,000     $ 731,874     $     $ 955,874  
Accrued interest     47,399             23,367       70,766  
Notes payable, net of derivative liability                        
Due to related parties           75,000             75,000  
Derivative liabilities                     897,461       897,461  
Amounts due under   Liabilities Purcahse Agreement                     2,075,483       2,075,483  
Notes payable- non current portion, net of derivative liability                            
                                 
Total liabilities   $ 271,399     $ 806,874     $ 2,996,311     $ 4,074,584  

 

F-23

 

 

Income statement information for the three months ended March 31, 2021:

 

    Water purification   Agriculture   Corporate   Total
Revenues   $     $     $     $  
Operating expenses     51,282       127,500             178,782  
Other income (expenses)                 (501,312 )     (501,312 )
Non-controlling                                
Interest           (51,000 )           (51,000 )
Net income/(loss)   $ (51,282 )   $ (56,500 )   $ (501,312 )   $ 629,095  

 

Income statement information for the three months ended March 31, 2020:

 

    Water purification   Agriculture   Corporate   Total
Revenues   $     $     $     $  
Operating expenses     15,000       127,500             142,500  
Other expenses                 4.537.939       4,537,939  
Non-controlling                                
Interest           (51,000 )           (51,000 )
Net income/loss   $ (15,000 )   $ (76,500 )   $ 4,537,939     $ 4,446,439  

 

NOTE 15 – CONTINGENCIES AND COMMITMENTS

 

Legal Matters

 

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of March 31, 2021, there were no pending or threatened lawsuits.

 

NOTE 16- COVID-19

 

The Company, like all enterprises, is currently dealing with the impact of COVID-19 on its operations and future prospects. At this time, it is difficult to estimate the ultimate impact on our operations, but we will continue to monitor circumstances and respond as appropriate.

 

NOTE 17 – SUBSEQUENT EVENTS

 

As of the date of this report, there were no material subsequent events that required disclosure except for the following:

 

F-24

 

 

Issuance of shares of common stock

 

Subsequent to March 31, 2021, the Company issued 86,484,000 shares as follows.

 

Subsequent to December 31, 2020, the Company issued 86,484,000 pursuant to the Regulation A financing agreement as follows below:

 

Date   Purchaser   Shares
4-28-21     Trillium Partners LP     86,484,000  

 

F-25

 

 

 

GME INNOTAINMENT, INC.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

December 31, 2020

 

Index to the Condensed Consolidated Financial Statements (Unaudited)

 

  Page
   
Condensed Consolidated Financial Statements:  
   
Condensed Consolidated Balance Sheet at December 31, 2020 and December 31, 2019 F-27
   
Condensed Consolidated Statement of Operations for the twelve months ended December 31, 2020 and December 31, 2019 F-28
   
Condensed Consolidated Statement of Stockholders’ Deficit for the twelve months ended December 31, 2020 F-29
   
Condensed Consolidated Statement of Stockholders’ Deficit for the twelve months ended December 31, 2020 and 2019 F-30
   
Condensed Consolidated Statement of Cash Flows for the twelve months ended December 31, 2020 and December 31, 2019 F-31
   
Notes to the Condensed Consolidated Financial Statements F-32

 

F-26

 

 

GME INNOTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
         
        December 31,     December 31,
    2020   2019
CURRENT ASSETS                
                 
Cash and cash equivalents   $ 4,468     $ 14  
Other receivables     1,050       1,050  
                 
Deferred financing costs and other prepaid expenses     75,278       101,968  
Total Current Assets     80,796       103,032  
                 
OTHER ASSETS                
Due to related parties     75,000       75,000  
                 
Goodwill     3,715,696       3,715,696  
Total Assets   $ 3,871,493     $ 3,893,728  
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT                
CURRENT LIABILITIES                
Accrued expenses   $ 955,874     $ 475,874  
Accrued interest     70,766       2,041,624  
Notes payable, net of derivative liability     36,477       3,053,713  
Due to related parties     75,000       75,000  
                 
Derivative liabilities     162,426       161,062  
Total Current Liabilities     1,300,542       5,807,273  
NON-CURRENT LIABILITIES                
Amounts due under Liabilities Purchase Agreement     2,075,483       2,803,896  
Notes payable-non-current portion     202,201       251,075  
Non-current liabilities     2,277,684       3,054,971  
Total Liabilities     3,578,226       8,862,244  
                 
STOCKHOLDERS’ DEFICIT                
Preferred Stock Series A, 100,000 and -0- shares outstanding at December 31, 2020 and 2019, par value $.001, 100,000 shares authorized Common stock; par value of $.01 2,000,000,000 shares authorized;                 100                       100      
1,235,658,085 and 86,695,638 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively           12,356,581               866,956    
Additional paid in capital     (811,918 )     9,447,309  
Accumulated deficit     (11,001,516 )     (15,236,899 )
Total Stockholders’ Deficit attributable to common stockholders     543,247       (4,922,534 )
Non-controlling interest     (249,981 )     (45,981 )
Total stockholders’ deficit     293,266       (4,968,515 )
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT   $ 3,871,493     $ 3,893,728  

 

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

F-27

 

  

GME INNOTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
    For the Twelve Months Ended
    December 31,
         
    2020   2019
         
REVENUES   $     $  
COST OF REVENUES            
                 
GROSS MARGIN            
                 
OPERATING EXPENSES                
                 
General and Administrative expenses     712,494       186,241  
                 
Total Operating Expenses     712,4944       186,241  
                 
OPERATING INCOME (LOSS)     (712,494 )     (186,241 )
                 
OTHER INCOME (EXPENSE)                
Gain on Extinguishment of debt and accrued interest and reconciliation of accounts, net     4,485,281        
Interest expense     287,928       (772,857 )
Financing fee penalty           (730,000 )
Change in embedded value           (320 )
Amortization of Liability Purchasing Plan note     (25,979 )        
Amortization of Original issue discount     (3,353 )     (5,572 )
Total Other Income (Expense)     4,743,878       (1,508,749 )
                 
NET INCOME (LOSS) BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST     4,031,383       (1,694,990 )
Provision for Income Taxes            
Non-controlling interest     204,000       45,981  
                 
NET (LOSS)   $ 4,235,383     $ (1,649,009 )
                 
BASIC EARNINGS INCOME/(LOSS) PER SHARE   $ .01     $ (0.02 )
                 
DILUTED EARNINGS INCOME/(LOSS) PER SHARE   $ .00     $ (0.02 )
                 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING   BASIC         411,496,799               82,459,719      
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DILUTED     1,149,592,037       82,459,719  
                 
The accompanying notes are an integral part of these consolidated financial statements

 

F-28

 

 

GME Innotainment, Inc.
and Subsidiaries
Consolidated Statement of Stockholders’ Deficit
Twelve months ended December 31, 2020
 
    Preferred Stock,       Additional   Non-       Total
    Series A   Common Stock   Paid-in   controlling   Accumulated   Equity
    Quantity   Amount   Quantity   Amount   Capital   Interest   Deficit   (Deficit)
                                 
Balance, December 31, 2019     100,000     $ 100       86,695,638     $ 866,956       9,447,309       (45,981 )     (15,236,899 )     (4,968,515 )
                                                                 
Shares sold pursuant to Liability purchases agreement                 741,467,327       7,414,673       (6,686,260 )                 728,413  
Shares issued for extinguishment of accrued interest           —               —               35,767,120               357,671               (348,729   )           —               —               8,942    
Debt extinguished in 3a10 program                             122,678                   122,678  
                                                                 
Shares issued pursuant to Regulation A financing           —               —               371,728,000               3,717,280               (3,345,552   )           —               —               371,728    
Mark to market to fair value of derivative liability                                 (1,364 )                 (1,364 )
Non-controlling interest share of majority owned subsidiary income                                     (204,000 )             (204,000 )
                                                                 
Net income for the twelve months ended December 31, 2020           —               —               —               —               —               —               4,235,383               4,235,383    
                                                                 
Balance, December 31, 2020     100,000     $ 100       1,235,658,085     $ 12,356,581     $ (811,918 )   $ (249,981 )   $ (11,001,516 )   $ 293,266  

 

F-29

 

 

GME Innotainment, Inc.
and Subsidiaries
Consolidated Statement of Stockholders’ Deficit
Twelve months ended December 31, 2019
 
    Preferred Stock,       Additional   Non-     Total
    Series A   Common Stock   Paid-in   controlling   Accumulated   Equity
    Quantity       Amount   Quantity   Amount   Capital   interest   Deficit   (Deficit)
                                     
Balance, December 31, 2018     100,000             $ 100       72,417,788     $ 724,178       9,305,149             (13,587,890 )     (3,558,563 )
                                                                         
Amortization of debt discount                                     (10,063 )                 (10,063 )
                                                                         
Shares issued but not yet sold pursuant to Liability purchases agreement                         12,244,000       122,440       (122,440 )                  
                                                                         
Shares issued for extinguishm ent of accrued interest                             2,033,850       20,338       (18,305 )                 2,034  
                                                                         
Non- controlling interest share of   majority owned subsidiary income                                           (45,981 )           (45,981 )
                                                                         
Net income for the twelve months ended December 31, 2019                                               (1,649,009 )     (1,649,009 )
                                                    $ (45,981 )                
Balance, December 31, 2019     100,000             $ 100       86,695,638     $ 866,956     $ 9,156,196           $ (15,236,899 )   $ (4,968,515 )

  

F-30

 

 

GME INNOTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
    For the Twelve Months
    Ended
    December 31,
    2020   2019
OPERATING ACTIVITIES                
Net Income/(Loss)   $ 4,235,281     $ (1,649,009 )
Adjustments to reconcile net (loss) to net cash used from operating activities:                
Gain on extinguishment of debt, accrued interest and reconciliation of accounts     (4,485,281 )      
Accrued interest and legal fees on extinguishment of debt     8,942       2,034  
Change in embedded value           320  
                 
Amortization of original issue discount     3,353       5,572  
Amortization of Liability Purchase Agreement deferred note     25,979        
                 
Financing fee penalty           730,,000  
Non-controlling interest     (204,000 )     (45,981 )
Changes in operating assets and liabilities:                
                 
Accrued interest     (301,650 )      
Accrued expenses and other payables     480,000       936,970  
                 
Net Cash (Used) From Operating Activities     (237,274 )     (20,094 )
                 
INVESTING ACTIVITIES                
Net Cash (Used) Investing Activities            
                 
FINANCING ACTIVITIES                
Proceeds from issuance of shares under Regulation A financing     371,728          
Payments on settlement liability     (112,500 )      
Payments on convertible notes     (57,500 )        
Proceeds from convertible notes payable     40,000       10,000  
Net Cash provided by Financing Activities     241,728       10,,000  
Net Increase (Decrease) in Cash and Cash Equivalents     4,454       (10,094 )
Cash and Cash Equivalents, Beginning of Period     14       10,108,  
Cash and Cash Equivalents, End of Period   $ 4,468     $ 14  
                 
Cash paid during the period for:                
Interest   $     $  
Taxes   $     $  
                 
Shares issued for funds received by creditors ny pursuant to Regulation A   $ 728,413     $  
Note issued for Liability Purchase Agreement   $     $ 100,000  
                 
Original issue discount issued on cash notes   $ 2,500     $  
                 
The accompanying notes are an integral part of these consolidated financial statements.

  

F-31

 

 

GME INNOTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020

 


 

NOTE 1- NATURE OF OPERATIONS

 

Corporate History

 

GME Innotainment, Inc. (the “Company,” “we,” “us,” “our,” or “GMEV”) was incorporated in Florida on July 8, 1983 and adopted the current name on July 8, 2015. Prior to December 1, 2015, the Company owned twenty-one subsidiaries. On December 1, 2015, the Company entered into an agreement selling all assets and liabilities.

 

On September 25, 2017, the Company acquired 100% of the outstanding stock of Sustainable Resources, Inc. (“Sustainable”) the Company and assumed certain debt of the Company in exchange for a promissory note for $3,000,000, due in five years, bearing interest of 5%. Sustainable was incorporated in Delaware on April 24, 2015. For purposes of financial reporting, we are treating Sustainable as the surviving entity and financial statements assume Sustainable had been acquired as of January 1, 2017.

 

On November 6, 2019, The Company acquired a controlling interest of 60% in Foundation Farms, Corp., which specializes in the operation of highly sophisticated organic fruit, herb and vegetable indoor cultivation units that provide organic locally grown vegetables year-round to its customers. Infrastructure installations at the Company’s facilities expect to occur during the first half of 2020.

 

A newly issued security, Preferred Series A was issued to the owners of Foundation Farms Corp. in consideration of their interest. Each share of Series A Preferred Stock shall be convertible into 3,468 shares of Common Stock at the option of a Holder for a period of eighteen (18) months from the Issuance Date.

 

Acquisition of Sustainable Resources

 

On September 25, 2017, the Company entered into a Securities Exchange Agreement through which the Company purchased 100% of the outstanding common stock of Sustainable Resources Corporation, a Delaware corporation (“Sustainable”), in exchange for the issuance by the Company of a $3,000,000 non-convertible promissory note bearing a 5% per annum interest rate with a five year term. As part of the Agreement, the Company granted to Seller a twelve (12) month option to purchase up to thirty percent (30%) of the Company’s then outstanding common stock (at time of exercise of option by Seller) at a price equal to seventy five percent (75%) of the average of trading prices during the first thirty (30) days following the closing. The Agreement constitutes a tax-free exchange. The parties also entered into a Royalty Agreement that provides for the delivery of a five percent royalty of the gross revenue earned by Sustainable beginning on July 1, 2018.

 

Please see our form 8-K filed on September 28, 2017 with the Securities and Exchange Commission for more detail.

 

F-32

 

 

Operations of Sustainable Resources

 

Sustainable holds licenses to produce a unique patented mobile and stationary water filtration system that was designed to be both an emergency response water filtration system as well as a permanent solution where drinkable water is not available for Government entities, companies and organizations. The self-contained and self-powered water filtration system can be mobilized to a site and within 30 minutes will produce drinking quality water from flood waters, surface and fresh water, desalinating ocean and/or brackish waters. This mid-range, 30,000 gallon per day system has also found a huge application in known contaminated water sources where water clarity, water borne disease and high bacteria content exist, and where mobile, self-contained systems are applicable to bring clean water to the population wherever they are located. The system can dispense water in bulk, by container or in half liter plastic bags to suit the situation.

 

Acquisition of Foundation Farms, Corp.

 

On November 6, 2019, the Company entered into a Securities Exchange Agreement through which the Company purchased 60% of the outstanding common stock of Sustainable Resources Corporation, a Delaware corporation (“Sustainable”), in exchange for the issuance of 100,000 shares of Series A Preferred stock.

 

Operations of Foundation Farms, Corp.

 

Foundation is a pre-revenue generating enterprise that is looking to take advantage of the growing demand for organic vegetables and the “locavore” craze. Their vision of farming embraces today’s key consumer demands, which include organic production without pesticides, environmental sustainability and maximized nutritional content. The Company’s solution comes from vertical farming solutions. Vertical Farming is based on modular growth units that house plants in columns. Due to the efficient structure of the vertical farming, the plants are showered with an optimal nutrient rich solution that results in rapid healthy growth.

 

Antioxidants are added to the plants along with constant light settings which result in peak nutrients. There are also strict worker hygiene protocols which limit the possibility of contamination.

 

The Company differentiates its product from traditional produce in the following ways:

  a. Distance travelled- typical produce often travels thousands of miles to reach its destination. Under such circumstances, quality becomes compromised through lost nutrition density and freshness. Our product is sold locally;
  c. Traceability- the source of traditional produce often cannot be determined. Given concerns about coronavirus and other potential sources of illness, this is a great concern. Our product comes from specific vertical farms local to the market where they are sold,
  e. Growing conditions- Given the variability of the weather due to climate change and other factors, there is tremendous price fluctuation in produce. Our produce eliminates these issues resulting in limited variability in cost.

  

In the end, we grow, harvest and sell food locally within 24 hours of harvesting. There are no wholesalers or distributors to deal with.

 

F-33

 

 

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company prepares its consolidated financial statements are prepared in conformity with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of GMEV and its subsidiaries. All significant inter- company balances and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, allowance for accounts receivable, depreciable lives of the web site, valuation of warrants and beneficial conversion feature debt discounts, valuation of derivatives, and valuation of share-based payments.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

 

Property, Equipment and Depreciation

 

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of three years for computer equipment, five years for office furniture and fixtures, and the lesser of the lease term or the useful life of the leased equipment. Leasehold improvements, if any, would be amortized over the lesser of the lease term or the useful life of the improvements. Expenditures for maintenance and repairs along with fixed assets below our capitalization threshold are expensed as incurred.

 

Accounting for Derivatives

 

The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.

 

F-34

 

 

Impairment of Long-Lived Assets

 

The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets”. This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

 

Fair Value of Financial Instruments

 

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses, deposits received from customers for layaway sales and short-term loans the carrying amounts approximate fair value due to their short maturities.

 

We follow accounting guidance for financial and non-financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. 

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

 

Revenue Recognition

 

The Company recognized revenue for our services in accordance with ASC 605-10, “Revenue Recognition in Financial Statements.” Under these guidelines, revenue is recognized on transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured.

 

Restatements

 

All financial statements for prior periods have been restated to more accurately present Financial condition. There has been no profit and loss impact on any prior period statements.

 

F-35

 

 

Stock-Based Compensation

 

The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.

 

Income Taxes

 

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes”. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases.

 

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled.

 

The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.

 

Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return. The Company has no liability for uncertain tax positions as of December 31, 2020. Interest and penalties in any, related to unrecognized tax benefits would be recognized as interest expense. The Company does not have any accrued interest or penalties associated with unrecognized tax benefits, nor were any significant interest expense recognized during the six months ended December 31, 2020 and 2019.

 

Net Earnings (Loss) Per Share

 

In accordance with ASC 260-10, “Earnings Per Share,” basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period.

 

Segment Information

 

In accordance with the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”, the Company is required to report financial and descriptive information about its reportable operating segments. The Company has two operating segments as of December 31, 2020, Water purification and Agriculture.

 

F-36

 

 

NOTE 3 – GOING CONCERN

 

The Company has not generated substantial revenues, has recurring net losses from operations. As of December 31, 2020 and December 31, 2019 of $(712,494) and $(186,241), respectively.

 

In addition, as of December 31, 2020, the Company had an accumulated deficit and stockholders’ equity of ($11,001,516) and $293,266 respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to continue its operations is dependent on the execution of management’s plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the consolidated financial statements.

 

There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Company’s current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.

 

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company is attempting to commence explorations and generate revenue; however, the Company’s future cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy in the exploration and development of its unproved properties and the Company’s ability to raise additional funds, until such time it is able to generate sufficient revenue to support its operations, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and in its ability to raise additional funds, until such time the Company can generate sufficient revenues to support its operations.

 

In the event the Company is unable to raise funding in the near term, we will not be able to pay our liabilities. In the event we are unable to raise adequate funding in the future for our operations and to pay our outstanding debt obligations, and if our current creditors elect to foreclose on the outstanding debts then owed, we would be forced to liquidate our assets or may be forced to seek bankruptcy protection, which could result in the value of our outstanding securities declining in value or becoming worthless.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

F-37

 

 

NOTE 4- LICENSES

 

Licenses represent the intellectual property associated with Foundation Farms Corp. Specifically, the license is for the modular growth units, known as AeroPods, which will be used to grow non-cannabis plants for local production.

 

Licenses at December 31, 2020 and December 31, 2019 are as follows:

 

    December 31   December 31
    2020   2019
Licenses     $ 75,000     $ 75,000  

  

NOTE 5 – ENTRY INTO A DEFINITIVE AGREEMENT AND GOODWILL

 

Sustainable Resources

 

On September 25, 2017, the Company entered into a Securities Exchange Agreement through which the Company purchased 100% of the outstanding common stock of Sustainable Resources Corporation, a Delaware corporation (“Sustainable”), in exchange for the issuance by the Company of a $3,000,000 non-convertible promissory note

 

bearing a 5% per annum interest rate with a five year term. As part of the Agreement, the Company granted to Seller a twelve (12) month option to purchase up to thirty percent (30%) of the Company’s then outstanding common stock (at time of exercise of option by Seller) at a price equal to seventy five percent (75%) of the average of trading prices during the first thirty (30) days following the closing. The Agreement constitutes a tax-free exchange. The parties also entered into a Royalty Agreement that provides for the delivery of a five percent royalty of the gross revenue earned by Sustainable beginning on July 1, 2018.

 

Sustainable’s assets, acquired liabilities assumed and residual goodwill at their respective acquisition dates are summarized as follows:

 

Liabilities assumed    
Note payable   $ 3,000,000 *
Deferred revenue     154,500  
Notes payable     75,500  
Accrued expenses     4,900  
Total liabilities     3,234,990  
Total liabilities (continued from prior page)     3,234,990  
Assets attached Cash     19,294  
Original calculation of Goodwill   $ 3,215,696  

  

Foundation Farms Corp.

 

On November 6, 2019, the Company entered into a Securities Exchange Agreement through which the Company purchased 60% of the outstanding common stock of Foundation Farms Corp., a Canadian Company (the “FFC”), having its principal office in Langley, BC. in exchange for the issuance of 100,000 shares of Series A Preferred stock.

 

F-38

 

 

FFC’s assets, acquired liabilities assumed and residual goodwill at their respective acquisition dates are summarized as follows:

 

Liabilities assumed        
Accrued expenses   $ 206,933  
Related party liability     25,000  
Total liabilities     231,933  
Assets attached License     25,000  
Net deficit     206,933  
Worth of assets     293,067  
Goodwill   $ 500,000  

 

Balances of goodwill are as follows for December 31, 2020 and December 31, 2019:

 

    December 31,
2020
  December 31,
2019
Sustainable Resources   $ 3,215,696     $ 3,215,696  
Foundation Farms Corp.,     500,000       500,000  
Goodwill   $ 3,715,696     $ 3,715,696  

  

NOTE 6 – NOTES PAYABLE, NET OF DERIVATIVE LIABILITY

 

The balances of convertible notes payable at December 31, 2020 and December 31, 2019 are as follows:

 

Date   Issuer / Noteholder   December 31, 2020 ($)   December 31, 2019 ($)
4/23/13   Evolution Capital Fund I, LP           2,842,746  
4/5/16   Michael Florman           5,000  
4/5/16   Vincent Papa           5,000  
8/15/16   Leslie Kessler           20,000  
9/21/16   Tarpon Bay Partners, LLC           5,500  
12/30/16   Tarpon Bay Partners, LLC           10,000  
12/31/16   Leslie Kessler           30,000  
2/1/17   Russell Davenport     10,000       10,000  
5/22/17   Evolution Capital Partners LLC           55,500  
9/17/17   Various Investors     196,075       196,104  
9/27/17   Gaye Bergstrom     10,000       10,000  
10/17/17   Alpha Capital     50,000       50,000  
11/15/17   Robert Frome           10,000  
11/21/17   Oscaleta Partners, LLC           15,000  
12/18/17   Tarpon Bay Partners LLC           12,000  
2/5/18   Oscaleta Partners, LLC           10,000  
3/2/18   Oscaleta Partners, LLC           10,000  
4/6/18   Oscaleta Partners, LLC           10,000  
6/22/18   Oscaleta Partners, LLC           9,000  
8/2/18   Oscaleta Partners, LLC           6,000  
9/17/18   Oscaleta Partners, LLC           3,000  
12/13/18   Alpha Capital Anstalt     30,000       30,000  
1/1/19   Oscaleta Partners, LLC     100,000       100,000  

 

F-39

 

 

5/2/19   Oscaleta Partners, LLC           6,000  
7/12/19   Oscaleta Partners, LLC     5,000       5,000  
3/6/20   Trillium Partners LP            
4/3/20   Trillium Partners LP            
Total       $ 401,075     $ 3,465,850  
Less: Transfer to Derivative Liability     (162,426 )     (161,062 )
Total Debt     238,678       3,304,788  
Less; non-current portion     (202,201 )     (251,075 )
Current Portion   $ 36,477     $ 3,053,713  

 

Evolution Note- April 23, 2013

 

On April 23, 2013, the Company executed a convertible promissory note with Evolution Capital Fund I, LP (“Evolution Capital Fund”) for $50,000. The note has a maturity date of January 22, 2014. The note bears interest of 12% per annum and, in the case of default, at 24% per annum. Additionally, the note has a penalty fee of $2,000 per day, effective December 1, 2015. The conversion price for the note is at a discount of 40% for the average

 

closing price of the Company’s common stock during the five-trading day period ending one trading day prior to the date of the conversion notice. On December 1, 2015, the Company and Evolution Capital Fund modified the conversion price to a fixed price of $0.01 per share. The Company initially recorded a debt discount of $62,235, which was amortized accordingly. As of December 31, 2020, and December 31, 2019, the face value of the note (net of conversions), with the financing penalty fee, was $-0- and $2,842,746, respectively. The financing penalty fee which reflects the $2,000 per day charge was $-0- and $180,00 for the three months ended December 31, 2020 and 2019, respectively. Parts of the note have been assigned by Evolution Capital Fund to other investors.

 

On March 26, 2020, the Company received an opinion from its Legal Counsel that the Statute of Limitations in regards to this debt had expired, and as such the balance was written off in the quarter ended December 31, 2020. Upon learning of this decision, Evolution Capital Fund and Evolution Capital (“The Evolution entities”) filed suit for collection of the funds. The parties ultimately reached an agreement whereby the Company agreed to pay $112,500 to settle all claims. As of December 31, 2020, the entire liability has been paid. See Footnote 10- Settlement Liability for more detail.

 

Michael Florman Note- April 5, 2016

 

On April 5, 2016, the Company executed a note payable to Michael Florman for $5,000. The note carries an interest rate of 2%. As of December 31, 2020, and December 31, 2019, the principal value was $5,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

F-40

 

 

Vincent Papa Note- April 5, 2016

 

On April 5, 2016, the Company executed a note payable to Vincent Papa for $5,000. The note carries an interest rate of 10%. As of December 31, 2020, and December 31, 2019, the principal value was $5,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Leslie Kessler Note -August 15, 2016

 

On August 15, 2016, the Company executed a note payable to Leslie Kessler (“Kessler”) for $20,000. The note has interest of 5% and is due on August 31, 2017. As of December 31, 2020, and December 31, 2019, the principal value was $20,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018.

 

Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Tarpon Bay Partners, LLC Note- September 21, 2016

 

On September 21, 2016, the Company executed a note payable to Tarpon Bay Partners, LLC (“Tarpon Bay”) for

 

$5,500. The note carries an interest rate of 10%. As of December 31, 2020, and December 31, 2019, the principal value was $5,500. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Tarpon Bay Partners, LLC Note- December 31, 2016

 

December 31, 2016, the Company executed a note payable to Tarpon Bay Partners LLC for $10,000. The note carries an interest rate of 10% and is due on December 31, 2017. As of December 31, 2020, and December 31, 2019, the principal value was $10,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Leslie Kessler Note – December 31, 2016

 

On December 31, 2016, the Company executed a note payable to Kessler for $30,000. The note carries an interest rate of 5% and was due on December 31, 2017. This note has been paid off in 2017 but had incorrectly been expensed. However, based upon a reconciliation, it was determined that the note was no longer outstanding and had been written off. As of December 31, 2020, and December 31, 2019, the principal value was $-0- and $30,000.

 

F-41

 

 

Russell Davenport Note- February 1, 2017

 

On February 1, 2017, the Company executed a note payable with Russell Davenport for $10,000. The note is non- interest bearing and was due on February 28, 2018. As of December 31, 2020, and December 31, 2019, the principal value was $10,000.

 

Evolution Note- May 24, 2017

 

On May 22, 2017, the Company executed a convertible promissory note with Evolution Capital Partners LLC

 

(“Evolution Capital Partners”) for $16,500. The note has a maturity date of November 23, 2017 and is in default. The note bears interest of 12% per annum and, in the case of default, at 24% per annum. The conversion price for the note is at a discount of 40% for the average closing price of the Company’s common stock during the five- trading day period ending one trading day prior to the date of the conversion notice The default interest rate is $1,000 per day. It was determined that the default rate had been inappropriately applied in the past. Thusly, $39,000 of default penalties were eliminated during the first quarter of 20202. During the first quarter of As of December 31, 2020, and December 31, 2019, the principal value was $16,500 and $55,500, respectively. The $39,000 difference has been recorded as Gain on extinguishment of debt.

 

On March 26, 2020, the Company received an opinion from its Legal Counsel that the Statute of Limitations in regard to this debt had expired, and as such the balance was written off in the quarter ended December 31, 2020. Upon learning of this decision, Evolution Capital Fund and Evolution Capital (“The Evolution entities”) filed suit for collection of the funds. The parties ultimately reached an agreement whereby the Company agreed to pay $112,500 to settle all claims. As of the Balance Sheet date, all amounts have been paid and the liability is $-0- See Footnote 10- Settlement Liability for more detail.

 

Various investors note- September 17, 2017

 

On September 17, 2017, the Company acquired 100% of the outstanding stock of Sustainable Resources, Inc. and assumed certain debt of Sustainable in exchange for a promissory note for $3,000,000, bearing interest of 5%.

 

Approximately $2.8 million of this liability was assigned to Liabilities under the Liabilities Purchase Agreement. Approximately $200,000 on this note remains as of December 31, 2020 and December 31, 2019 and is due on September 17, 2022.

 

Gaye Bergstrom Note- September 27, 2017

 

On September 27, 2017, the Company executed a note payable with Gaye Bergstrom for $10,000. The note carries an interest rate of 5% and is due on October 2, 2019. As of December 31, 2020, and December 31, 2019, the principal value was $10,000.

 

Alpha Capital Anstalt Note- October 17, 2017

 

On October 17, 2017, the Company executed a note payable with Alpha Capital Anstalt for $50,000. The note carries an interest of 5% and is due on October 16, 2022. As of December 31, 2020, and December 31, 2019, the principal value was $50,000.

 

F-42

 

 

Robert Frome Note- November 2, 2017

 

The Company executed a note payable with Robert Frome for $10,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Oscaleta Partners, LLC Note- November 21 , 2017

 

On November 21, 2017, the Company executed a convertible note payable with Oscaleta Partners LLC for $15,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Tarpon Bay Partners, LLC Note- December 18, 2017

 

On December 18, 2017, the Company executed a convertible note payable with Tarpon Bay for $12,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Oscaleta Partners, LLC Note- February 5, 2018

 

On February 5, 2018, the Company executed a convertible note payable with Oscaleta Partners LLC for $10,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Oscaleta Partners, LLC Note- March 2, 2018

 

On March 2, 2018, the Company executed a convertible note payable with Oscaleta Partners LLC for $10,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Oscaleta Partners, LLC Note- April 6, 2018

 

On April 6, 2018, the Company executed a convertible note payable with Oscaleta Partners LLC for $10,000. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the

 

F-43

 

 

Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Oscaleta Partners, LLC Note- June 22, 2018

 

On June 22, 2018, the Company executed a convertible note payable with Oscaleta Partners LLC for $9,000 for $7,950 in cash plus a $1,050 original issue discount. This note is currently included in the Liabilities Purchase agreement dated December 17, 2018. Since it is a part of the Liabilities purchase agreement, it is no longer listed separately as of December 31, 2020. See Note 11- Amounts Owed under Liability Purchase Agreement for more detail.

 

Oscaleta Partners, LLC Note- August 2, 2018

 

On August 2, 2018, the Company executed a convertible note payable with Oscaleta Partners LLC for $6,000. The note bears interest of 5%, payable quarterly and matures on August 1, 2023. The Note plus accrued interest was repaid during the quarter ended December 31, 2020.

 

Oscaleta Partners, LLC Note- September 18, 2018

 

On September 18, 2018, the Company executed a convertible note payable with Oscaleta Partners LLC for $3,000 for $2,500 in cash plus a $500 original issue discount. The note bears interest of 5%, payable quarterly and matures on September 17, 2023. The Note plus accrued interest was repaid during the quarter ended December 31, 2020.

 

Alpha Capital Anstalt Note- December 18, 2018

 

On December 18, 2018, the Company executed a convertible note payable with Alpha Capital Anstalt for $10,000 for $25,010 in cash plus a $4,990 original issue discount. The note bears interest of 10%, payable quarterly and matures on December 31, 2019. The note is convertible at the lower of a) $.005 or b) a 50% discount based on the closing bid prices for the twenty (20) trading days immediately preceding the date of conversion. As of December 31, 2020, and December 31, 2019, the principal value was $30,000 and $30,000, respectively.

 

Livingston Asset Management Note- January 1, 2019

 

On January 1, 2019, the Company executed a convertible note payable with Livingston Asset Management LLC for $100,000 as a fee for the Liability Purchase Agreement. The note bears interest of 10%, payable quarterly and matures on November 20, 2019. The note is convertible at a 50% discount based on the closing bid prices for the twenty (20) trading days immediately preceding the date of conversion. As of December 31, 2020, and December 31, 2019, the principal value was $100,000 and $100,000, respectively. The note has been recorded as a deferred financing cost and will be amortized into expense as the Company reduces its liability under the Liability Purchase Agreement. See Note 11 below.

 

F-44

 

 

Oscaleta Partners, LLC Note- May 2, 2019

 

On May 2, 2019, the Company executed a convertible note payable with Oscaleta Partners LLC for $6,000 for $5,000 in cash plus a $1,000 original issue discount. The note bears interest of 5%, payable quarterly and matures on May 1, 2024. The Note plus accrued interest was repaid during the quarter ended December 31, 2020.

 

Oscaleta Partners, LLC Note- July 12, 2019

 

On July 12, 2019, the Company executed a convertible note payable with Oscaleta Partners LLC for $5,000 in cash. The note bears interest of 5%, payable quarterly and matures on May 1, 2024. The note is convertible at a 40% discount based on the closing bid prices for the five (5) trading days immediately preceding the date of conversion. As of December 31, 2020, and December 31, 2019, the principal value was $5,000 and $5,000, respectively.

 

NOTE 7- ACCRUED EXPENSES

 

Accrued expenses at December 31, 2020 and December 31, 2019 are as follows:

 

    December 31
2020
  December 31
2019
Accrued expenses   $ 955,874     $ 475,874  

 

A summary of accrued expenses is as follows:

 

    December 31
2020
  December 31
2019
Officer salaries   $ 220,000     $ 150,000  
Foundation Farms Corp. accruals     731,874       321,874  
Accrued expenses at Sustainable     4,000       4,000  
Total accrued expenses   $ 955,874     $ 475,874  

 

Foundation Farms Corp. accruals are mostly consulting expenses, travel, meals, vehicle usage, hotels, business meetings, advertisement and promotion.

 

F-45

 

 

NOTE 8- ACCRUED INTEREST

 

    December 31   December 31
    2020   2019
Accrued interest   $ 70,766     $ 2,041,624  

 

A reconciliation of accrued interest by entity follows below:

 

    December 31   December 31,
    2020   2019
Evolution notes   $     $ 1,686,778  
September 17, 2017 Note     47,399       303,801  
Other     23,367       51,045  
Total accrued interest   $ 70,766     $ 2,041,624  

 

On March 26, 2020, the Company received an opinion from its Legal Counsel that the Statute of Limitations in regard to this debt had expired, and as such the balance was written off in the quarter ended December 31, 2020. The total amount of accrued interest totaled $1,658,235. See note 14- Gain on extinguishment of debt, accrued interest and reconciliation of accounts for more detail.

 

The Company had previously been accruing interest on debt which had been included in the company’s Liability Purchase Agreement. See Note 15. However, this was incorrect, as the creditors agreed to receive only the face value of the notes incurred. Therefore, approximately 18 months of interest expense was reversed on the overwhelming balance of the note. As a result of this correction, interest expense was negative for the year and the accrued liability was approximately $300,000 lower.

 

NOTE 9- DUE TO RELATED PARTIES

 

The related party liability relates to a consultant to the Company who provides the intellectual property for Foundation Farms Corp., See Note 4 above.

 

    December 31   December 31
    2020   2019
Due to Related parties   $ 75,000     $ 75,000  

  

NOTE 10- SETTLEMENT LIABILITY

 

On June 30, 2020, the Company and Evolution Capital Partners, LLC and its related funds (“Evolution”) reached an agreement in regards to their related indebtedness with the Company. The agreement called for the Company to pay Evolution $112,500 for settlement of all claims to be completed by December 31, 2020.

 

The Company had previously accrued, $27,800 for these liabilities and thusly recorded a loss on settlement for the quarter ended December 31, 2020 of $84,700.

 

As of December 31, 2020, the Company had paid Evolution $112,500. Thusly, no liability remains as of December 31, 2020.

 

F-46

 

 

    December 31
2020
  December 31
2019
Settlement Liability   $     $  

  

NOTE 11- AMOUNTS DUE UNDER LIABILITIES PURCHASE AGREEMENT

 

On December 17, 2018, the United States District Court for the Southern District of Maryland, Northern Division (the “Court”) entered an Order Granting Approval of Settlement Agreement and Stipulation (the “Order”) in the matter titled Livingston Asset Management LLC (“Livingston”) vs GME Innotainment, Inc. (the “Company”). The Order Granting Approval of Settlement Agreement and Stipulation between the Company and Livingston (the “Stipulation”), provides for settlement of claims against the Company in the aggregate amount of $2,803,896 for past due amounts owed to creditors in connection with attorney’s fees, consulting fees, unpaid wages, and Acquisition services which Livingston acquired from third party claim holders by means of the issuance by the Company of Settlement Shares sufficient to pay down such claims. Pursuant to the terms of the settlement agreement, the remittance amount shall be the proceeds received less the prevailing discount, which is 50%.

 

During the twelve months ended December 31, 2020, the Company issued 741,467,327 shares of common stock to retire $728,412 of liabilities under the Liabilities Purchase Agreement:

 

As of December 31, 2020 and December 31, 2019, the balances owed under the Liabilities Purchase agreement are as follows:

 

Balance at December 31, 2019   $ 2,803,896  
Less: Payments     (728,412 )
Balance at December 31, 2020   $ 2,075,484  

 

NOTE 12- DERIVATIVE LIABILITY

 

The Company’s derivative liabilities as of December 31, 2020 and December 31, 2019 are as follows:

 

The debt conversion feature embedded in the various Convertible Promissory Notes which contain “down round” provisions that would be triggered if the Company issued instruments with rights to the Company’s common stock at prices below this exercise price.

 

The fair value of the derivative liabilities as of December 31, 2020 and December 31, 2019 are as follows:

 

    December 31,
  2020
  December 31,
2019
Note conversion feature liabilities   $ 162,426     $ 161,062  
Total   $ 162,426     $ 161,062  

  

F-47

 

 

The following is the Company’s derivative liability measured at fair value on a recurring basis at December 31, 2020 and December 31, 2019:

 

    December 31,
 2020
  December 31
2019
Level One   $ -0-     $ -0-  
Level Two   $ -0-     $ -0-  
Level Three   $ 162,426     $ 161,062  

  

As a result of the application of ASC No. 815, the fair value of the conversion feature is summarized as follows:

 

Derivative liability balance at December 31, 2019   $ 161,062  
Fair value mark to market adjustment – December 31, 2020     1,364  
Derivative liability balance at December 31, 2020   $ 162,426  

  

NOTE 13 – STOCKHOLDERS’ DEFICIT

 

As of December 31, 2020, and December 31, 2019, the Company had 1,235,658,085 and 86,695,638 shares outstanding, respectively. Common shares authorized are 2,000,000,000 as of December 31, 2020. Par value is $.01 per share. During the current fiscal year, the Company petitioned and received approval to increase the authorized shares of common stock to 2,000,000,000 from 375,000,000.

 

Regulation A Offering

 

In June 2020, the Company received approval from the United States Security and Exchange Commission to file an offering circular pursuant to Regulation A of the Securities Act of 1933. The Offering allows for the issuance of up to 1,500,000,000 shares to raise $1,500,000 throughout the life of the offering. As of the balance sheet date, the Company has sold 1,212,134,965 shares to fund the Company and to eliminate liabilities. Subsequent to the Balance sheet date, the Company has issued another 172,328,000 shares to raise $172,328.

 

Share Issuances

 

Share issuances for the two-year period ended December 31, 2020 follows below:

 

On January 24, 2019, the Company issued 5,079,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On May 24, 2019, the Company issued 2,086,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 7, 2019, the Company issued 5,079,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

F-48

 

 

On June 7, 2019, the Company issued 2,033,850 shares of common stock to Oscaleta Partners LLC for the extinguishment of $838.95 of convertible debt.

 

On January 7, 2020, the Company issued 7,200,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On February 24, 2020, the Company issued 9,288,450 shares of common stock to Trillium Partners LP under the Liabilities Purchase Agreement.

 

On February 27, 2020, the Company issued 10,215,225 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

On March 5, 2020, the Company issued 5,659,120 shares of common stock to Trillium Partners LP under the Liabilities Purchase Agreement.

 

On March 25, 2020, the Company issued 3,500,000 shares of common stock to Trillium Partners LP under the Liabilities Purchase Agreement.

 

On March 31, 2020, the Company issued 5,896,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On April 14, 2020, the Company issued 5,890,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On April 21, 2020, the Company issued 6,641,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On April 23, 2020, the Company issued 13,300,099 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

On April 28, 2020, the Company issued 8,615,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On April 29, 2020, the Company issued 6,659,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On May 1, 2020, the Company issued 16,786,394 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

On May 5, 2020, the Company issued 11,208,427 shares of common stock to Trillium Partners LP under the Liabilities Purchase Agreement.

 

On May 7, 2020, the Company issued 11,850,925 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

F-49

 

 

On May 14, 2020, the Company issued 20,713,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On May 27, 2020, the Company issued 14,636,687 shares of common stock to Tri-Bridge Ventures LLC under the Liabilities Purchase Agreement.

 

On June 1, 2020, the Company issued 6,764,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 3, 2020, the Company issued 9,988,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 5, 2020, the Company issued 14,912,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 12, 2020, the Company issued 10,028,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On June 25, 2020, the Company issued 28,000,000 shares of common stock to Trillium Partners LP for $28,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On July 6, 2020, the Company issued 28,000,000 shares of common stock to Trillium Partners LP for $28,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On July 15, 2020, the Company issued 34,000,000 shares of common stock to Trillium Partners LP for $34,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On July 22, 2020, the Company issued 15,000,000 shares of common stock to PAG Group, LLC for $15,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On July 24, 2020, the Company issued 38,714,000 shares of common stock to Trillium Partners LP for $38,714 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On August 11, 2020, the Company issued 38,800,000 shares of common stock to Trillium Partners LP for $38,800 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On August 31, 2020, the Company issued 18,200,000 shares of common stock to Trillium Partners LP for $18,200 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On September 3, 2020, the Company issued 23,200,000 shares of common stock to Trillium Partners LP for $23,200 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On September 4, 2020, the Company issued 10,000,000 shares of common stock to PAG Group, LLC for $10,000 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

F-50

 

 

On September 16, 2020, the Company issued 31,699,000 shares of common stock to Trillium Partners LP for $31,699 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On September 20, 2020, the Company issued 16,145,000 shares of common stock to Trillium Partners LP for $16,145 in cash pursuant to the outstanding Regulation A Financing which the Company is undertaking.

 

On October 2,, 2020, the Company issued 21,287,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On October 9, 2020, the Company issued 52,593,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On October 16, 2020, the Company issued 63,509,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On October 23, 2020, the Company issued 4,303,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On November 11, 2020, the Company issued 50,000,000 shares of common stock to PAG Group LLC under the Liabilities Purchase Agreement.

 

On November 16, 2020 the Company issued 81,640,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On November 20, 2020, the Company issued 65,488,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On November 24, 2020, the Company issued 81,874,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On December 3, 2020 the Company issued 90,000,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On December 14, 2020, the Company issued 50,000,000 shares of common stock to PAG Group LLC under the Liabilities Purchase Agreement.

 

On December 16, 2020 the Company issued 71,022,000 shares of common stock to Livingston Asset Management LLC under the Liabilities Purchase Agreement.

 

On December 23, 2020, the Company issued 35,767,120 shares of common stock to Livingston Asset Management LLC for the extinguishment of $8,192 of accrued interest and $750 in fees.

 

F-51

 

 

Issuance of Preferred stock

 

On November 6, 2019, The Company acquired a controlling interest of 60% in Foundation Farms, Corp., which specializes in the operation of highly sophisticated organic fruit, herb and vegetable indoor cultivation units that provide organic locally grown vegetables year-round to its customers. Infrastructure installations at the Company’s facilities expect to occur during the first half of 2020.

 

A newly issued security, Preferred Series A was issued to the owners of Foundation Farms Corp. in consideration of their interest. Each share of Series A Preferred Stock shall be convertible into 3,468 shares of Common Stock at the option of a Holder for a period of eighteen (18) months from the Issuance Date.

 

The shares of Series A Preferred Stock have a par value of $0.001 and each share is convertible into 3,621 shares of common stock (the “Conversion Ratio”). The holders of shares of the Series A Preferred Stock shall be entitled to receive dividends out of any assets legally available, to the extent permitted by Florida law, at an annual rate equal to 8% of the Series A Liquidation Value of such shares of Series A Preferred Stock, and shall accrue from the date of issuance of such shares of Series A Preferred Stock, payable quarterly in common stock valued at the closing trade price per share on the last trading day of the calendar quarter.

 

The holders of Series A Preferred Stock rank senior to the Company’s common stock and will vote together with the holders of the Company’s common stock on an as-converted basis on each matter submitted to a vote of holders of common stock (whether at a meeting of shareholders or by written consent). In any such vote, the number of votes that may be cast by a holder shall be equal to one (1) vote for each share of common stock into which such holder’s outstanding shares of Series A Preferred Stock may be converted. Each holder shall be entitled to notice of all shareholder meetings (or requests for written consent) in accordance with the Company’s bylaws. As a result of the issuance of the Series B Preferred Stock, there was a change in control of the Company as of the date of consummation of the Merger.

 

NOTE 14- GAIN ON EXTINGUISHMENT OF DEBT, ACCRUED INTEREST AND RECONCILIATION OF ACCOUNTS

 

On April 23, 2013, the Company executed a convertible promissory note with Evolution Capital Fund I, LP (“Evolution Capital Fund”) for $50,000. The note has a maturity date of January 22, 2014. On March 26, 2020, the Company received an opinion from its Legal Counsel that the Statute of Limitations in regards to this indebtedness had expired, and as such the Company was no longer legally obligated to pay the amounts owed. As of December 31, 2019, the Company had accrued a total indebtedness to Evolution Capital Fund of $4,500,981, comprised of a note balance of $2,843,746 and accrued interest of $1,658,235 . The entire balance was written off in the quarter ended December 31, 2020, and a related gain on extinguishment of debt was recorded as well. In addition, the Company reviewed its other outstanding note with the Evolution Group and determined that $39,000 of penalty had been accrued incorrectly. Also, after a reconciliation of its outstanding indebtedness, it had been determined that a $30,000 note to Leslie Kessler was no longer outstanding. This amount was offset by the $84,700 loss on the Evolution settlement. As such the total gain on extinguishment of debt, accrued interest and reconciliation of balances was $4,485,281.

 

F-52

 

 

NOTE 15- SEGMENT REPORTING

 

The Company has two segments; a) Water purification and b) Agriculture.

 

Balance sheet information as of December 31, 2020:

 

    Water Purification   Agriculture   Corporate   Total
                 
Assets                                
Cash   $ 4,468     $     $     $ 4,468  
Other receivable     1,050                   1,050  
Deferred financing costs and other prepaid expenses                 75,278       75,278  
Total current assets   $ 5,518     $     $ 75,278     $ 80,796  
                                 
License           75,000             75,000  
Goodwill     3,215,696       500,000             3,715,696  
                                 
Total Assets   $ 3,221,214     $ 575,000     $ 75,278     $ 3,871,493  
                                 
Liabilities                                
Accrued expenses   $ 224,000     $ 731,874     $     $ 955,874  
Accrued interest     47,399             23,367       70,766  
Notes payable, net of derivative liability                 36,477       36,477  
Due to related parties           75,000             75,000  
Derivative liabilities                     162,426       162,426  
Amounts due under Liabilities Purcahse Agreement                     2,075,483       2,075,483  
Notes payable- non current portion, net of derivative liability                     202,201       202,201  
                                 
Total liabilities   $ 271,399     $ 806,874     $ 2,499,954     $ 3,578,227  

 

F-53

 

 

Income statement information for the twelve months ended December 31, 2020:

 

    Water purification   Agriculture   Corporate   Total
Revenues   $     $     $     $  
Operating expenses     202,494       510,000             712,494  
Other income (expenses)                 4,743,878       4,743,878  
                                 
Non-controlling Interest           (204,000 )           (204,000 )
Net income/(loss)   $ (202,494 )   $ (286,000 )   $ 4,743,878     $ 4,235,383  

 

NOTE 16 – INCOME TAX

 

For the twelve months ended December 31, 2020 and 2019, there was no provision for income taxes and deferred tax assets have been entirely offset by valuation allowance as follows:

 

    2020   2019
         
Net income   $ 4,235,383     $ (1,649,009 )
                 
Less:                
                 
Amortization of Original Issue discount     (4,485,281 )      
                 
Amortization of Liability Purchase Agreement Note     25,979        
                 
Amortization of Original Issue discount     3,353       5,572  
                 
Financing fee penalty             730,000  
                 
Non-controlling interest     (204,000 )     (45,981 )
                 
Taxable income   $ (424,566 )   $ (959,418 )
                 
Marginal tax rate     26 %     26 %
                 
Tax expense     (110,387 )     (249,449 )
                 
Change in valuation allowance     110,387       249,449  
                 
Provision for Income taxes   $     $  

 

F-54

 

 

In percentage terms, the analysis is as follows:

 

    2020   2019
         
Net income     26.0 %     26.0 %
                 
Amortization of Original Issue discount     -27.5 %     0.0 %
                 
Amortization of Liability Purchase Agreement Note     0.2 %     0.0 %
                 
Amortization of Original Issue discount     0.0 %     -0.1 %
                 
Financing fee penalty     0.0 %     -11.5 %
                 
Non-controlling interest     -1.3 %     0.7 %
                 
Taxable income     -2.6 %     15.1 %
                 
Change in valuation allowance     2.6 %     -15.1 %
                 
Provision for Income tax expense     0.0 %     0.0 %

  

Marginal income tax rates were as follows:

 

    2020   2019
Marginal tax rates:                
Federal     21 %     21 %
State     5 %     5 %
                 
Total marginal tax rates     26 %     26 %

  

F-55

 

 

NOTE 17 – CONTINGENCIES AND COMMITMENTS

 

Legal Matters

 

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of March 31, 2021, there were no pending or threatened lawsuits.

 

NOTE 18- COVID-19

 

The Company, like all enterprises, is currently dealing with the impact of COVID-19 on its operations and future prospects. At this time, it is difficult to estimate the ultimate impact on our operations, but we will continue to monitor circumstances and respond as appropriate.

 

NOTE 19 – SUBSEQUENT EVENTS

 

As of the date of this report, there were no material subsequent events that required disclosure except for the following:

 

Issuance of shares of common stock

 

Subsequent to December 31, 2020, the Company issued 250,549,500 shares as follows.

 

Extinguishment of accrued interest

 

Subsequent to December 31, 2020, the Company issued 78,221,400 shares pursuant to the extinguishment of Accrued interest and fees as follows below. The conversion of interest was on the $100,000 LPA note.:

 

    Shares       Accrued        
    Issued   Principal   Interest   Fees   Total
                     
05-Jan-21       78,221,400     $     $ 21,753     $ 1,713     $ 23,466  
        78,221,400     $     $ 21,753     $ 1,713     $ 23,466  

 

Subsequent to December 31, 2020, the Company issued 172,328,000 pursuant to the Regulation A financing agreement as follows below:

 

  Shares Issued   Purchaser
         
07-Jan-21       130,322,000     Livingston Asset Manangement LLC
12-Feb-21       42,006,000     Livingston Asset Manangement LLC
        172,328,000      

 

F-56

 


Exhibit 2.1

Articles of Incorporation

 

 

 

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Exhibit 2.2

 

BY-LAWS

 

OF

 

GME INNOTAINMENT, INC.

 

ARTICLE I

 

OFFICES

 

Section 1. PRINCIPAL OFFICE. The principal office for the transaction of business of the corporation shall be fixed or may be changed by approval of a majority of the authorized Directors, and additional offices may be established and maintained at such other place or places as the Board of Directors may from time to time designate.

 

Section 2. OTHER OFFICES. Branch or subordinate offices may at any time be established by the Board of Directors at any place or places where the corporation is qualified to do business.

 

ARTICLE II

 

DIRECTORS - MANAGEMENT

 

Section 1. RESPONSIBILITY OF BOARD OF DIRECTORS. Subject to the provisions of applicable law and to any limitations in the Articles of Incorporation of the corporation relating to action required to be approved by the Shareholders, or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board may delegate the management of the day-to-day operation of the business of the corporation to an executive committee or others, provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board.

 

Section 2. STANDARD OF CARE. Each Director shall perform the duties of a Director, including the duties as a member of any committee of the Board upon which the Director may serve, in good faith, in a manner such Director believes to be in the best interests of the corporation, and with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances.

 

Section 3. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of Directors shall be up to fifteen (15) until changed by a duly adopted amendment to the Articles of Incorporation or by an amendment to this by-law adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote.

 

Section 4. ELECTION AND TERM OF OFFICE OF DIRECTORS. Three Directors shall be elected at each annual meeting of the Shareholders to hold office until the next annual meeting. Each Director, including a Director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified. The election of Directors shall be on a staggered basis. Dependent on the total number of Directors approved, election shall be for no more than twenty percent (20%) of the Board of Directors in any given year when the total number of Directors exceeds five (5) Directors.

 

 1 

 

 

Section 5. VACANCIES. Vacancies in the Board of Directors may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director, except that a vacancy created by the removal of a Director by the vote or written consent of the Shareholders or by court order may be filled only by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of holders of a majority of the outstanding shares entitled to vote. Each Director so elected shall hold office until the next annual meeting of the Shareholders and until a successor has been elected and qualified.

 

A vacancy or vacancies in the Board of Directors shall be deemed to exist in the event of the death, resignation, or removal of any Director, or if the Board of Directors by resolution declares vacant the office of a Director who has been declared of unsound mind by an order of court or convicted of a felony, or if the authorized number of Directors is increased, or if the Shareholders fail, at any meeting of Shareholders at which any Director or Directors are elected, to elect the number of Directors to be voted for at that meeting.

 

The Shareholders may elect a Director or Directors at any time to fill any vacancy or vacancies not filled by the Directors, but any such election by written consent shall require the consent of a majority of the outstanding shares entitled to vote.

 

Any Director may resign effective on giving written notice to the Chairman of the Board, the President, the Secretary, or the Board of Directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a Director is effective at a future time, the Board of Directors may elect a successor to take office when the resignation becomes effective.

 

No reduction of the authorized number of Directors shall have the effect of removing any Director before that Directors’ term of office expires.

 

Section 6. REMOVAL OF DIRECTORS. Subject to applicable law, the entire Board of Directors or any individual Director may be removed from office. In such case, the remaining Board members may elect a successor Director to fill such vacancy for the remaining unexpired term of the Director so removed.

 

Section 7. NOTICE, PLACE AND MANNER OF MEETINGS. Meetings of the Board of Directors may be called by the Chairman of the Board, or the President, or any Vice President, or the Secretary, or any one (1) Director and shall be held at the principal executive office of the corporation, unless some other place is designated in the notice of the meeting. Members of the Board may participate in a meeting through use of a conference telephone or similar communications equipment so long as all members participating in such a meeting can hear one another. Accurate minutes of any meeting of the Board or any committee thereof, shall be maintained by the Secretary or other officer designated for that purpose.

 

Section 8. ORGANIZATIONAL MEETINGS. The organizational meetings of the Board of Directors shall be held immediately following the adjournment of the Annual Meetings of the Shareholders.

 

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Section 9. OTHER REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at the corporate offices, or such other place as may be designated by the Board of Directors, as follows:

 

Time of Regular Meeting: 9:00 A.M.

 

Date of Regular Meeting: Last Friday of every month

 

If said day shall fall upon a holiday, such meetings shall be held on the next succeeding business day thereafter. No notice need be given of such regular meetings.

 

Section 10. SPECIAL MEETINGS - NOTICES - WAIVERS. Special meetings of the Board may be called at any time by the President or, if he or she is absent or unable or refuses to act, by any Vice President or the Secretary or by any one (1) Director if only one is provided.

 

At least forty-eight (48) hours notice of the time and place of special meetings shall be delivered personally to the Directors or personally communicated to them by a corporate officer by telephone or telegraph. If the notice is sent to a Director by letter, it shall be addressed to him or her at his or her address as it is shown upon the records of the corporation, or if it is not so shown on such records or if not readily ascertainable, at the place in which the meetings of the Directors are regularly held. In case such notice is mailed, it shall be deposited in the United States mail, postage prepaid, in the place in which the principal executive officer of the corporation is located at least four (4) days prior to the time of the holding of the meeting. Such mailing, telegraphing, telephoning or delivery as above provided shall be due, legal and personal notice to such Director.

 

When all of the Directors are present at any Directors’ meeting, however, called or noticed, and either (i) sign a written consent thereto on the records of such meeting, or, (ii) if a majority of the Directors is present and if those not present sign a waiver of notice of such meeting or a consent to holding the meeting or an approval of the minute thereof, whether prior to or after the holding of such meeting, which said waiver, consent or approval shall be filed with the Secretary of the corporation, or, (iii) if a Director attends a meeting without notice but without protesting, prior thereto or at its commencement, the lack of notice, then the transactions thereof are as valid as if had at a meeting regularly called and noticed.

 

Section 11. DIRECTORS’ ACTION BY UNANIMOUS WRITTEN CONSENT. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting and with the same force and effect as if taken by a unanimous vote of Directors, if authorized by a writing signed individually or collectively by all members of the Board. Such consent shall be filed with the regular minutes of the Board.

 

Section 12. QUORUM. A majority of the number of Directors as fixed by the Articles of Incorporation or By-Laws shall be necessary to constitute a quorum for the transaction of business, and the action of a majority of the Directors present at any meeting at which there is a quorum, when duly assembled, is valid as a corporate act; provided that a minority of the Directors, in the absence of a quorum, may adjourn from time to time, but may not transact any business. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of Directors, if any action taken is approved by a majority of the required quorum for such meeting.

 

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Section 13. NOTICE OF ADJOURNMENT. Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place be fixed at the meeting adjourned and held within twenty-four (24) hours, but if adjourned more than twenty-four (24) hours, notice shall be given to all Directors not present at the time of the adjournment.

 

Section 14. COMPENSATION OF DIRECTORS. Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board a fixed sum and expense of attendance, if any, may be allowed for attendance at each regular and special meeting of the Board; provided that nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor.

 

Section 15. COMMITTEES. Committees of the Board may be appointed by resolution passed by a majority of the whole Board. Committees shall be composed of two (2) or more members of the Board and shall have such powers of the Board as may be expressly delegated to it by resolution of the Board of Directors, except those powers expressly made non-delegable by applicable law.

 

Section 16. ADVISORY DIRECTORS. The Board of Directors from time to time may elect one or more persons to be Advisory Directors who shall not by such appointment be members of the Board of Directors. Advisory Directors shall be available from time to time to perform special assignments specified by the President, to attend meetings of the Board of Directors upon invitation and to furnish consultation to the Board. The period during which the title shall be held may be prescribed by the Board of Directors. If no period is prescribed, the title shall be held at the pleasure of the Board.

 

Section 17. RESIGNATIONS. Any Director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the Corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.

 

ARTICLE III

 

OFFICERS

 

Section 1. OFFICERS. The Officers of the corporation shall be a President, a Secretary, and a Treasurer. The corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries, or one or more Assistant Treasurers, and such other Officers as may be appointed in accordance with the provisions of Section 3 of this Article. Any number of offices may be held by the same person.

 

Section 2. ELECTION. The Officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article, shall be chosen annually by the Board of Directors, and each shall hold office until he or she shall resign or shall be removed or otherwise disqualified to serve or a successor shall be elected and qualified.

 

Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint such other Officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided by the By-Laws or as the Board of Directors may from time to time determine.

 

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Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if any, of any officer under any contract of employment, any officer may be removed, either with or without cause, by the Board of Directors, at any regular or special meeting of the Board, or except in case of an Officer chosen by the Board of Directors by any Officer upon whom such power of removal may be conferred by the Board of Directors.

 

Any Officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

 

Section 5. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filed in the manner prescribed in the By-Laws for regular appointment to that office.

 

Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an officer be elected, shall, if present, preside at meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned by the Board of Directors or prescribed by the By-Laws. If there is no President, the Chairman of the Board shall in addition be the Chief Executive Officer of the corporation and shall have the powers and duties prescribed in Section 7 of this Article.

 

Section 7. PRESIDENT/CHIEF EXECUTIVE OFFICER. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the chairman of the Board, if there be such an officer, the President shall be the Chief Executive Officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and Officers of the corporation. He or she shall preside at all meetings of the Shareholders and in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. The President shall be ex officio a member of all the standing committees, including the Executive Committee, if any, and shall have the general powers and duties of management usually vested in the office of President of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the By-Laws.

 

Section 8. VICE PRESIDENT. In the absence or disability of the President, the Vice Presidents, if any, in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to, all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the By-Laws.

 

Section 9. SECRETARY. The Secretary shall keep, or cause to be kept, a book of minutes at the principal office or such other place as the Board of Directors may order, of all meetings of Directors and Shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at Directors’ meetings, the number of shares present or represented at Shareholders’ meetings and the proceedings thereof.

 

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The Secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation’s transfer agent, a share register, or duplicate share register showing the names of the Shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation.

 

The Secretary shall give, or cause to be given, notice of all the meetings of the Shareholders and of the Board of Directors required by the By-Laws or by law to be given. He or she shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the By-Laws.

 

Section 10. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained in accordance with generally accepted accounting principles, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, earnings (or surplus) and shares. The books of accounts shall at all reasonable times be open to inspection by any Director.

 

This officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors. He or she shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the President and Directors, whenever they request it, an account of all of his or her transactions and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the By-Laws.

 

ARTICLE IV

 

SHAREHOLDERS’ MEETINGS

 

Section 1. PLACE OF MEETINGS. All meetings of the Shareholders shall be held at the principal executive office of the corporation unless some other appropriate and convenient location be designated for that purpose from time to time by the Board of Directors.

 

Section 2. ANNUAL MEETINGS. The annual meetings of the Shareholders shall be held, each year, at the time and on the day following:

 

Time of Meeting: 10:00 A.M.

 

Date of Meeting: July 8th of each year

 

If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same hour. At the annual meeting, the Shareholders shall elect a Board of Directors, consider reports of the affairs of the corporation and transact such other business as may be properly brought before the meeting.

 

Section 3. SPECIAL MEETINGS. Special meetings of the Shareholders may be called at any time by the Board of Directors, the Chairman of the Board, the President, a Vice President, the Secretary, or by one or more Shareholders holding not less than one-tenth (1/10) of the voting power of the corporation. Except as next provided, notice shall be given as for the annual meeting.

 

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Upon receipt of a written request addressed to the Chairman, President, Vice President, or Secretary, mailed or delivered personally to such officer by any person (other than the Board) entitled to call a special meeting of Shareholders, such Officer shall cause notice to be given, to the Shareholders entitled to vote, that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of such request. If such notice is not given within twenty (20) days after receipt of such request, the persons calling the meeting may give notice thereof in the same manner provided by these By-Laws.

 

Section 4. NOTICE OF MEETINGS - REPORTS. Notice of meetings, annual or special, shall be given in writing not less than ten (10) nor more than sixty (60) days before the date of the meeting to Shareholders entitled to vote thereat. Such notice shall be given by the Secretary or the Assistant Secretary, or if there be no such officer, or in the case of his or her neglect or refusal, by any Director or Shareholder.

 

Such notices or any reports shall be given personally or by mail and shall be sent to the Shareholder’s address appearing on the books of the corporation, or supplied by him or her to the corporation for the purpose of the notice.

 

Notice of any meeting of Shareholders shall specify the place, the day and the hour of meeting, and (1) in case of a special meeting, the general nature of the business to be transacted and no other business may be transacted, or (2) in the case of an annual meeting, those matters which Board at date of mailing, intends to present for action by the Shareholders. At any meetings where Directors are to be elected notice shall include the names of the nominees, if any, intended at date of notice to be presented by management for election.

 

If a Shareholder supplies no address, notice shall be deemed to have been given if mailed to the place where the principal executive office of the corporation is situated, or published at least once in some newspaper of general circulation in the County of said principal office.

 

Notice shall be deemed given at the time it is delivered personally or deposited in the mail or sent by other means of written communication. The Officer giving such notice or report shall prepare and file an affidavit or declaration thereof.

 

When a meeting is adjourned for forty-five (45) days or more, notice of the adjourned meeting shall be given as in case of an original meeting. Save, as aforesaid, it shall not be necessary to give any notice of adjournment or of the business to be transacted at an adjourned meeting other than by announcement at the meeting at which said adjournment is taken.

 

Section 5. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The transactions of any meeting of Shareholders, however called and notice, shall be valid as through had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the Shareholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting or an approval shall be filed with the corporate records or made a part of the minutes of the meeting.

 

Attendance shall constitute a waiver of notice, unless objection shall be made as provided in applicable law.

 

Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING - DIRECTORS. Any action which may be taken at a meeting of the Shareholders, may be taken without a meeting or notice of meeting if authorized by a writing signed by all of the Shareholders entitled to vote at a meeting for such purpose, and filed with the Secretary of the corporation, provided, further, that while ordinarily Directors can be elected by unanimous written consent, if the Directors fail to fill a vacancy, then a Director to fill that vacancy may be elected by the written consent of persons holding a majority of shares entitled to vote for the election of Directors.

 

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Section 7. OTHER ACTIONS WITHOUT A MEETING. Unless otherwise provided for under applicable law or the Articles of Incorporation, any action which may be taken at any annual or special meeting of Shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize to take such action at a meeting at which all shares entitled to vote thereon were present and voted.

 

Unless the consents of all Shareholders entitled to vote have been solicited in writing,

 

(1) Notice of any Shareholder approval without a meeting by less than unanimous written consent shall be given at least ten (10) days before the consummation of the action authorized by such approval, and

 

(2) Prompt notice shall be given of the taking of any other corporate action approved by Shareholders without a meeting be less than unanimous written consent, to each of those Shareholders entitled to vote who have not consented in writing.

 

Any Shareholder giving a written consent, or the Shareholder’s proxy holders, or a transferee of the shares of a personal representative of the Shareholder or their respective proxy holders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the corporation.

 

Section 8. QUORUM. The holder of a majority of the shares entitled to vote thereat, present in person, or represented by proxy, shall constitute a quorum at all meetings of the Shareholders for the transaction of business except as otherwise provided by law, by the Articles of Incorporation, or by these By-Laws. If, however, such majority shall not be present or represented at any meeting of the Shareholders, the shareholders entitled to vote thereat, present in person, or by proxy, shall have the power to adjourn the meeting from time to time, until the requisite amount of voting shares shall be present. At such adjourned meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been transacted at a meeting as originally notified.

 

If a quorum be initially present, the Shareholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum, if any action taken is approved by a majority of the Shareholders required to initially constitute a quorum.

 

Section 9. VOTING. Only persons in whose names shares entitled to vote stand on the stock records of the corporation on the day of any meeting of Shareholders, unless some other day be fixed by the Board of Directors for the determination of Shareholders of record, and then on such other day, shall be entitled to vote at such meeting.

 

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Provided the candidate’s name has been placed in nomination prior to the voting and one or more Shareholders has given notice at the meeting prior to the voting of the Shareholder’s intent to cumulate the Shareholder’s votes, every Shareholder entitled to vote at any election for Directors of any corporation for profit may cumulate their votes and give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of votes to which his or her shares are entitled to, or distribute his or her votes on the same principle among as many candidates as he or she thinks fit.

 

The candidates receiving the highest number of votes up to the number of Directors to be elected are elected.

 

The Board of Directors may fix a time in the future not exceeding thirty (30) days preceding the date of any meeting of Shareholders or the date fixed for the payment of any dividend or distribution, or for the allotment of rights, or when any change or conversion or exchange of shares shall go into effect, as a record date for the determination of the Shareholders entitled to notice of and to vote at any such meeting, or entitled to receive any such dividend or distribution, or any allotment of rights or to exercise the rights in respect to any such change, conversion or exchange of shares. In such case only Shareholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting, to receive such dividends, distribution or allotment of rights, or to exercise such rights, as the case may be notwithstanding any transfer of any share on the books of the corporation after any record date fixed as aforesaid. The Board of Directors may close the books of the corporation against transfers of shares during the whole or any part of such period.

 

Section 10. PROXIES. Every Shareholder entitled to vote, or to execute consents, may do so, either in person or by written proxy, executed in accordance with the provisions of applicable law filed with the Secretary of the corporation.

 

Section 11. ORGANIZATION. The President, or in the absence of the President, any Vice President, shall call the meeting of the Shareholders to order, and shall act as Chairman of the meeting. In the absence of the President and all of the Vice Presidents, Shareholders shall appoint a Chairman for such meeting. The Secretary of the corporation shall act as Secretary of all meetings of the Shareholders, but in the absence of the Secretary at any meeting of the Shareholders, the presiding officer may appoint any person to act as Secretary of the meeting.

 

Section 12. INSPECTORS OF ELECTION. In advance of any meeting of Shareholders, the Board of Directors may, if they so elect, appoint inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election be not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any such meeting may, and on the request of any Shareholder or his or her proxy shall, make such appointment at the meeting in which case the number of inspectors shall be either one (1) or three (3) as determined by a majority of the Shareholders represented at the meeting.

 

ARTICLE V

 

CERTIFICATES AND TRANSFER OF SHARES

 

Section 1. CERTIFICATES FOR SHARES. Certificates for shares shall be of such form and device as the Board of Directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; a statement of the rights, privileges preferences and restriction, if any; a statement as to the redemption or conversion, if any; a statement of liens or restrictions upon transfer or voting, if any; if the shares be assessable or, if assessments are collectible by personal action, a plain statement of such facts.

 

 9 

 

 

All certificates shall be signed in the name of the corporation by the Chairman of the Board or Vice Chairman of the Board or the President or Vice President and by the Chief Financial officer or an Assistant Treasurer or the Secretary or any Assistant Secretary, certifying the number of shares and the class or series of shares owned by the Shareholder.

 

Any or all of the signatures on the certificate may be facsimile. In case any Officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed on a certificate shall have ceased to be that Officer, transfer agent, or registrar before that certificate is issued, it may be issued by the corporation with the same effect as if that person were an Officer, transfer agent, or registrar at the date of issuance.

 

Section 2. TRANSFER ON THE BOOKS. Upon surrender to the Secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

 

Section 3. LOST OR DESTROYED CERTIFICATES. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact and shall, if the Directors so require, give the corporation a bond of indemnity, in form and with one or more sureties satisfactory to the Board, of the stock represented by said certificate may be issued in the number of shares as the one alleged in at least double the value certificate, whereupon a new same tender and for the same to be lost or destroyed.

 

Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars which shall be an incorporated bank or trust company, either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the Board of Directors may designate.

 

Section 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE. In order that the corporation may determine the Shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect to any other lawful action, the Board may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days prior to the date of such meeting nor more than sixty (60) days prior to any other action.

 

If no record date is fixed; the record date for determining Shareholders entitled to notice of or to vote at a meeting of Shareholders shall be at the close of business on the business day next preceding the day on which notice is given or if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. The record date for determining Shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is given.

 

The record date for determining Shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the sixtieth (60th) day prior to the date of such other action, whichever is later.

 

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ARTICLE VI

 

RECORDS - REPORTS - INSPECTION

 

Section 1. RECORDS. The corporation shall maintain, in accordance with generally accepted accounting principles, adequate and correct accounts, books and records of its business and properties. All of such books, records and accounts shall be kept at its principal executive office as fixed by the Board of Directors from time to time.

 

Section 2. INSPECTION OF BOOKS AND RECORDS. All books and records shall be open to inspection of the Directors and Shareholders from time to time and in the manner provided under applicable law.

 

Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS. The original or a copy of these By-Laws, as amended or otherwise altered to date, certified by the Secretary, shall be kept at the corporation’s principal executive office and shall be open to inspection by the Shareholders at all reasonable times during office hours.

 

Section 4. CHECK, DRAFTS, ETC. All checks, drafts, or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by the Board of Directors.

 

Section 5. CONTRACT, ETC. – HOW EXECUTED. The Board of Directors, except as in the By-Laws otherwise provided, may authorize any Officer or Officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation. Such authority may be general or confined to specific instances. Unless so authorized by the Board of Directors, no Officer, agent or employee shall have any power or authority to bind the corporation by any contract or agreement, or to pledge its credit, or to render it liable for any purpose or to any amount except as may be provided under applicable law.

 

ARTICLE VII

 

ANNUAL REPORTS

 

Section 1. REPORT TO SHAREHOLDERS, DUE DATE. The Board of Directors shall not be required to file an annual report to be sent to the Shareholders. This report shall be available at the annual meeting of Shareholders to be held during the next fiscal year and in the manner specified in Section 4 of the Article IV of these By-Laws for giving notice to Shareholders of the corporation. The annual report shall contain a balance sheet as of the end of the fiscal year and an income statement and statement of changes in financial position for the fiscal year, accompanied by any report of independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation. No report shall be necessary in the event the corporation transacts no business and is not a fully operational entity during the course of the fiscal year.

 

 11 

 

 

ARTICLE VIII

 

AMENDMENTS TO BY-LAWS

 

Section 1. AMENDMENT BY SHAREHOLDERS. New By-Laws may be adopted or these By-Laws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the Articles of Incorporation of the corporation set forth the number of authorized Directors of the corporation, the authorized number of Directors may be changed only by an amendment of the Article of Incorporation.

 

Section 2. POWERS OF DIRECTORS. Subject to the right of the Shareholders to adopt, amend or repeal By-Laws, as provided in Section 1 of this Article VIII, and the limitations, if any, under law, the Board of Directors may adopt, amend or repeal any of these By-Laws other than a By-Law or amendment thereof changing the authorized number of Directors.

 

Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new By-Law is adopted, it shall be copied in the book of By-Laws with the original By-Laws, in the appropriate place. If any By-Law is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said book.

 

ARTICLE IX

 

CORPORATE SEAL

 

Section 1. SEAL. The corporate seal shall be circular in form, and shall have inscribed thereon the name of the corporation, the date and State of incorporation.

 

ARTICLE X

 

MISCELLANEOUS

 

Section 1. REPRESENTATION OF SHARES IN OTHER CORPORATIONS. Shares of other corporations standing in the name of this corporation may be voted or represented and all incidents thereto may be exercised on behalf of the corporation by the Chairman of the Board, the President or any Vice President and the Secretary or an Assistant Secretary.

 

Section 2. SUBSIDIARY CORPORATIONS. Shares of this corporation owned by a subsidiary shall not be entitled to vote on any matter. A subsidiary for these purposes is defined as a corporation, the shares of which possessing more than 25% of the total combined voting power of all classes of shares entitled to vote, are owned directly or indirectly through one (1) or more subsidiaries.

 

Section 3. INDEMNITY. Subject to applicable law, the corporation may indemnify any Director, Officer, agent or employee as to those liabilities and on those terms and conditions as appropriate. In any event, the corporation shall have the right to purchase and maintain insurance on behalf of any such persons whether or not the corporation would have the power to indemnify such person against the liability insured against.

 

Section 4. ACCOUNTING YEAR. The accounting year of the corporation shall be fixed by resolution of the Board of Directors.

 

 12 

 


Exhibit 3.1

 

 

  

 


 

Exhibit 3.2

 

GME INNOTAINMENT, INC.

SUBSCRIPTION AGREEMENT

 

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS. ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

PROSPECTIVE INVESTORS MAY NOT TREAT THE CONTENTS OF THE SUBSCRIPTION AGREEMENT, THE OFFERING CIRCULAR OR ANY OF THE OTHER MATERIALS RELATING TO THE OFFERING AND PRESENTED TO INVESTORS ON THE COMPANY’S WEBSITE OR PROVIDED BY THE BROKER (COLLECTIVELY, THE “OFFERING MATERIALS”) OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES OR AGENTS (INCLUDING “TESTING THE WATERS” MATERIALS) AS INVESTMENT, LEGAL OR TAX ADVICE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND THE RISKS INVOLVED. EACH PROSPECTIVE INVESTOR SHOULD CONSULT THE INVESTOR’S OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISOR AS TO INVESTMENT, LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THE INVESTOR’S PROPOSED INVESTMENT.

 

THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

 

THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE. THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED.

 

 

 

 

THE INFORMATION PRESENTED IN THE OFFERING MATERIALS WAS PREPARED BY THE COMPANY SOLELY FOR THE USE BY PROSPECTIVE INVESTORS IN CONNECTION WITH THIS OFFERING. NO REPRESENTATIONS OR WARRANTIES ARE MADE AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN ANY OFFERING MATERIALS, AND NOTHING CONTAINED IN THE OFFERING MATERIALS IS OR SHOULD BE RELIED UPON AS A PROMISE OR REPRESENTATION AS TO THE FUTURE PERFORMANCE OF THE COMPANY.

 

THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE. EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

 

Ladies and Gentlemen:

 

1. Subscription.

 

(a) The undersigned (“Subscriber”) hereby irrevocably subscribes for and agrees to purchase Common Stock (the “Securities”), of GME Innotainment, Inc., a Florida corporation (the “Company”), at a purchase price of $0.001 per share of Common Stock (the “Per Security Price”), upon the terms and conditions set forth herein.

 

(b) Subscriber understands that the Securities are being offered pursuant to an offering circular (the “Offering Circular”) filed with the SEC as part of the Offering Statement. By executing this Subscription Agreement, Subscriber acknowledges that Subscriber has received this Subscription Agreement, copies of the Offering Circular and Offering Statement, including exhibits thereto, and any other information required by the Subscriber to make an investment decision.

 

(c) The Subscriber’s subscription may be accepted or rejected in whole or in part, at any time prior to a Closing Date (as hereinafter defined), by the Company at its sole discretion. In addition, the Company, at its sole discretion, may allocate to Subscriber only a portion of the number of Securities Subscriber has subscribed for. The Company will notify Subscriber whether this subscription is accepted (whether in whole or in part) or rejected. If Subscriber’s subscription is rejected, Subscriber’s payment (or portion thereof if partially rejected) will be returned to Subscriber without interest and all of Subscriber’s obligations hereunder shall terminate.

 

(d) The aggregate number of Securities sold shall not exceed 10,000,000,000 shares (the “Maximum Offering”). The Company may accept subscriptions until the termination date given in the Offering Circular, unless otherwise extended by the Company in its sole discretion in accordance with applicable SEC regulations for such other period required to sell the Maximum Offering (the “Termination Date”). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a “Closing Date”).

 

(e) In the event of rejection of this subscription in its entirety, or in the event the sale of the Securities (or any portion thereof) is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in force and effect.

 

2. Purchase Procedure.

 

(a) Payment. The purchase price for the Securities shall be paid simultaneously with the execution and delivery to the Company of the signature page of this Subscription Agreement. Subscriber shall deliver a signed copy of this Subscription Agreement (which may be executed and delivered electronically), along with payment for the aggregate purchase price of the Securities by ACH electronic transfer or wire transfer to an account designated by the Company, or by any combination of such methods.

 

 

 

 

(b) No Escrow. The proceeds of this offering will not be placed into an escrow account. As there is no minimum offering, upon the approval of any subscription to this Offering Circular, the Company shall immediately deposit said proceeds into the bank account of the Company and may dispose of the proceeds in accordance with the Use of Proceeds.

 

3. Representations and Warranties of the Company.

 

The Company represents and warrants to Subscriber that the following representations and warranties are true and complete in all material respects as of the date of each Closing Date, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have “knowledge” of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have “knowledge” of a particular fact or other matter if one of the Company’s current officers has, or at any time had, actual knowledge of such fact or other matter.

 

(a) Organization and Standing. The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Florida. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

 

(b) Issuance of the Securities. The issuance, sale and delivery of the Securities in accordance with this Subscription Agreement have been duly authorized by all necessary corporate action on the part of the Company. The Securities, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable.

 

(c) Authority for Agreement. The execution and delivery by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Securities) are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon full execution hereof, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.

 

(d) No filings . Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 4 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the execution, delivery and performance by the Company of this Subscription Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.

 

(e) Capitalization. The authorized and outstanding securities of the Company immediately prior to the initial investment in the Securities is as set forth in “Securities Being Offered” in the Offering Circular. Except as set forth in the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.

 

(f) Financial statements. Complete copies of the Company’s financial statements consisting of the balance sheets of the Company given in the Offering Circular and the related statements of income, stockholders’ equity and cash flows for the two-year period then ended (the “Financial Statements”) have been made available to the Subscriber and appear in the Offering Circular. The Financial Statements are based on the books and records of the Company and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the periods indicated.

 

 

 

 

(g) Proceeds. The Company shall use the proceeds from the issuance and sale of the Securities as set forth in “Use of Proceeds to issuer” in the Offering Circular.

 

(h) Litigation. There is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company’s knowledge, currently threatened in writing (a) against the Company or (b) against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.

 

4. Representations and Warranties of Subscriber. By executing this Subscription Agreement, Subscriber (and, if Subscriber is purchasing the Securities subscribed for hereby in a fiduciary capacity, the person or persons for whom Subscriber is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects as of such Subscriber’s respective Closing Date(s):

 

(a) Requisite Power and Authority. Such Subscriber has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement and other agreements required hereunder and to carry out their provisions. All action on Subscriber’s part required for the lawful execution and delivery of this Subscription Agreement and other agreements required hereunder have been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Subscription Agreement and other agreements required hereunder will be valid and binding obligations of Subscriber, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (b) as limited by general principles of equity that restrict the availability of equitable remedies.

 

(b) Investment Representations. Subscriber understands that the Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). Subscriber also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Subscriber’s representations contained in this Subscription Agreement.

 

(c) Illiquidity and Continued Economic Risk. Subscriber acknowledges and agrees that there is a limited public market for the Securities and that there is no guarantee that a market for their resale will ever exist. Subscriber must bear the economic risk of this investment indefinitely and the Company has no obligation to list the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended) with respect to facilitating trading or resale of the Securities. Subscriber acknowledges that Subscriber is able to bear the economic risk of losing Subscriber’s entire investment in the Securities. Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.

 

(d) Company Information. Subscriber understands that the Company is subject to all the risks that apply to early-stage companies, whether or not those risks are explicitly set out in the Offering Circular. Subscriber has had such opportunity as it deems necessary (which opportunity may have presented through online chat or commentary functions) to discuss the Company’s business, management and financial affairs with managers, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. Subscriber has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Subscriber acknowledges that except as set forth herein, no representations or warranties have been made to Subscriber, or to Subscriber’s advisors or representative, by the Company or others with respect to the business or prospects of the Company or its financial condition.

 

(e) Valuation. The Subscriber acknowledges that the price of the Securities was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. The Subscriber further acknowledges that future offerings of Securities may be made at lower valuations, with the result that the Subscriber’s investment will bear a lower valuation.

 

 

 

 

(f) Domicile. Subscriber maintains Subscriber’s domicile (and is not a transient or temporary resident) at the address shown on the signature page.

 

(g) No Brokerage Fees. There are no claims for brokerage commission, finders’ fees or similar compensation in connection with the transactions contemplated by this Subscription Agreement or related documents based on any arrangement or agreement binding upon Subscriber.

 

(h) Issuer-Directed Offering; No Underwriter. Subscriber understands that the offering is being conducted by the Company directly (issuer-directed) and the Company has not engaged a selling agent such as an underwriter or placement agent.

 

(j) Foreign Investors. If Subscriber is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Subscriber’s subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.

 

5. Survival of Representations. The representations, warranties and covenants made by the Subscriber herein shall survive the Termination Date of this Agreement.

 

6. Governing Law; Jurisdiction. This Subscription Agreement shall be governed and construed in accordance with the laws of the State of Florida.

 

7. Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed, telecopied or cabled, on the date of such delivery to the address of the respective parties as follows:

 

If to the Company, to:

GME Innotainment, Inc.

208 East 51st Street Suite 170

New York, NY 10022

 

If to a Subscriber, to Subscriber’s address as shown on the signature page hereto or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by telecopy or cable shall be confirmed by letter given in accordance with (a) or (b) above.

 

8. Miscellaneous.

 

(a) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.

 

(b) This Subscription Agreement is not transferable or assignable by Subscriber.

 

(c) The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Subscriber and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.

 

 

 

 

(d) None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Subscriber.

 

(e) In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.

 

(f) The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

 

(g) This Subscription Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.

 

(h) The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.

 

(i) The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

 

(j) This Subscription Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

(k) If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Subscription Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Subscription Agreement.

 

(l) No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

[SIGNATURE PAGE FOLLOWS]

 

 

 

 

GME Innotainment, Inc.

 

SUBSCRIPTION AGREEMENT SIGNATURE PAGE

 

The undersigned, desiring to purchase Common Stock of GME Innotainment, Inc., by executing this signature page, hereby executes, adopts and agrees to all terms, conditions and representations of the Subscription Agreement.

 

(a)       The number of shares of Common Stock the undersigned hereby irrevocably subscribes for is:    
    (print number of Shares)
     

(b)       The aggregate purchase price (based on a purchase price of $0.001 per Share) for the Common Stock the undersigned hereby irrevocably subscribes for is:

    (print aggregate purchase price)
     
     
     
    (print applicable number from Appendix A)
     
     
     
(c)       The Securities being subscribed for will be owned by, and should be recorded on the Company’s books as held in the name of:    
     
___________________________________________
(print name of owner or joint owners)

 

 

 

 

If the Securities are to be purchased in joint names, both Subscribers must sign:
__________________________________  
Signature ___________________________________
  Signature
__________________________________  
Name (Please Print) ___________________________________
  Name (Please Print)
__________________________________  
   
Entity Name (if applicable)  
   
__________________________________  
Signatory title (if applicable)  
   
__________________________________ ___________________________________
Email address Email address
   
__________________________________ ___________________________________
Address Address
__________________________________ ___________________________________
   
__________________________________ ___________________________________
Telephone Number Telephone Number
   
__________________________________ ___________________________________
Social Security Number/EIN Social Security Number
   
__________________________________ ___________________________________
Date Date

 

* * * * *

 

This Subscription is accepted GME Innotainment, Inc.
on _____________, 2020  
  By:  
    Name:
    Title:

 

 

 

 


LICENSE AGREEMENT

 

This Agreement is made this 31st day of March, 2016 (“Effective Date”) by and between Puresafe Water Systems, Inc., a Delaware corporation (“Licensor”), and Sustainable Resources Corporation, a Delaware corporation (“Licensee”).

 

BACKGROUND

 

WHEREAS, Licensor wishes to license to Licensee, and Licensee wishes to license from Licensor, on a perpetual, exclusive, worldwide basis certain patents, products, trade secrets and technologies related to the design and manufacture of mobile water purification systems.

 

NOW, THEREFORE, in consideration of the mutual promises in this Agreement and for other good and valuable consideration, the parties hereby agree as follows.

 

AGREEMENT

 

 

1.                   DEFINITIONS.

 

1.1              “Agreement Year” means any 12-month period during the License Term commencing on the Effective Date.

 

1.2              “License Term” has the meaning ascribed to it in Section 2.2.

 

1.3              “Licensed Intellectual Property” means (i) the Licensed Patents, (ii) all trade secrets, proprietary information and other intellectual property currently developed or currently under development or developed in the future by Licensor and/or any of its subsidiaries that it currently owns or has transferable rights to including, without limitation, in each instance, all specifications, engineering drawings, schematics, bills of materials, software source code and algorithms, wiring diagrams, test procedures, assembly drawings, and other documents or files that would be required to manufacture, test and/or improve such products and services with no limitations (collectively, the “Proprietary Information”), and (iii) the Licensor Improvements.

 

1.4              “Licensed Patents” means the Patents, Patent registrations and Patent applications identified on Schedule A and any and all Patents related thereto or improvements or enhancements derived therefrom or from any such improvements or enhancements.

 

1.5              “Licensee Improvements” means any enhancement to or modification or improvement of the Licensed Patents and/or the Proprietary Information created by or on behalf of Licensee and/or any of its subsidiaries.

 

1.6              “Licensor Improvements” means any enhancement to or modification or improvement of the Licensed Patents and/or the Proprietary Information created by or on behalf of Licensor and/or any of its subsidiaries.

1 

 

1.7                “Net Sales” means revenues received and recognized in accordance with GAAP, as follows: the invoice price of Royalty-Bearing Products sold or licensed by Licensee to third parties, less, to the extent included in such invoice price the total of:

(i) ordinary and customary trade discounts actually allowed; (ii) credits, rebates and returns (including, but not limited to, wholesaler and retailer returns); (iii) freight, postage, insurance and duties paid for and separately identified on the invoice or other documentation maintained in the ordinary course of business; (iv) any revenues designated as bad debts; and (v) excise taxes, other consumption taxes, customs duties and compulsory payments to governmental authorities actually paid and separately identified on the invoice or other documentation maintained in the ordinary course of business.

 

1.8              "Patents" means United States and foreign patents and utility models and applications therefor and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations-in-part.

 

1.9              “Royalty-Bearing Product” means: (i) a product the manufacture, use, offer for sale, sale or importation of which, absent the license granted in Section 2.1, would infringe one or more Valid Claims; or (ii) a service the performance, offering for sale, or sale of which, absent the license granted in Section 2.1, would infringe one or more Valid Claims.

 

1.10          “Valid Claim” means: (i) any claim of an application for a Licensed Patent, provided that such application still is pending; or (ii) any claim of a valid issued Licensed Patent, provided that such patent has not expired, and has not been held invalid in a decision of a court of competent jurisdiction, and has not been disclaimed or admitted to be invalid or unenforceable through reissue or otherwise.

 

2.                   LICENSE RIGHTS AND RESTRICTIONS.

 

2.1              Licensed Intellectual Property. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a perpetual, worldwide, exclusive, sub-licensable right and license to make, have made, use, sell, offer for sale and import products and provide services under the Licensed Intellectual Property throughout the License Term for the sole purpose of commercializing products and/or services in any and all commercial markets. Such license will be exclusive, even as to Licensor. Licensor shall be given prior written notice of any sublicense or transfer of Licensee’s rights hereunder. The foregoing license will only be transferable to a party that agrees in writing to be bound by the terms of this Agreement in connection with any merger, acquisition, consolidation, or other business combination, or sale of all or substantially all of Licensee’s assets relating to the Licensed Intellectual Property. In the event that Licensor hereafter creates any Licensor Improvements, Licensor shall give Licensee notice of same and the opportunity to obtain all documentation with respect thereto to enable Licensee to make use of same pursuant to the terms of this Agreement. Licensee shall be given prior written notice of any sublicense or transfer of Licensor’s rights hereunder.

2 

 

2.2              Term. Subject to the terms and conditions of this Agreement, the term of the license granted hereunder (the “License Term”) shall expire at the end of the term of the last to expire Licensed Patent or unless terminated pursuant to Section 4.

 

2.3              Proprietary Rights. Licensor owns all right, title and interest in and to the Licensed Intellectual Property and reserves all intellectual property rights thereto, subject to the terms and conditions of this Agreement.

 

2.4              Prosecution of Patents. During the time this Agreement is in effect, Licensor will be solely responsible for the prosecution of patent applications with respect to the Licensed Patents and the maintenance of the Licensed Patents. Licensor shall, promptly after the Effective Date, deliver to Licensee copies of all files, information and materials related to the Licensed Patents. Licensor shall not intentionally abandon any Patent or Patent application included in the Licensed Patents without notifying Licensee and giving Licensee the right to take over the prosecution and/or maintenance, at Licensee’s own expense, of any such Patent or Patent application. Licensor, at its expense, must enforce any Licensed Patent against infringement by third parties and it is entitled to retain recovery from such enforcement. If Licensor does not file suit against an infringer of a Licensed Patent within 6 months after obtaining knowledge of such infringement, then Licensee may enforce any Licensed Patent on behalf of itself and Licensor and shall be entitled to retain all recoveries from such enforcement. In any infringement suit or dispute, the parties agree to cooperate fully with each other. At the request and expense of the party bringing suit, the other party will permit access to all relevant personnel, records, papers, information, samples, specimens, etc., during regular business hours.

 

2.5              COMPENSATION. In consideration of the license of rights affected by this Agreement, Licensee shall pay Licensor a royalty equal to three percent (3%) of Net Sales with respect to Royalty Bearing Products sold with respect to which the Licensee has received final payment during each calendar quarter after the date hereof, such royalty to be payable in accordance with the terms of this Section 2.5.

 

(a)    Royalty Reporting and Payment. Licensee shall make quarterly written reports to Licensor within 60 days after the end of each calendar quarter. Each such report must in reasonable detail explain the basis for the royalty due hereunder as a result of receipts from Net Sales during the previous quarter. Licensor shall treat such reports as the confidential information of Licensee, and shall not disclose it to third parties. Concurrently with the making of each such report, Licensee shall pay Licensor the royalty due, if any, in relation to such report.

 

(b)    Records; Inspection. Licensee shall keep complete, true and accurate books of account and records for the purpose of determining the royalty amounts payable hereunder. Such books and records must be kept at the principal place of business of Licensee for a period of not less than two years following the end of the calendar quarter to which they pertain. Licensor may audit such books to ensure Licensee’s compliance with this Agreement, provided that each such audit: (i) occurs during business hours, and upon no less than ten business days notice to Licensee; (ii) is conducted by a certified public accountant chosen by Licensor and approved by Licensee, such approval not to be unreasonably withheld; (iii) the results of such audit are considered the confidential information of Licensor, and both Licensor and the auditor will be required to sign a non-disclosure and non-use agreement limiting disclosure and use of such information; and (iv) occurs no sooner than one year after the most recent prior audit. Licensor shall pay all expenses relating to each audit, unless an audit reveals an underpayment exceeding 10% of the amount stated for the period covered by the audit, in which case all costs relating to the inspection and any unpaid amounts will be paid by Licensee.

 

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3.                   TERMINATION. This Agreement may be terminated prior to the end of the License Term upon the mutual written consent of Licensor and Licensee.

 

4.                   REPRESENTATIONS AND WARRANTIES. Licensor represents and warrants to Licensee:

 

4.1              Registered Intellectual Property. All of the Licensed Patents filed are, to Licensor’s knowledge, valid and subsisting. Licensor has no knowledge of any information, materials, facts, or circumstances, including any information or fact that would constitute prior art, that would render any claim of any Licensed Patent invalid or unenforceable, and Licensor has not knowingly misrepresented, or knowingly failed to disclose, any facts or circumstances in any Licensed Patent application that would constitute fraud or a misrepresentation with respect to such application or that would otherwise affect the validity or enforceability of any Licensed Patent.

 

4.2              No Licenses. As of the Effective Date, there are no license agreements in effect relating to the Licensed Intellectual Property.

 

4.3              Ownership. Licensor owns and has good and exclusive title to, the Licensed Intellectual Property free and clear of any lien or encumbrance.

 

4.4              DISCLAIMER. EXCEPT FOR THE WARRANTIES EXPLICITLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, WHETHER ORAL OR WRITTEN, WHETHER EXPRESS, IMPLIED, OR ARISING BY STATUTE, CUSTOM, COURSE OF DEALING OR TRADE USAGE, WITH RESPECT TO THE SUBJECT MATTER HEREOF, IN CONNECTION WITH THIS AGREEMENT. EACH PARTY SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE.

 

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5.                   MISCELLANEOUS.

 

5.1              Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

5.2              Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

5.3              Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

 

5.4              Compliance with Laws. Notwithstanding anything contained in this Agreement to the contrary, the obligations of the parties shall be subject to all laws, present and future, of any government having jurisdiction over the parties and this transaction, and to orders, regulations, directions or requests of any such government.

 

5.5              Confidentiality of Terms. The parties hereto shall keep the terms and existence of this Agreement and the identities of the parties hereto confidential and shall not now or hereafter divulge any of this information to any third party except:

(a) with the prior written consent of the other party; (b) as otherwise may be required by law or legal process, including in confidence to legal and financial advisors in their capacity of advising a party in such matters; (c) during the course of litigation, so long as the disclosure of such terms and conditions are restricted in the same manner as is the confidential information of other litigating parties; (d) in confidence to its legal counsel, accountants, banks and financing sources and their advisors solely in connection with complying with financial transactions; (e) in confidence (and under confidentiality provisions) to its legal counsel, business advisors, accountants, banks and financing sources and their advisors solely in connection with merger and acquisition and related transactions; or (f) creditors and other parties related to the wind down of operations of the parties.

 

5.6              Governing Law. Any claim arising under or relating to this Agreement shall be governed by the internal substantive laws of the State of Delaware without regard to principles of conflict of laws.

 

5.7              Entire Agreement; Interpretation. The terms and conditions of this Agreement, including its exhibits, schedules and sections constitute the entire agreement between the parties with respect to the subject matter hereof, and merge and supersede all prior and contemporaneous agreements, understandings, negotiations and discussions. Neither of the parties shall be bound by any conditions, definitions, warranties, understandings, or representations with respect to the subject matter hereof other than as expressly provided herein. No oral explanation or oral information by either party hereto shall alter the meaning or interpretation of this Agreement. The terms “includes” and “including” are not limiting. No amendments or modifications shall be effective unless in writing, signed by authorized representatives of both parties. These terms and conditions will prevail notwithstanding any different, conflicting or additional terms and conditions that may appear on any purchase order, acknowledgment or other writing not expressly incorporated into this Agreement.

 

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Such notices shall be deemed served when received by addressee or, if delivery is not accomplished by reason of some fault of the addressee, when tendered for delivery. Either party may give written notice of a change of address and, after notice of such change has been received, any notice or request shall thereafter be given to such party at such changed address.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date:

 

 

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SCHEDULE A

 

Licensed Patents

 

       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       

 

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 2 

 

 

 

 

 3 

 

 

 

 

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Exhibit 6.2

 

SECURITIES EXCHANGE AGREEMENT

 

This Securities Exchange Agreement (this "Agreement") is dated as of September 25, 2017, by and among PureSafe Water Systems, Inc. (the "Seller"), GME Innotainment, Inc. (the "Purchaser"), and Sustainable Resources Corporation, a Delaware corporation (the "Company").

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller one thousand (1,000) shares of the Company’s common stock, representing one hundred percent (100%) of the issued and outstanding shares of the Company’s common stock (the "Shares"), in exchange the issuance by Purchaser of a 5 year, $3,000,000 non-convertible promissory note, bearing interest at 5% per annum, in favor of the Seller, pursuant to a tax free exchange, as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Sellers and the Purchaser agree as follows:

 

ARTICLE I
DEFINITIONS

 

1.1 Definitions . In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:

 

"Business Day" means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

"Closing" means the closing of the purchase and sale of the Shares pursuant to Section 2.1.

 

"Closing Date" means the Business Day when this Agreement has been executed and delivered by the applicable parties thereto, and all conditions precedent to the Parties obligations pursuant to this Agreement  have been satisfied or waived.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

“ Shares ” means one thousand (1,000) shares of common stock held by the Seller which are the subject of this Agreement.

 

" Liens " means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

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"Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

"Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

ARTICLE II
EXCHANGE

 

2.1 Closing. At the Closing, Purchaser shall deliver a non-convertible promissory note in the principal amount of three million dollars ($3,000,000), bearing interest at 5% per annum, a form of which is attached hereto as Exhibit A (the “Note”) to Seller, and the Seller shall deliver to Purchaser the Shares. The Purchaser shall grant to Seller a twelve (12) month option to purchase for cash up to thirty percent (30%) of the Purchaser’s then outstanding (at time of exercise) common stock at a price equal to seventy five percent (75%) of the average of trading prices for Purchaser’s common stock during the first thirty (30) days following the Close.  Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall occur at the offices of the Company, or such other location as the parties shall mutually agree, on or before October 1, 2017.

 

Royalty Agreement . Purchaser shall enter into a royalty agreement with Seller such that, beginning July 1, 2018 and thereafter, Seller shall receive five percent (5%) of the Gross Revenue earned by the Company on all product sales, as set forth in a Royalty Agreement attached hereto as Exhibit B .

 

2.2 Closing Conditions.

 

(a)At each Closing the Seller shall deliver to the Purchaser:

 

ieach of this Agreement and the Royalty Agreement duly executed by the Seller and the Company;

 

iicertificates evidencing the Shares, registered in the name of the Purchaser.

 

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(b)At the Closing the Purchaser shall deliver or cause to be delivered to the Seller the following:

 

ithis Agreement duly executed by the Purchaser; and

 

iithe Note, payable to the Seller; and

 

(c)All representations and warranties of each party contained herein shall remain true and correct as of the Closing Date and all conditions precedent to be performed by each party shall have been performed if due prior to such date.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties set forth below to the Purchaser:

 

(a)Subsidiaries. The Company has no direct or indirect subsidiaries.

 

(b)Organization and Qualification. The Company is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation of any of the provisions of its articles of organization, bylaws or other organizational or charter documents. The Company is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be,

 

i.could not, individually or in the aggregate adversely affect the legality, validity or enforceability of this Agreement,

 

ii.has had or could not reasonably be expected to result in a material adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company, or

 

iii.could not, individually or in the aggregate, adversely impair the Company's ability to perform fully on a timely basis its obligations under this Agreement (any of (i), (ii) or (iii), a "Material Adverse Effect").

 

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(c)Authorization - Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder or thereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company. This Agreement has been (or upon delivery will be) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and general principles of equity..

 

(d)No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not:

 

i.conflict with or violate any provision of the Company' articles of organization, bylaws or other charter documents, or

 

ii.conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or

 

iii.result, in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as has not had or could not reasonably be expected to result in a Material Adverse Effect.

 

(e)Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement.

 

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(f)Shares. The Shares are duly authorized and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than any restrictions on transfer provided for in this Agreement.

 

(g)Capitalization. The capitalization of the Company as of the Closing Date is as described on Schedule 3.1(g) and will remain as of the Closing Date. The Company has not issued any Shares since such date. Except as set forth on Schedule 3.1(g), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any Shares, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional Shares, or securities or rights convertible or exchangeable into Shares.

 

(h)Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an "Action") which:

 

i.adversely affects or challenges the legality, validity or enforceability of any of this Agreement or the Shares; or

 

ii.could reasonably be expected to result in a Material Adverse Effect. Neither the Company, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty that has had or could reasonably be expected to result in a Material Adverse Effect.

 

(i)Regulatory Permits. The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their business, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect ("Material Permits"), and the Company has not received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

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(j)Title to Assets. The Company has good and marketable title in fee simple to all real property owned by it that is material to the business of the Company and good and marketable title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company is held by it under valid, subsisting and enforceable leases of which the Company is in compliance, except where the failure to be in compliance would not reasonably be expected to result in a Material Adverse Effect.

 

(k)Patents and Trademarks. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights necessary or material for use in connection with its businesses and which the failure to so have has had or could reasonably be expected to result in a Material Adverse Effect (collectively, the "Intellectual  Property Rights"). The Company has not received a written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person that has had or could reasonably be expected to result in a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights that has had or could reasonably be expected to result in a Material Adverse Effect.

 

(l)Insurance. The Company maintains no insurance.

 

(m)Certain Fees. No brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement, and the Company has not taken any action that would cause the Purchaser to be liable for any such fees or commissions.

 

(n)Financial Statements. The financial statements of the Company as supplied to the Purchasers ("Financial Statements") comply in all material respects with applicable accounting requirements with respect thereto as in effect at the time of filing. The Financial Statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

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(o)Tax Status. The Company has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, statute or local tax. None of the Company's tax returns is presently being audited by any taxing authority.

 

(p)Minute Books. The minute books of the Company made available to the Purchaser contain a complete summary of all meetings and written consents in lieu of meetings of directors and stockholders since the time of incorporation.

 

(q)Employee Benefits. The Company has never had any plans which are subject to ERISA.

 

(r)Business Records and Due Diligence. Prior to the Closing, the Company has delivered (or will deliver) to the Purchaser all records and documents relating to the Company, which the Company and possesses, including, without limitation, books, records, government filings, Tax Returns, Charter Documents, corporate records, stock records, consent decrees, orders, and correspondence, director and stockholder minutes, resolutions and written consents, stock ownership records, financial information and records, and other documents used in or associated with the Company.

 

(s)No Undisclosed Liabilities. Except as otherwise disclosed in the Company' Financial Statements, the Company has no other undisclosed liabilities whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. The Company represents that at the date of Closing, except as set forth on Schedule 3.1 (y) the Company shall have no liabilities or obligations whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise.

 

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3.2 Representations and Warranties of the Purchaser. The Purchaser represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:

 

(a)Organization; Authority. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution, delivery and performance by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of the Purchaser. This Agreement, to which it is party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms except

 

ias limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally,

 

iias limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and

 

iiiinsofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)Investment Intent. The Purchaser understands that the Shares are "restricted securities" and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Shares or any part thereof, has no present intention of distributing any of such Shares and has no arrangement or understanding with any other persons regarding the distribution of such Shares. The Purchaser is acquiring the Shares hereunder in the ordinary course of its business. The Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares.

 

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(c)No Undisclosed Liabilities. Except as otherwise disclosed to the Seller, Purchaser has no other undisclosed liabilities whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. Purchaser represents that at the date of Closing, except as set forth on Schedule 3.2 (c), Purchaser shall have no liabilities or obligations whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise.

 

3.3 Representations and Warranties of the Seller. The Seller represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:

 

(a)Ownership. The Seller is the legal, beneficial and registered owner of the Shares, free and clear of any liens, security interest, charges or other encumbrances of any nature whatsoever. The Shares are validly issued, fully paid and non-assessable.

 

(b)No Conflict. The execution, delivery and performance by the Seller of this Agreement, and the consummation of the transactions contemplated hereby, will not

 

iconflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any contractual obligations or other agreements of the Seller, or

 

iiviolate any provision of law applicable to the Seller.

 

(c)Consents. No registration, filing with the consent or approval of, or other action by, any federal, state or other governmental authority, agency, regulatory body, third party or other Person is or will be required in connection with the execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby.

 

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

 

4.1 Transfer Restrictions .

 

(a)The Note, or any portion thereof, may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Note, the Purchaser may require the transferor thereof to provide an opinion of counsel selected by the transferor and reasonably acceptable to Purchaser, the form and substance of which opinion shall be reasonably satisfactory to the Purchaser, to the effect that such transfer does not require registration of such Note under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Seller under this Agreement.

 

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(b)The Seller agrees to the imprinting, so long as is required by this Section 4.1(b), of the following legend on any certificate evidencing the Note:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

4.2 Operating Assets . Purchaser shall segregate its current operating assets and associated liabilities, as necessary, into a separate subsidiary, potentially to be spun off at a later date.

 

4.3 Financial Statements . At the Company’s sole expense, each of the Company and the Purchaser shall provide the necessary (audited) financials in order to satisfy the required regulatory and /or OTC disclosure within 60 days of the Closing. Purchaser shall file to become an alternative reporting entity with the OTC.

 

4.4 Management. Yves Michel shall be appointed to appropriate positions as officer and director of the Purchaser at an annual salary of $150,000, plus a commission of 6.5% of all Gross Sales generated by him.  Existing management and board of the Company shall resign at the Closing, but remain available to serve Purchaser, as necessary, upon mutually satisfactory terms.

 

4.5 Balance Sheet . All existing debt obligations (loans) on the Purchaser’s balance sheet shall be converted to long term liabilities with a maturity date of no earlier than 2 years from Closing Date.

 

4.6 Announcements . Prior to the issuance of any press release or any other public statement with respect to the contents of this Agreement, or the transaction contemplated hereby, each party shall agree in writing as to the content, manner and timing of any such release or statement, except as may be required by law or applicable exchange.

 

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ARTICLE V
MISCELLANEOUS

 

5.1 Fees and Expenses. Except as otherwise set forth in this Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied in connection with the sale of the Shares.

 

5.2 Entire Agreement. This Agreement, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of

 

(a)the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 6:00 p.m. (New York time) on a Business Day;

 

(b)the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Business Day or later than 6:00 p.m. (New York time) on any Business Day;

 

(c)the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service; or

 

(d)upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.4 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the parties, or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

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5.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

5.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.

 

5.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

5.8 Governing Law; Venue; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the County of New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney's fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

5.9 Survival. The representations, warranties and covenants contained herein shall survive for a period of 12 months after the Closing Date and delivery of the Shares, as applicable.

 

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5.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof

  

5.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

THE BALANCE OF THIS PAGE INTETIONALLY LEFT BLANK

 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

SELLER  
     
PURESAFE WATER SYSTEMS, INC.  
     
By: /s/ Leslie Kessler  
     
  Leslie Kessler  
     
  Chief Executive Officer  

 

PURCHASER  
     
GME INNOTAINMENT, INC.  
     
By: /s/ Matthew Miller  
     
  Matthew Miller  
     
  Chief Executive Officer  
     
COMPANY  
     
SUSTAINABLE RESOURCES CORPORATION  
     
By: /s/ Yves Michel  
     
  Yves Michel  
     
  President  

 

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Exhibit 6.3

 

PROMISSORY NOTE

 

$3,000,000.00 New York, New York

 

September 25, 2017

 

FOR VALUE RECEIVED, GME Innotainment, Inc., a Florida Corporation (the "Maker") hereby promise to pay to the order of PureSafe Water Systems, Inc. (the "Holder"), a Delaware Corporation, the principal sum of Three Million Dollars ($3,000,000.00).

 

1. Interest. Subject to any imposition of a default rate of interest under Section 4 hereof, the principal balance outstanding under this Note shall bear simple interest at the rate of five percent (5.0%) per annum.

 

2. Maturity. The entire indebtedness evidenced by this Note, including the entire principal balance outstanding hereunder, any and all unpaid interest accrued thereon and any and all other amounts due and owing hereunder, shall be due and payable in full September 30, 2022 (the "Maturity Date") .

 

3. Payment. All payments made hereunder shall be made in lawful money of the United States of America without setoff, deduction or counterclaim by Maker of any kind whatsoever.

 

4. Default Interest. In the event of a "Default" (as defined in Section 6 hereof) under this Note, the principal balance outstanding under this Note, from time to time, shall bear interest at the rate of ten percent (10%) per annum, until such Default and any and all other Defaults hereunder are cured.

 

5. Prepayment. This Note may be prepaid, at any time and from time to time, in whole or in part, without premium, fee or penalty.

 

6. Default. Maker shall be in "Default" under this Note upon the occurrence of any of the following events:

 

(a) Maker's failure to make any payment of interest, principal or other amount hereunder, on the date first due and payable;

 

(b) Maker's admission in writing of Maker's inability to pay Maker's debts as such debts become due;

 

(c) Maker's filing of any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or under any other law for the relief of, or relating to, debtors; or

 

(d) Maker's failure to have dismissed or vacated within thirty (30) days following the date of filing any involuntary petition against Maker under any bankruptcy, reorganization, insolvency or moratorium law or under any other law for the relief of, or relating to, debtors.

 

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Notwithstanding any other provision of this Note to the contrary, upon the occurrence of a Default, Holder may, at Holder's option but with written notice to Maker, declare immediately due and payable the entire indebtedness evidenced by this Note, including the entire principal balance outstanding hereunder, any and all unpaid interest accrued thereon and any and all other amounts due and owing under this Note.

 

7. No Waiver. No delay or omission on the part of Holder in exercising any right under this Note shall operate as a waiver of that right on any future occasion or of any other rights under this Note.

 

8. Costs and Attorney’s Fees. If Holder institutes any collection effort, of any nature whatsoever (expressly including any collection efforts in any bankruptcy case), for any amount due and payable hereunder following a Default, then Maker shall pay to Holder forthwith any and all reasonable costs and expenses of collection actually incurred by Holder, including, without limitation, reasonable attorneys fees, accounting fees, expert witness fees and related costs, whether or not suit or other action or proceeding is instituted. The payment of any and all such costs and expenses shall be fully secured by any and all instruments securing this Note and fully assured by any and all instruments assuring payment of this Note. If either party to this Note commences any mediation, arbitration, administrative proceeding or judicial proceeding (each, a "Proceeding") to enforce or interpret any term, condition or other provision of this Note, the prevailing party in such Proceeding shall be entitled to recover reasonable attorneys fees, accounting fees, expert witness fees and related costs incurred by such prevailing party in such Proceeding from the non-prevailing party, in addition to any other relief to which such prevailing party may be entitled.

 

9. Compliance with Laws. Notwithstanding any provision of this Note to the contrary, the total liability for payments in the nature of interest shall not exceed the limits imposed by the applicable usury laws of the State of New York. If, from any circumstances whatsoever, fulfillment of any provision hereof or of any other agreement evidencing, securing or otherwise assuring payment of the debt, at the time performance of such provisions shall be due, shall involve the payment of interest in excess of that authorized by law, and if from any circumstances, Holder shall ever receive as interest an amount which would exceed the highest lawful rate applicable to Maker, such amount which would be excessive interest shall be applied to the reduction of the principal balance outstanding under this Note and not to the payment of interest.

 

10. Severability. The provisions of this Note are intended by Maker to be severable and divisible, and the invalidity or unenforceability of a provision or term herein shall not invalidate or render unenforceable the remainder of this Note or any part thereof.

 

11. Governing Law; Jurisdiction. This Note and the respective rights, powers, privileges and authority and the respective duties, obligations and liabilities of the parties under this Note shall be governed by, and construed, interpreted and enforced in accordance with, the laws of the State of New York without giving effect, principle or doctrine regarding conflicts of laws. The parties hereto hereby irrevocably consent to the jurisdiction of any court of competent jurisdiction located in New York County, New York in connection with any action or proceeding brought by a party and arising out of or relating to this Note.

 

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IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the date first stated above.

  

  GME INNOTAINMENT, INC.
     
  By: /s/ Matthew Miller
    Matthew Miller
    Chief Executive Officer

 

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Exhibit 6.4

 

ROYALTY AGREEMENT

 

This Royalty Agreement (this "Agreement") is dated as of September 25, 2017, by and among PureSafe Water Systems, Inc. (the "Seller"), GME Innotainment, Inc. (the "Purchaser"), and Sustainable Resources Corporation, a Delaware corporation (the "Company").

 

RECITALS

 

WHEREAS, the parties have entered into a Securities Exchange Agreement in connection with the transfer of 100% of the Company’s outstanding common stock held by Seller to Purchaser; and

 

WHEREAS, as part of the consideration for the transfer, Purchaser and Company have agreed to pay Seller a royalty on certain sales as set forth in this Agreement; and

 

WHEREAS, the execution and delivery by the parties to this Agreement is a precondition to the closing of the Securities Exchange Agreement.

 

AGREEMENT

 

NOW THEREFORE, for an in consideration of the premises hereof and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.Beginning July 1, 2018, for a period of five (5) years from the date hereof, Buyer shall pay to Seller a royalty equal to five percent (5%) of the Company’s gross sales as hereinafter defined (the “Gross Sales”), with a minimum of royalty equal to ten thousand dollars ($10,000.00) per month, payable quarterly.  Gross Sales shall include all revenue derived from sales of the Company’s product(s), excluding any revenue collected for shipping or freight charges, or sales taxes.  Gross Sales shall be calculated on a quarterly basis, and paid to Seller within 15 days of the conclusion of each calendar quarter.  Payments will be due and payable on April 15, July 15, October 15, and January 15 of each calendar year. In the event that any such date is not a business day, payment shall be due and payable on the immediately following business day after such date.

 

2.It is the intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought.  Accordingly, if any particular provision of this Agreement shall be adjudicated to be invalid or unenforceable, such provisions shall be deemed amended to delete the offending portion, with the remainder of the Agreement to remain in full force and effect.

 

3.This Agreement may be amended, modified, terminated, rescinded or supplemented only by written agreement of the parties hereto.  This Agreement and all of the provisions hereof shall be binding upon the Buyers, and each of them, and their respective heirs, personal representatives, successors and assigns, and shall inure to the benefit of Seller and its successors and assigns.  This Agreement shall be governed by and construed in accordance with the laws of the State of Utah applicable to contracts made and to be performed wholly within the state.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Royalty Agreement to be effective as of the date first set forth above.

 

SELLER   BUYER
     
PURESAFE WATER SYSTEMS, INC.   GME INNOTAINMENT, INC.
         
By: /s/ Leslie Kessler   By: /s/ Matthew Miller
  Leslie Kessler     Matthew Miller
  Chief Executive Officer     Chief Executive Officer
         
COMPANY      
         
SUSTAINABLE RESOURCES CORPORATION      
       
By: /s/ Yves Michel      
  Yves Michel      
  President      

 

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Exhibit 6.5

 

SECURITIES EXCHANGE AGREEMENT

 

This Securities Exchange Agreement (this "Agreement") is dated as of October 16, 2019, by and among the shareholders of Foundation Farms Corp., representing 100 percent of the outstanding shares, thereof (collectively the "Seller"), Foundation Farms Corp., a British Columbia, Canada corporation (the "Company"), and GME Innotainment, Inc. (the "Purchaser").

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller certain restricted common stock shares of the Company, representing Sixty percent (60%) of the issued and outstanding restricted common stock shares of the Company (the "Shares"), as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Sellers and the Purchaser agree as follows:

 

ARTICLE I
DEFINITIONS

 

1.1           Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this

Agreement, the following terms have the meanings indicated in this Section 1.1:

 

"Affiliate" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144.

 

"Business Day" means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

"Closing" means the closing of the purchase and sale of the Shares pursuant to Section 2.1.

 

"Closing Date" means the Business Day when this Agreement has been executed and delivered by the applicable parties thereto, and all conditions precedent to the Parties obligations to perform have been satisfied or waived.

 

"Commission" means the Securities and Exchange Commission.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

 

"Liens" means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

"Losses" means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

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"Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

"Preferred Stock" means a designated series of convertible preferred stock issued by Purchaser as consideration to Seller, designated as Series A Convertible Preferred Stock the form of certificate of designation of which is set forth as Exhibit attached hereto.

 

"Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

"Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

"Securities Act" means the Securities Act of 1933, as amended.

 

ARTICLE II

PURCHASE AND SALE

 

2.1          Closing. At the Closing, Purchaser or certain of its securities holders shall deliver 100,000 shares of the Preferred Stock to Seller pursuant to Schedule A as consideration for the Shares, and the Seller shall deliver to Purchaser the Shares. Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall occur at the offices of the Company, or such other location as the parties shall mutually agree, on or before October 16, 2019.

 

2.2          Closing Conditions.

 

(a)          At the Closing the Seller shall deliver to the Purchaser:

 

(i)  this Agreement duly executed by the Company, and Seller; and

 

(ii) certificates evidencing the Shares, registered in the name of the Purchaser.

 

(b)          At the Closing the Purchaser shall deliver or cause to be delivered to the Seller:

 

(i)  this Agreement duly executed by the Purchaser; and

 

(ii) a copy of the certificate of designations for the Preferred Stock to be filed with the State of Florida and an executed unanimous written consent of the Board of Directors of the Purchaser authorizing issuance of the Preferred Stock to the Seller, in accordance with the terms hereof.

 

(c)          All representations and warranties of each party to the other party contained herein shall remain true and correct as of the Closing Date and all covenants of each party to the other party shall have been performed if due prior to such date.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

3.1          Representations and Warranties of the Company. The Company hereby makes the following representations and warranties set forth below to the Purchaser:

 

(a)          Subsidiaries. The Company has no direct or indirect subsidiaries.

 

(b)          Organization and Qualification. The Company is duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation of any of the provisions of its certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, (i) could not, individually or in the aggregate adversely affect the legality, validity or enforceability of this Agreement, (ii) has had or could not reasonably be expected to result in a material adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company, or (iii) could not, individually or in the aggregate, adversely impair the Company's ability to perform fully on a timely basis its obligations under this Agreement (any of (0, (ii) or (iii), a "Material Adverse Effect").

 

(c)          Authorization- Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder or thereunder. The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company other than Required Approvals. This Agreement has been (or upon delivery will be) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and general principles of equity. The Company is not in violation of any of the provisions of its certificate or articles of incorporation, by-laws or other organizational or charter documents.

 

(d)          No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company's certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) subject to obtaining the Required Approvals, conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) result, in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as has not had or could not reasonably be expected to result in a Material Adverse Effect.

 

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(e)          Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, provincial, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement.

 

(f)          Shares. The Shares are duly authorized and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in this Agreement.

 

(g)          Capitalization. The capitalization of the Company as of the Closing Date is as described on Schedule 3.1(g) and will remain as of the Closing Date. The Company has not issued any capital stock since such date. Except as set forth on Schedule 3.1(g), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any restricted common stock shares or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional restricted common stock shares, or securities or rights convertible or exchangeable into restricted common stock shares. The sale of the Shares will not obligate the Company to issue additional restricted common stock shares or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

 

(h)          Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, provincial, state, county, local or foreign) (collectively, an "Action") which: (i) adversely affects or challenges the legality, validity or enforceability of any of this Agreement or the Shares or (ii) could reasonably be expected to result in a Material Adverse Effect. Neither the Company, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty that has had or could reasonably be expected to result in a Material Adverse Effect. The Company does not have pending before the Commission any request for confidential treatment of information. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company that has had or could reasonably be expected to result in a Material Adverse Effect.

 

(i)          Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which has had or could reasonably be expected to result in a Material Adverse Effect. None of the Company's employees is a member of a union that relates to such employee's relationship with the Company, and the Company is not a party to a collective bargaining agreement, and the Company believes that its relationships with their employees are good. No officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other Contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters. The Company is in compliance with all, Canadian, Provincial, U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours.

 

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(j)          Compliance. The Company is not: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived) that has had or could reasonably be expected to result in a Material Adverse Effect, (ii) is in violation of any order of any court, arbitrator or governmental body that has had or could reasonably be expected to result in a Material Adverse Effect, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority that has had or could reasonably be expected to result in a Material Adverse Effect.

 

(k)          Regulatory Permits. The Company possesses all certificates, authorizations and permits issued by the appropriate federal, provincial, state, local or foreign regulatory authorities necessary to conduct their business, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect ("Material Permits"), and the Company has not received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(l)          Title to Assets. The Company has good and marketable title in fee simple to all real property owned by it that is material to the business of the Company and good and marketable title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and Liens for the payment of federal, provincial, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company is held by it under valid, subsisting and enforceable leases of which the Company is in compliance, except where the failure to be in compliance would not reasonably be expected to result in a Material Adverse Effect.

 

(m)          Patents and Trademarks. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights necessary or material for use in connection with its businesses and which the failure to so have has had or could reasonably be expected to result in a Material Adverse Effect (collectively, the "Intellectual Property Rights"). The Company has not received a written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person that has had or could reasonably be expected to result in a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights that has had or could reasonably be expected to result in a Material Adverse Effect.

 

(n)          Insurance. The Company maintains no insurance.

 

(o)          Certain Fees. No brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement, and the Company has not taken any action that would cause the Purchaser to be liable for any such fees or commissions.

 

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(p)          Financial Statements. The financial statements of the Company as supplied to the Purchaser ("Financial Statements") comply in all material respects with applicable accounting requirements with respect thereto as in effect at the time of filing. The Financial Statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(q)          Material Changes. Since the date of the latest Financial Statement: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise), (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities. Except for the issuance of the Shares contemplated by this Agreement, no event, liability or development has occurred or exists with respect to the Company or its business, properties, operations or financial condition that would be required to be disclosed by the Company.

 

(r)          Tax Status. The Company has made or filed all federal, provincial, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, statute or local tax. None of the Company's tax returns is presently being audited by any taxing authority.

 

(s)          Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(t)          No Disagreements with Accountants and Lawyers. There are no disagreements of any kind, including but not limited to any disagreements regarding fees owed for services rendered, presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company, and the Company is current with respect to any fees owed to its accountants and lawyers.

 

(u)          Minute Books. The minute books of the Company made available to the Purchaser contain a complete summary of all meetings and written consents in lieu of meetings of directors and stockholders since the time of incorporation.

 

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(v)         Employee Benefits. The Company has never had any plans which are subject to ERISA.

 

(w)        Business Records and Due Diligence. Prior to the Closing, the Company has delivered (or will deliver) to the Purchaser all records and documents relating to the Company, which the Company and possesses, including, without limitation, books, records, government filings, Tax Returns, Charter Documents, corporate records, stock records, consent decrees, orders, and correspondence, director and stockholder minutes, resolutions and written consents, stock ownership records, financial information and records, and other documents used in or associated with the Company.

 

(x)         Contracts. Except as set forth on Schedule 3.1(x), The Company is not a party to any Contracts.

 

(y)         No Undisclosed Liabilities. Except as otherwise disclosed in the Company's Financial Statements, the Company has no other undisclosed liabilities whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise. The Company represents that at the date of Closing, except as set forth on Schedule 3.1 (y) the Company shall have no liabilities or obligations whatsoever, either direct or indirect, matured or unmatured, accrued, absolute, contingent or otherwise.

 

3.2           Representations and Warranties of the Purchaser. The Purchaser represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:

 

(a)         Organization; Authority. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution, delivery and performance by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action on the part of the Purchaser. This Agreement, to which it is party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)         Investment Intent. The Purchaser understands that the Shares are "restricted securities" and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Shares or any part thereof, has no present intention of distributing any of such Shares and has no arrangement or understanding with any other persons regarding the distribution of such Shares. The Purchaser is acquiring the Shares hereunder in the ordinary course of its business. The Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares.

 

3.3           Representations and Warranties of the Seller. The Seller represents and warrants as of the date hereof and as of the Closing Date to the Purchaser as follows:

 

 7 

 

 

(a)          Ownership. The Seller is the legal, beneficial and registered owner of the Shares, free and clear of any liens, security interests, charges or other encumbrances of any nature whatsoever. The Shares are validly issued, fully paid and non-assessable.

 

(b)          No Conflict. The execution, delivery and performance by the Seller of this Agreement, and the consummation of the transactions contemplated hereby, will not (i) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any contractual obligations or other agreements of the Seller, or (ii) violate any provision of law applicable to the Seller.

 

(c)          Consents. No registration, filing with the consent or approval of, or other action by, any federal, provincial, state or other governmental authority, agency, regulatory body, third party or other Person is or will be required in connection with the execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby.

 

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

 

4.1          Transfer Restrictions.

 

(a)          The Preferred Stock may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Preferred Stock other than pursuant to an effective registration statement or Rule 144, the Purchaser may require the transferor thereof to provide an opinion of counsel selected by the transferor and reasonably acceptable to Purchaser, the form and substance of which opinion shall be reasonably satisfactory to the Purchaser, to the effect that such transfer does not require registration of such transferred Preferred Stock under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Seller under this Agreement.

 

(b)          The Seller agrees to the imprinting, so long as is required by this Section 4.1(b), of the following legend on any certificate evidencing the Preferred Stock:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

 

4.2          [RESERVED]

 

4.3           Financial Statements: The Company shall provide to the Purchaser the necessary GAAP prepared Company financials in order to satisfy the required regulatory disclosure associated with this Securities Exchange Agreement within 60 days of the Closing.

 

 8 

 

 

4.4           Intercompany Loan. Purchaser shall provide to Company monthly loans of up to $50,000 per month for a period of 6 months following the Closing. The terms of loans, including repayment, shall be finalized between the parties after the Closing.

 

ARTICLE V

MISCELLANEOUS

 

5.1           Fees and Expenses. Except as otherwise set forth in this Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied in connection with the sale of the Shares.

 

5.2           Entire Agreement. This Agreement, together with the exhibits and schedules thereto, contain the

entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.3           Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 6:00 p.m. (New York time) on a Business Day, (b) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Business Day or later than 6:00 p.m. (New York time) on any Business Day, (c) the second Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.4           Amendments / Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

5.5           Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

5.6           Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser. The Purchaser may assign its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Shares.

 

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5.7           No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

5.8           Governing Law / Venue; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida, without regard to the principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Miami-Dade County, Florida for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorney's fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

5.9           Survival. The representations, warranties and covenants contained herein shall survive for a period of 12 months after the Closing Date and delivery and/or exercise of the Shares, as applicable.

 

5.10        Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof

 

5.11        Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

[REMAINDER OF PAGE LEFT BLANK]

 

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IN WITNESS WHEREOF, each of the Parties has caused this Securities Exchange Agreement to be duly executed as of the date first above written.

 

PURCHASER  
   
GME INNOTAINMENT, INC.  
   
By:                  
Title: Yves Michel, Chief Executive Officer  
     

 

COMPANY  
   
FOUNDATION FARMS CORP.  
   
By:                 
Title: Darcy Rai – President, Director  
   
By:        
Title: Ryan Veillet –Director  

 

SELLER   SELLER
Darcy Rai   Clara Fischl
     
By: /   By: /      
     
SELLER   SELLER
 Bailey Fischl    Carla Blampin
     
By: /        By: /
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SELLER   SELLER
Sharon Branconnier   Roan Blampin
     
By: /            By: /         
     
SELLER   SELLER
 Ryan Veillet    Saranbir Singh Takhar
     
By: /   By: /
     
SELLER   SELLER
 Kenwalpreet Singh Takhar    Jaide Branconnier
     
By: /   By: /
     
SELLER   SELLER
James Warren-Berry   Jolene Branconnier
     
By: /   By: /
     
SELLER   SELLER
Alex MacWilliam   Jake Howardson
     
By: /   By: /
     
SELLER   SELLER
 Gurminder Rai    Sareen Takhar
     
By: /   By: /
     
SELLER    
Trillium Partners, LP; Narine Persaud   Chad Fischl
     
By: /     By: /

 

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Certificate of Designation of Series A Preferred Stock

 

SCHEDULE A

 

POST CLOSING SERIES A PREFERRED STOCKHOLDERS

 

Name and Address  Series A Preferred Shares 
Bailey Fischl
East Saskatoon, SK
   5,625 
Carla Blampin
Big River, SK
   5,625 
Roan Blampin
N. Saskatoon, SK
   5,625 
Clara Fischl
Prince Albert, SK
   5,625 
Sharon Branconnier
Abbotsford, B.C.
   5,625 
Saranbir Singh Takhar
Vancouver
B.C.
   2,500 
Kenwalpreet Singh Rai
Vancouver, B.C.
   2,500 
Jaide Branconnier
Langley, B.C.
   5,625 
James Warren-Berry
Abborstford  B.C.
   5,625 
Jolene Branconnier
Falkland B.C.
   5,625 
Trillium Partners LP
Ridgefield, CT
   5,000 
Ryan Veillet
Surrey, B.C.
   11,000 
Alex MacWilliam
Surrey, B.C.
   5,750 
Jake Howardson
Maple Ridge, B.C.
   5,750 
Darcy Rai
Surrey, B.C.
   11,000 
Gurminder Rai
Surrey, B.C.
   5,750 
Sareen Takhar
Victoria, B.C.
   5,750 
TOTAL:   100,000 

 

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SCHEDULE 3.1(g)

 

60,000 Shares of Restricted Common Stock (or 60% of Company); held as follows:

 

Name and Address  Shares of PrufBC 
Bailey Fischl
East Saskatoon, SK
   3,375 
Carla Blampin
Big River, SK
   3,375 
Roan Blampin
N. Saskatoon, SK
   3,375 
Clara Fischl
Prince Albert, SK
   3,375 
Sharon Branconnier
Abbotsford, B.C.
   3,375 
Saranbir Singh Takhar
Vancouver, B.C.
   1,500 
Kenwalpreet Singh Rai
Vancouver, B.C.
   1,500 
Jaide Branconnier
Langley, B.C.
   3,375 
James Warren-Berry
Abborstford,  B.C.
   3,375 
Jolene Branconnier
Falkland B.C.
   3,375 
Trillium Partners LP
Ridgefield, CT
   3,000 
Ryan Veillet
Surrey, B.C.
   6,600 
Alex MacWilliam
Surrey, B.C.
   3,450 
Jake Howardson
Maple Ridge, B.C.
   3,450 
Darcy Rai
Surrey, B.C.
   6,600 
Gurminder Rai
Surrey, B.C.
   3,450 
Sareen Takhar
Victoria, B.C.
   3,450 
TOTAL:   60,000 

 

SCHEDULE 3.1(x)

 

Manufacturing and Distribution License by and between the Company and Grow Solutions Holdings, Inc.

 

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SCHEDULE 3.1(y)

 

N/A

 

 

  15  

 


 

Exhibit 6.6

 

PURE ROOTS MODULAR GROW UNITS & LICENSE PURCHASE AGREEMENT

 

 

 

This PURE ROOTS MODULAR UNITS & LICENSE PURCHASE AGREEMENT (“Agreement”) is entered into as of this 10th day of October 2019, by and amongst Grow Solutions Holdings, Inc. (“GRSO”), Pure Roots Holdings Canada Inc.., Pure Roots Urban Farms™ Corp.. (“GRSO subsidiaries”), and Pure Roots Urban Farms BC, Inc. (“BC-URBN” or “Licensee”) This Agreement may refer to GRSO and its subsidiaries, as “Licensors,” or “Sellers” and it may refer to Licensors and BC-URBN individually as a “Party” or collectively as the “Parties.”

 

BACKGROUND

 

Licensors manufactures modular grow units, which covers the manufacturing and distribution of / and intellectual property rights to manufacture, design, license and market the Pure Roots Urban Farm™ modular grow units; additionally holding the controlling brand use, horticultural knowledge, and go-to-market strategy from Pure Roots Urban Farms Corp.

 

Licensors desire to sell to BC-URBN, and BC-URBN desires to purchase 3 modular grow units for the purpose of vertical growing of non-cannabis plants and 1 modular pre/post processing unit (the “Pure Roots Urban Farm”) and obtain, the license to the Geographic Region (as defined below), subject to the terms and conditions of this Agreement.

 

BC-URBN desires to obtain from Sellers, and Sellers desire to provide to BC-URBN, certain services relating to the Pure Roots Urban Farms Corp, Pure Roots Holdings Canada Inc., as well as operating the Pure Roots Urban Farm to achieve maximum growing / operating efficiency, along with growing expertise, brand use and knowledge transfer (in regards to any advancements in growing techniques and nutritional formulas) from Pure Roots Urban Farms Corp.

 

After the first Pure Roots Urban Farm is operational for a period of three (3) months, BC-URBN will commit to purchasing six more Pure Roots Urban Farms (each farm consisting of 3 Modular grow units for the purpose of growing of non-cannabis plants and 1 modular pre/post processing unit) on a three month after operation interval (as described in section 5.1.3) and that BC-URBN will chose the locations within the BC-URBN’s geographic region (defined later in Agreement) for installation for the purchase price of each Pure Roots Urban Farm is as described in section 5.1.1.

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the Parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

For the purpose of this Agreement:

 

1.1         “Affiliate” means, with respect to an entity, any person or entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such entity.

 

1.2         “BC-URBN” means B.C. Urban Farms, Inc. a company incorporated in British Columbia, Canada.

 

1.3         “Confidential Information” has the meaning stated in Section 7.1.

 

1.4          “Pure Roots Modular Grow Units” are the modular grow rooms for the purpose of growing plants manufactured using the Designs, Brand Name and Intellectual Property from Pure Roots Holdings Canada Inc. and GRSO.

 

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1.5           “Documentation” means, instruction manuals, product manuals, advertising materials, and other documentation that relates to any of the Pure Roots Urban Farm.

 

1.6           “Effective Date” means the date on which the deposit is paid, 5.1.1 (a).

 

1.7           “Encumbrance” means any lien, pledge, security interest, license, option, right of first refusal or similar restriction or third-party right.

 

1.8           “End User” means an individual or company who is authorized to build and use the Pure Roots Modular Grow Units under the Pure Roots Urban Farms Corp brand and business model.

 

1.9           “Pure Roots Urban Farm” 3 Pure Roots Modular Grow Units & 1 modular pre/post processing unit, including but not limited to its respective processing equipment, fridges, tables, prep areas and other finishes to make up a turn-key operation. .

 

1.10         “License” means the Pure Roots Urban Farms License.

 

1.11         “License Acquisition Fee” has the meaning stated in Section 5.1.

 

1.12         “Other IP License” has the meaning stated in Section 2.1.

 

1.13         “Patents” means every patent or patent application that any Licensor owns or otherwise has rights to in any country, and which claims technology used in or is otherwise relevant to the Manufacturing and Distribution or the Products, along with any continuations, continuations-in-part, divisional, reissues, reexaminations, foreign counterparts or other patents or applications claiming priority to, or sharing a common claim of priority with, any such patent or patent application.

 

1.14         “Products” means any Manufacturing & Distribution code, toolkit, electronic libraries or related technology that is developed by or under authorization of BC-URBN using the Pure Roots Urban Farm and products or technology

 

1.15         “Purchase Agreements” means that certain Pure Roots Urban Farm Purchase Agreement dated on or about the date hereof entered into by and between BC-URBN and GRSO.

 

1.16         “Purchase Order” means the final purchase order for the 3 AeroPods and 1 pre/post processing modular unit.

 

1.17         “Royalties” means the payments to be made to the Licensor by the Licensee under Section 5.4.

 

1.18         “Right of First Refusal” has the meaning stated in Section 5.5.

 

1.19         “Term” has the meaning stated in Section 4.1.

 

1.20         “Training Period” has the meaning stated in Section 3.2.

 

1.21          “Pure Roots Urban Farms Corp” – a wholly owned subsidiary of GRSO.

 

1.22          “Pu re Ro o ts Ho ld in g s C anada Inc” – a wholly owned subsidiary of GRSO.

 

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ARTICLE II

PURCHASE & LICENSE

 

2.1          Pure Roots Urban Farm & Documentation License. Subject to payment of the License Acquisition Fee and Licensors’ rights in Section 2.2, Licensors hereby grant to BC-URBN an exclusive, fully paid-up license to the geographic regions of British Columbia, Alberta, and Yukon Territory for the growing of non-cannabis plants (the “Geographic Region”).

 

2.2          Rights and Ownership Retained by Licensors.

 

2.2.1           Use By Licensors. Notwithstanding the exclusive rights of BC-URBN, Licensors retain and have the right and license to practice, use and collaborate on further developing the Pure Roots Modular Grow Units, including making improvements..

 

2.2.2           IP Ownership. Ownership of and title to the intellectual property rights in the Pure Roots Modular Grow Units and other products or technology shall remain Pure Roots Holdings Canada Inc., unless expressly agreed otherwise in a written agreement between the relevant Parties.

 

2.2.3           Licensors’ rights in this Section 2.2. may not be assigned or sublicensed.

 

ARTICLE III

DELIVERY AND TRAINING

 

3.1          Delivery and Documentation. On the Effective Date, and as provided by the Purchase Agreement, Licensors shall deliver to BC-URBN the instruction manuals, dimensions and some of the operational guides to the Pure Roots Urban Farm as negotiated.

 

3.2          Training. Beginning on the Effective Date and continuing through December 31, 2021 (the “Training Period”), Licensors shall provide, at no additional charge, BC-URBN with up to ten (10) in person training (8 hr day) sessions (that do not have to be used continuously) that will be sufficient to enable BC-URBN’s relevant staff to use, clean, repair, troubleshoot, understand, and suggest ways to help further develop and modify the Pure Roots Urban Farm Units. Each purchase of a Pure Roots Urban Farm will come with the Training Period, as aforementioned.

 

3.3          Pure Roots Urban Farm to Work as Described. The Pure Roots Modular Grow Units will perform as described in regards to the environment that the Pure Roots Modular Grow Unit will be able to sustain for the plants, the amount and type of nutrition to deliver to the plants, and that the electronics will operate as described.

 

ARTICLE IV

TERM; OPTION UPON TERMINATION

 

4.1          Term. The term of this Agreement shall commence on date stated in the first paragraph of this Agreement and shall continue in perpetuity as long as the Pure Roots Urban Farms are in operation and BC-URBN meets the obligations set out in the “Pure Roots Urban Farms Brand-Use/Knowledge Transfer License Agreement” (the “Term”). This Agreement may not be terminated except in accordance with Section 4.2.

 

4.2          Termination. If any of the Purchase Agreements are terminated, or if the transactions contemplated by this Purchase & License Agreement are not closed and initial payment funded in full by October 10, 2019 (unless such date is extended by written agreement of GRSO, BC-URBN and the parties thereto), then this Agreement shall also terminate at the same time. For the avoidance of doubt, the respective obligations of each Party to consummate the transactions contemplated by this Agreement shall be subject to the express condition that closings shall be conducted with respect to the transactions contemplated by the Purchase Agreements.

 

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ARTICLE V

PAYMENTS

 

5.1          Purchase Order & License Acquisition Fee.

 

5.1.1           The aggregate consideration for the Purchase of the Pure Roots Urban Farm, License, the available Maintenance agreement, and other rights and benefits granted to BC-URBN in this Agreement shall be One Million Five Hundred Thousand Canadian Dollars (CDN $1,500,000) (the “Pure Roots Urban Farm License Acquisition Fee”). Because, BC-URBN is purchasing the Pure Roots Urban Farm, GRSO shall wave the Geographical Exclusivity License Fee of two million dollars ($2,000,000) and grant BC- URBN the license to the Geographic Region in order to allow BC-URBN to expand their operations in the most expedient manner. The payment by BC-URBN shall be made in the following manner:

 

a.$25,000 as a refundable deposit, at the signing of this Agreement, in order for GRSO to release the purchase order to BC-URBN (refundable until the $300,000 deposit has been transferred);
b.$50,000 as a refundable deposit three days after receiving the Purchase Order, in order for GRSO to release the operation and training manuals, schedules, etc. (refundable until the $300,000 deposit has been transferred);

c.BC-URBN will visit the headquarters and manufacturing site in Saskatoon, SK.
d.BC-URBN will have their legal and accounting professionals approve the final documentation
e.$300,000 will then be deposited (non-refundable) for the purchase of the Pure Roots Urban Farm, after the License Agreement and Purchase Agreement have been finalized;
f.$200,000 will then be deposited (non-refundable) upon 50% completion of the building of the Pure Roots Urban Farm;
g.$175,000 remaining, will be deposited (non-refundable) upon the delivery and full set-up of the Pure Roots Urban Farm at the BC-URBN site;
h.The Remaining $750,000 (of the initial $1,500,000) with 8% interest per annum will be paid to GRSO over the following five (5) year period, paid monthly from BC-URBN to Pure Roots Urban Farms Corp., beginning three months after first delivery of the Pure Roots Urban Farm, and after satisfaction of the conditions set forth in Section 5.2. After the full Pure Roots Urban Farm & License Acquisition Fee has been paid BC-URBN will then grant Pure Roots Urban Farms Corp a 10% royalty on Gross Revenue in perpetuity (lifetime royalties) of the operation of those Pure Roots Urban Farms by BC-URBN.

 

5.1.2           Following the first purchase of the Pure Roots Urban Farm, BC-URBN will commit to purchase Six (6) more Pure Roots Urban Farms for a purchase price of $1,500,000 each in the first two years of this Agreement in order to maintain exclusivity over the Geographic Region. If BC-URBN does not purchase Six (6) Pure Roots Urban Farms over the first two years of this Agreement then the exclusivity of the Geographic Region is waved and becomes a right of first refusal on all projects within the Geographic Region for an additional 12 months after the exclusivity is waved, where BC-URBN would have to match any offers in order to gain use of the proposed purchase.

 

5.1.3           BC-URBN will commit to purchasing each of the six (6) Pure Roots Urban Farms after three (3) months of operation of the last Pure Roots Urban Farm to be purchased. Example, if Pure Roots Urban Farm 1 is operational February 28, 2020, the three-month period begins upon that operation date (February 28, 2020) and at the end of that three-month period May 31, 2020, BC-URBN would be required to have purchased their next Pure Roots Urban Farm in order to maintain exclusivity. During the first two (2) years BC-URBN may catch up and complete the Six (6) Pure Roots Urban Farm purchases by the end of the two (2) year period in order to maintain exclusivity.

 

5.1.4           BC-URBN may also pay the $750,000 financed portion of the purchase price anytime before the five (5) year period and not be liable for the interest payments that would have occurred had the $750,000 financed portion been outstanding for the total five (5) year period.

 

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5.2          Condition. BC-URBN’s obligation to pay the Pure Roots Urban Farm License Acquisition Fee is conditioned on the closing in full of the transactions contemplated by the proposed Purchase and Manufacturing Agreements. The Pure Roots Urban Farm License Acquisition Fee will be paid exclusively as per this Agreement.

 

5.2.1           Condition. BC-URBN obligation to pay the “Pure Roots Urban Farm License Acquisition Fee” is conditional on the support and help with the building of the brand, as to be laid out in the “Pure Roots Urban Farms Brand-Use/Knowledge Transfer License Agreement.”

 

5.3          Taxes. Each Party shall pay directly all income, franchise, sales, use, personal property, ad valorem, value added, stamp or other taxes, levies, customs, duties or other imposts or fees, including withheld taxes (except taxes based on the net income of each Party) together with all penalties, fines and interest thereon, that arise out the income that it receives under this Agreement or in connection with the grant of licenses to others under this agreement.

 

5.4          Royalties & License Fees paid to the Licensor. In addition to the Purchase & License Acquisition Fee the rights granted by the Licensor in Article II, the Licensee shall pay to the Licensor a royalty equal to an amount of:

 

5.4.1           As referred to in 5.1.1 (h), [10] % of the Gross Revenue in perpetuity, in respect of all BC-URBN operations using the Pure Roots Urban Farm and/or Pure Roots Urban Farms™ Corp brand and products designed by the Licensor if any; after the full purchase price of $1,500,000 has been paid, for as long as BC-URBN operates the Pure Roots Urban Farm.

 

ARTICLE VI

ENFORCEMENT; MAINTENANCE

 

6.1          Enforcement.

 

6.1.1           Notwithstanding the License and other rights granted to BC-URBN in this Agreement, Licensors shall have the right and authority, at its sole discretion, to undertake efforts to obtain a discontinuance of any infringement of any trademarks, brand use, intellectual property rights in the Manufacturing, Distribution or Documentation, or of any of the Patents to the extent that such infringement involves a feature of the Manufacturing, Distribution or any Product, including, but not limited to filing suit against the infringing party. BC-URBN agrees to cooperate with Licensors to provide Licensors with such assistance as is reasonably requested by Licensors in connection with any such litigation.

 

6.1.2           If Licensors provide BC-URBN with written notice that Licensors decline to take action to obtain a discontinuance of an infringement under Section 6.1.1 above, or if Licensors fail to do so within a reasonable time of being notified of the infringement, then BC-URBN may undertake efforts to obtain a discontinuance of the infringement. Licensors shall execute such legal papers necessary for the litigation of any such action as may reasonably be requested by BC-URBN. Licensors agree to cooperate with BC-URBN to provide BC-URBN with such assistance as is reasonably requested by BC-URBN in connection with any such litigation.

 

6.1.3           The Party who takes the lead in any enforcement action under this Section 6.1 shall be responsible for the expenses incurred in connection with the enforcement action.

 

6.2          Notification. Licensors and BC-URBN shall promptly notify each other of any known or reasonably suspected infringement of the Brand-use, Trademarks, Manufacturing, Distribution or Documentation or of any Patent to the extent that such infringement involves a feature of the Brand-use, Trademarks, Manufacturing, Distribution or any Product. Licensors on the one hand and BC-URBN on the other hand shall provide the other Party with all information available to them about the infringement or challenge so that the relevant Party may use that information in investigating, enforcing, and/or responding to the infringement or challenge.

 

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ARTICLE VII

CONFIDENTIALITY

 

7.1           Confidentiality. BC-URBN and Licensors shall each, during the Term or, if applicable, five (5) years after termination of this Agreement, keep confidential, and not use and disclose to any third party, all information regarding the business and operations of the Parties disclosed by any of the Parties to the other in the course of performance under this Agreement (“Confidential Information”). No Party shall use the other Party’s Confidential Information for any purpose other than for the purposes permitted in this Agreement. “Confidential Information” shall not include such information which: (a) at the time of disclosure by the disclosing Party is in the public domain or thereafter enters the public domain through no fault of the receiving Party; (b) prior to disclosure by the disclosing Party was already in the possession of the receiving Party as evidenced by the receiving Party’s written records; or (c) subsequent to disclosure under this Agreement is obtained by the receiving Party from a third party not in violation of any obligation to the disclosing party. If any Confidential Information is, in the reasonable opinion of legal counsel, required to be disclosed under law or pursuant to the rules and regulations of any applicable securities exchange, the receiving Party may disclose the Confidential Information as required so long as it provides the disclosing Party prior notice of the disclosure and agrees to cooperate, at the request and sole expense of the disclosing Party, with the disclosing Party’s efforts to preserve the confidentiality of the Confidential Information.

 

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES OF LICENSORS

 

8.1           Legal Status; Enforceability. Licensors have the legal status and all authority to enter into this Agreement, and to perform their obligations under this Agreement. This Agreement constitutes the valid, legal and binding obligations of Licensors, enforceable against them in accordance with its terms.

 

8.2           No Infringement. To the knowledge of Licensors, no third party is infringing any intellectual property rights in the Manufacturing, Distribution, Documentation or any Patent.

 

8.3           No Conflict. Neither the execution nor delivery of this Agreement by Licensors, nor the performance by Licensors of the transactions contemplated by this Agreement, conflicts with, or constitutes a material breach of or material default under: (a) any applicable law or any applicable rule, judgment, order, writ, injunction or decree of any court; or (b) any agreement, indenture, contract or instrument to which either Licensor is a party or is otherwise bound. No consent or approval of any person, entity or governmental authority is required in connection with the execution and delivery by Licensors of this Agreement or for grant of the License under this Agreement.

 

8.4           Litigation. There are no instances in which any Licensor: (a) is subject to any outstanding injunction, judgment, order, decree, ruling or charge with respect to the Patents, Manufacturing, Distribution or Documentation; or (b) is a party to, or under threat of, any action, suit, proceeding, hearing or investigation of, in or before any court or quasi-judicial or administrative agency of any federal, state, local or foreign jurisdiction or before any arbitrator with respect to the Patents, Manufacturing, Distribution or Documentation.

 

8.6          Warranty Disclaimer. EXCEPT FOR THE WARRANTIES PROVIDED ABOVE, LICENSORS MAKE NO OTHER WARRANTIES WITH RESPECT TO THE MERCHANTABILITY, SUITABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE AEROPOD FARM.

 

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ARTICLE IX

REPRESENTATIONS AND WARRANTIES OF BC-URBN

 

9.1           Legal Status; Enforceability. BC-URBN is a corporation duly organized, validly existing and in good standing under the laws of British Columbia, Canada. BC-URBN has all requisite power and authority to enter into this Agreement and to perform its obligations under this Agreement. This Agreement constitutes the valid, legal and binding obligations of Licensee enforceable against BC-URBN in accordance with its terms.

 

9.2           Authorization. This Agreement has been duly authorized, executed and delivered by BC-URBN. BC- URBN has the legal authority to enter into this Agreement and consummate the transactions contemplated by this Agreement.

 

9.3           No Conflict. Neither the execution nor delivery of this Agreement by BC-URBN, nor the performance by BC-URBN of the transactions contemplated by this Agreement, conflicts with, or constitutes a material breach of or material default under (a) any applicable law or any applicable rule, judgment, order, writ, injunction or decree of any court; or (b) any agreement, indenture, contract or instrument to which BC-URBN is a party or is otherwise bound. No consent or approval of any person, entity or governmental authority is required in connection with the execution and delivery by BC-URBN of this Agreement or for the consummation by BC-URBN of the transactions contemplated by this Agreement.

 

ARTICLE X

INDEMNIFICATION

 

10.1         Indemnification. Licensors covenant and agree to indemnify, defend and hold BC-URBN, its employees, officers, directors, agents and Affiliates harmless against and with respect to any and all damages, losses, liabilities, deficiencies, costs and expenses, including reasonable attorney’s fees, resulting from any misrepresentation, breach of warranty or non-fulfillment of any agreement or covenant on the part of any Licensor under this Agreement. BC-URBN covenants and agrees to indemnify, defend and hold Licensors and their respective employees, officers, directors, agents and Affiliates harmless against and with respect to any and all damages, losses, liabilities, deficiencies, costs and expenses, including reasonable attorney’s fees, resulting from any misrepresentation, breach of warranty or non-fulfillment of any agreement or covenant on the part of BC-URBN under this Agreement.

 

10.2         LIMITATION OF LIABILITY. NO PARTY SHALL BE LIABLE TO THE OTHER PARTIES IN TORT, CONTRACT OR OTHERWISE FOR ANY LOST PROFITS, SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH CLAIM.

 

ARTICLE XI

GENERAL PROVISIONS

 

11.1         Notices. All notices, consents, waivers and other communications required or permitted by this Agreement will be in writing and will be deemed given to a Party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); or (b) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses and marked to the attention of the person (by name or title) designated below (or to such other address, facsimile number, e-mail address or person as a Party may designate by notice to the other Parties):

 

If to Grow Solutions Holdings, Inc.: With a copy to:
  ATTN: Chad Fischl, CEO & President
  230 – 111 Research Drive
  Saskatoon, Saskatchewan, Canada.
  S7N 3R2

 

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If to BC-URBN: With a copy to:
  Attn: Darci or Ryan
Pure Roots Urban Farms BC, Inc. Pure Roots Urban Farms BC, Inc.
  17688 – 24 Avenue, Surrey, BC.

 

11.2         Entire Agreement and Modification. This Agreement supersedes all prior agreements, whether written or oral, between the Parties with respect to its subject matter and constitutes a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter. This Agreement may not be amended, supplemented, or otherwise modified except by a written agreement executed by the Party to be charged with the amendment.

 

11.3         Assignment. No Party may assign any of its rights under this Agreement, in whole or in part, to any third party without the prior written consent of the other Parties. Notwithstanding the above, any Party may assign this Agreement to an Affiliate, or in connection with a merger, reorganization or similar transaction, or in connection with a sale of more than 50% of the assets of such Party in one or a series of related transactions. Subject to the foregoing, this Agreement will be binding upon and will inure to the benefit of the Parties and their respective permitted heirs, successors and assigns. Licensor shall not assign any Patent or any intellectual property right which claims technology used in or is otherwise relevant to the Manufacturing, Distribution, any Product or any Documentation without (i) including an express statement in the assignment document that the assignment is subject to the licenses granted in this Agreement, and (ii) providing BC-URBN with a copy of such assignment document, and any purported assignment that does not comply with this Section 11.3 shall be void.

 

11.4         Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

11.5         Governing Law. This Agreement will be governed by and construed under the laws of the province of Saskatchewan, Canada (“Saskatchewan, Canada”).

 

11.6         Arbitration. The parties agree to submit any and all disputes arising hereunder, or relating in any manner hereto, to binding arbitration before a panel of three arbitrators, with one arbitrator selected by each party and the third arbitrator selected by the two arbitrators selected by the parties, who will proceed in accordance with the procedures of the Forum Code of Procedure of the National Arbitration Forum. The arbitrators will have full authority to render any ruling in law or in equity and to assess costs against any party(ies) they deem appropriate. Such arbitration will be held in Saskatoon, Saskatchewan, Canada. The parties acknowledge that a breach of or a default under any of the terms and conditions of this Agreement may, in some cases, result in irreparable harm, and in such case, any remedies that the parties may have at law may be insufficient. Accordingly, the parties agree that in the case of a breach or default that could cause irreparable harm, nothing contained in this Section 11.6 will deny the aggrieved party of the right to seek injunctive relief in any court having jurisdiction.

 

11.6         Force Majeure. No Party shall be liable for any failure to perform due to acts of God, acts of government authorities which significantly restrict or prohibit the transactions contemplated hereby, war, fires, floods, explosions or other natural catastrophes, civil disturbances, strikes, riots, unusually severe weather such as hurricanes or failures or fluctuations in electrical power, heat, light, air conditioning, or telecommunications equipment (“Force Majeure”). In such event, the performance of such Party’s obligations shall be suspended during, but not longer than, the period of existence of such cause and a period reasonably required to perform the obligation. The Parties shall use their best reasonable efforts to minimize the consequences of Force Majeure.

 

11.7         Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, personal representatives, successors and permitted assigns, as the case may be.

 

11.8         Relationship Between the Parties. Nothing in this Agreement contained shall be deemed to create an employment, agency, joint venture or partnership relationship between the Parties.

 

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11.9.          Execution of Agreement. This Agreement may be executed in multiple counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. The exchange of copies of this Agreement and of signature pages by facsimile or other electronic form of transmission will constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or other electronic method will be deemed to be their original signatures for all purposes.

 

Intending to be legally bound, the Parties have executed this Agreement as of the Effective Date.

 

Grow Solutions Holdings, Inc. and Subsidiaries

 

By: /s/ Chad Fischl  
  Name: Chad Fischl  
  Title: President  

  

Pure Roots Urban Farms BC Inc.   Pure Roots Urban Farms BC Inc.
         
By:  /s/ Darcy Rai   By: /s/ Ryan Veillet
  Name: Darcy Rai     Name: Ryan Veillet
  Title: CEO / CF     Title: President

 

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