ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Acquisition Agreement
On February 10, 2021, Bergio International, Inc. (the "Company" or "BRGO")
entered into an Acquisition Agreement with Digital Age Business, Inc., a Florida
corporation, ("Digital Age"), pursuant to which the shareholders of Digital Age
(the "Selling Shareholders") agreed to sell all of the assets (the "Acquired
Assets") and liabilities ("Assumed Liabilities") of its Aphrodite's business to
a recently formed wholly-owned subsidiary of the Company known as Aphrodite's
Marketing, Inc., a Wyoming corporation (the "Acquisition Sub") in exchange for
newly created Series B Preferred Stock of the Company, which collectively, shall
be convertible at Shareholders' option, at any time, in whole or in part, into
that number of shares of common stock of BRGO which shall equal Thirty Percent
(30%) of the total issued and outstanding common stock of BRGO (as determined at
the earlier of (i) the date of conversion of the Series B Preferred Stock; and
(ii) eighteen (18) months following the Closing).
As additional consideration for the purchase of the Acquired Assets, BRGO has
also agreed to transfer to the Selling Shareholders 49,000 of the 100,000
authorized shares of the Acquisition Sub, such that upon the Closing Date, 51%
of the Acquisition Sub shall be owned by BRGO, and 49% of the Acquisition Sub
shall be owned by the Selling Shareholders.
Under the terms of the Acquisition Agreement, the Acquisition Sub is expected to
meet the adjusted financial projections as set forth on Schedule "D" to the
Acquisition Agreement, in order to earn additional Series B Preferred shares,
which if earned, shall entitle the Selling Shareholders to earn up to an
additional 19% (the "Additional Shares") of Series B Preferred Stock, which,
including the 30% of Series B Preferred Stock issued at Closing, shall together
convert up to a maximum of 49% of BRGO's then-issued and outstanding shares of
Common Stock, with the Additional Shares being subject to a two-year vesting
period from the date of issuance, based upon additional revenues of Acquisition
Sub, as set forth on Schedule "E" to the Acquisition Agreement.
In addition, the Acquisition Agreement requires that upon Closing, Jonathan
Foltz, the President and CEO of Digital Age, and certain other key employees of
Acquisition Sub shall receive employment agreements from Acquisition Sub with
respect to their continued employment (the "Employment Agreements") (which will
allow such key employees to participate in any employee stock ownership plan
("ESOP") as offered to other BRGO subsidiary employees from time to time) to
make certain that current personnel operating the business of Aphrodites.com
shall remain in place for all departments of the business of Aphrodite's
post-Closing of the Acquisition.
As further consideration for the Acquisition, under Section 2.2.1 of the
Acquisition Agreement, BRGO has agreed to provide Acquisition Sub with certain
financing, as follows (a) upon the signing of the Letter of Intent that preceded
this Acquisition Agreement, BRGO provided loans to Jonathan Foltz for the
benefit of Aphrodites.com in the amounts of $50,000 on January 22, 2021, $35,000
on January 27, 2021, and $50,000 on February 5, 2021, which were used to pay
some of the most pressing of Aphrodite's Liabilities of as evidenced by the
three promissory notes set forth on Schedule "H" therein (b) and upon the
signing of this Acquisition Agreement, BRGO or its investors will provide equity
financing of $615,000 for the benefit of Acquisition Sub, (for which BRGO shall
enter into a certain Securities Purchase Agreement, Convertible Promissory Note,
Warrant, Guaranty, Security Agreement and Registration Rights Agreement
(together, the "BRGO Transaction Documents"), (the "Initial Financing") which
will be used to pay for (i) partial extinguishing the Assumed Liabilities set
forth in Schedule "B" thereto, and (ii) expenses in connection with the
Acquisition and the Audit of Acquisition Sub; (c) and following the Closing of
the Acquisition, BRGO will facilitate a second equity financing for the benefit
of the Acquisition Sub in the amount of an additional $750,000, which shall take
place following the effective date of BRGO's new S-1 Registration Statement (the
"Second Financing"), and such funds shall be utilized, in part, to pay for (i)
extinguishing the Assumed Liabilities set forth in Schedule "B" thereto, and
(ii) the expenses incurred in connection with the Acquisition and the Audit of
Acquisition Sub and (d)
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following the Closing, BRGO will raise an additional $3,500,000, the proceeds of
which will be used for the Acquisition Sub, by the sale of shares of common
stock of BRGO, pursuant to an S-1 Registration Statement (the "Additional
Financing"). It is anticipated that the Additional Financing will be consummated
in tranches over the twelve (12) months following the Closing; provided that the
first tranche of the Additional Financing will be at least $750,000, and will be
provided to the Acquisition Sub within 60 days after BRGO's new S-1 Registration
Statement is declared effective by the SEC. As noted on Schedule D and Schedule
E to the Acquisition Agreement, the foregoing financing, (including the loans
shown on Schedule H, the Initial Financing, the Second Financing and the
Additional Financing) totals $5,000,000, and any financing provided to
Acquisition Sub, which exceeds the $5,000,000 total detailed in this Section
2.2.1, shall be added to the Gross Revenue benchmarks set forth on Schedule D
and Schedule E to the Acquisition Agreement.
Section 2.2.2 of the Acquisition Agreement further provides that, at the Closing
of the Acquisition, Southridge (or its affiliates as directed by Southridge)
shall receive shares of BRGO's newly created Series C Preferred Stock which,
collectively, shall be convertible into that number of shares of common stock of
the Company which shall equal five percent (5%) of the total issued and
outstanding shares of BRGO Common Stock (as determined at the earlier of: (i)
the date of conversion of the Series C Preferred Stock; and (ii) eighteen (18)
months following the Closing). The proposed Certificate of Designation for the
Series C Preferred share is set forth on Schedule "G" to the Acquisition
Agreement.
Amendment to the Acquisition Agreement
On February 11, 2021, the Company, Digital Age, Acquisition Sub, and the Selling
Shareholders entered into the First Amendment to the February 10, 2021
Acquisition Agreement (the "Amendment") for the purpose of allocating the Series
B Preferred Stock to the Selling Shareholders without fractional shares, which
resulted in changing the Certificate of Designation for the Series B Preferred
Stock to reflect a total of 4,900 authorized shares of Series B Preferred Stock,
and for the purpose of reflecting a total of 3,000 shares of Series B Preferred
Stock to be issued to the Selling Shareholders upon Closing, (and the
opportunity for the Selling Shareholders to earn up to an additional 1,900
shares of Series B Preferred Stock upon reaching certain gross revenue
benchmarks); and the new Certificate of Designation for the Series B Preferred
Stock of BRGO was attached to the Amendment as "Schedule Amendment-C", and shows
in Section 1 thereof the increase in authorized shares from 49 to 4,900, and in
Section 5 thereof, the conversion language changed accordingly so that the
holders thereof shall have, in the aggregate, the same conversion rights as
previously stated in the Acquisition Agreement. Other than as expressly set
forth in the Amendment, all other terms and conditions of the Acquisition
Agreement were unchanged, and remain in full force and effect.
The Closing of the Acquisition is subject to the entry of Acquisition Sub into
the Employment Agreements with Jonathan Foltz and other key employees, the
Company's raising certain financing for the benefit of the Acquisition Sub, as
referenced in Section 2.2.1 of the Acquisition Agreement, and to increasing the
Company's authorized shares of Common Stock, the creation and issuance of the
Company's Series B and Series C Preferred Stock, and the transfer of 49,000
shares of the Acquisition Sub's Common Stock from BRGO to the Selling
Shareholders, all of which will be described in more detail in a Schedule 14
which the Company expects to file with the SEC in the next few days.
The foregoing descriptions of the Acquisition Agreement and Amendment herein are
qualified by the terms of the full text of the respective agreements attached
hereto as Exhibits 10.1 and 10.2, and the terms thereof are incorporated herein
by reference.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit No. Description
10.1 Acquisition Agreement with Digital Age Business, Inc. dated February
10, 2021
10.2 Amendment to the Acquisition Agreement dated February 11, 2021
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