HFACTOR, INC. Item 9.01 Financial Statements and Exhibits
Prior to the Merger, we were a "shell company" (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). As a result of the Merger, we have ceased to be a shell company. The information contained in this Current Report constitutes the current "Form 10 information" necessary to satisfy the conditions contained in Rule 144(i)(2) under the Securities Act of 1933, as amended (the "Securities Act").
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
The information contained in Item 2.01 below relating to the various agreements described therein is incorporated herein by reference.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
The Merger and Related Transactions
The Merger
On
Prior to the Merger, we ceased being an operating company and became a "shell company". Pursuant to the Merger, we acquired the business of Target to engage in the business of the development, marketing, and sale of hydrogen-infused water and other consumer goods.
As consideration for the merger, Target shareholders exchanged 100% of Target Stock (as defined in the Merger Agreement) totaling 44,136,473 fully diluted shares into shares of Company Common Stock at a conversion rate of 0.7 As a result, an aggregate of 30,895,530 shares of our Common Stock were issued to the shareholders of Target.
The Merger Agreement contained customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions. Breaches of the representations and warranties will be subject to customary indemnification provisions, subject to specified aggregate limits of liability.
The issuance of shares of our Common Stock to shareholders of Target in
connection with the merger was not registered under the Securities Act, in
reliance upon the exemption from registration provided by Section 4(2) of the
Securities Act, which exempts transactions by an issuer not involving any public
offering, and Regulation D and/or Regulation S promulgated by the
Changes to the Company's Officers and Directors
Effective
In conjunction with the Merger, Dawn Cames resigned as President,
Initial
On
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The Note 1 has a term of twelve months and matures on
The Note 1 is convertible at any time after one hundred eighty (180) days, at the holder's option, into shares of our common stock at a 30% discount to the lowest daily VWAP during the 10-day period immediately preceding conversion. The conversion price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the conversion price then in effect.
Each Warrant is exercisable for a period of five years from the date of issuance
at an initial exercise price of
Boot has contractually agreed to restrict its ability to exercise the Warrants and convert the Note such that the number of shares of the Company common stock held by Boot and its affiliates after such conversion or exercise does not exceed 4.99% of the Company's then issued and outstanding shares of common stock.
The transaction with Boot was disclosed on the Company's form 8-K that was filed
on
Second
On
The Note 2 has a term of twelve months and matures on
The Note 2 is convertible at any time after one hundred eighty (180) days, at the holder's option, into shares of our common stock at a 30% discount to the lowest daily VWAP during the 10-day period immediately preceding conversion. The conversion price is also subject to adjustment due to certain events, including stock dividends, stock splits and in connection with the issuance by the Company of common stock or common stock equivalents at an effective price per share lower than the conversion price then in effect.
Each Warrant is exercisable for a period of five years from the date of issuance
at an initial exercise price of
Boot has contractually agreed to restrict its ability to exercise the Warrants and convert Note 1 and Note 2 such that the number of shares of the Company common stock held by Boot and its affiliates after such conversion or exercise does not exceed 4.99% of the Company's then issued and outstanding shares of common stock.
Creation of Preferred Classes of Stock
On
5 Current Ownership
Immediately after giving effect to the Merger and other related transactions, there were 40,822,197 shares of our Common Stock issued and outstanding. This figure does not include shares issuable at a future date through the Boot Note and Warrants.
No other securities convertible into or exercisable or exchangeable for our Common Stock (including options or warrants) are outstanding.
Our Common Stock is quoted on the OTC Markets under the symbol "FCAA".
Following the Merger, we continue to be a "smaller reporting company" as defined under the Exchange Act. We believe that as a result of the Merger we have ceased to be a "shell company", as such term is defined in Rule 12b-2 under the Exchange Act.
Description of Business
Immediately following the Merger, the business of HyEdge became our business.
Overview
HyEdge operates primarily through its subsidiary,
HFactor was developed and is manufactured by a team of experts in the
HFactor's anti-inflammatory and antioxidant benefits appeal to a wide population
across every age group, positioning HFactor to capture significant share in an
expanding market. The global market for bottled water is projected to reach
The quality of our product is achieved through a proprietary manufacturing process. A reverse osmosis filtering system and patent-protected infusion process ensures efficacy, purity, and taste. The efficacy of hydrogen water is backed by over 1,000 published peer reviewed studies demonstrating that hydrogen positively impacts fitness, health, lifestyle, recovery, and wellness.
Our sales strategy involves a diversified, multi-channel approach. Our products are currently on shelves in approximately 5,000+ retail stores across 20 chains in addition to our growing ecommerce presence. Our company prides itself on having a low carbon footprint, primarily due to our eco-conscious packaging and free mail-in recycling program through our partnership with Teracycle.
Mission Statement
To build a brand and corporate culture that, at its essence, exhibits strength in oneself and in one's community. We promote a foundation of "doing well by doing good". This foundation enables HFactor to produce and distribute the highest quality "better for you" consumer products that are conscious to the community, mind, body, and the environment.
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Consumers are looking for a go-to hydration option that provides additional functional benefits without the sugar or caffeine. The worldwide health and fitness movement is just beginning. More and more people are realizing the importance of what you put in your body and how you maintain it. On a greater scale, consumers are looking for brands that have removed artificial ingredients. This has led to a recent increase in contracts from major retailers and distributors in the US that should result in a significant increase to the Company's retail presence throughout 2021 and 2022.
Maintaining Relevance in a
HFactor has found success by establishing beneficial relationships with target-aligned influencers and sponsoring a multitude of events and activities. We have built organic relationships with athletes and influencers in the fitness space to drive awareness, education, and ecommerce. To solidify HFactor in the fitness space, we have had a strong presence at many sports and fitness events as participating sponsor, driving product trial and education. We expect that as we continue to cultivate these relationships, brand awareness will increase, and we will be able to capture a significant share in an expanding market.
The Benefits of Hydrogen Infused Water
Water already has Hydrogen, as in H2O, but when those two hydrogen atoms are bound to oxygen, they are not available for any other interactions. When we infuse hydrogen gas into water, active hydrogen molecules are free and accessible to our body. Small and soluble, molecular hydrogen can quickly circulate and speed straight into the power centers of our cells. This interaction has been shown to increase athletic performance, reduce inflammation from exercise, and increase powerful antioxidants in our body. Our Reverse Osmosis filtering system ensures the purity and taste of our water, and our patented infusion process allows us to deliver PURE hydrogen and PURE water, and nothing else.
Our Products
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The pouch. The pouch is unique, convenient to hold and carry, and plays a significant role in helping you reap all the benefits Hydrogen has to offer. The eco-conscious design and material was created in an effort to contain the additional Hydrogen in the water. When you add hydrogen to water, it tries to and usually does escape quite easily through more traditional materials such as plastic or cardboard. Our pouch keeps the extra Hydrogen molecules contained, and does so with a lower carbon footprint.
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The can. Slim, sleek, and eye-catching, the HFactor cans are finished with a matte white color so the blues and text information stand out on the shelf. Functionally, the aluminum material of the can is also very effective at containing the extra Hydrogen molecules.
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More Flavors. More Sizes. More Choices. Recent innovations include a larger, 20-ounce pouch, in addition to different flavors of HFactor water such as Watermelon, Blood Orange, Honeydew, and Tart Cherry. These options offer consumers a great-tasting beverage that still provides the health benefits of our standard hydrogen-infused water.
Our Business Plan
HFactor's demonstrated efficacy, innovative packaging, and low carbon footprint
has propelled traction since our launch in
Our business plan focuses on four key areas: (1) regional focus; (2) retailer
focus; (3) driving volume; and (4) controlling spending. We plan to focus on key
regions of the US where our market traction is already established, including
the Northeast,
Description of Properties
As a result of the COVID-19 pandemic, HFactor Leadership and sales teams work
remotely. Our manufacturing is maintained in
Risk Factors
Risks Relating to the Company and Its Business
The Company has a limited operating history.
The Company has a limited operating history. 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 its business plan.
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The Company's success is heavily dependent upon the continued active participation of the Company's current leadership team . Loss of these key 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 beverage/Consumer Product nd 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 its ability to operate. 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.
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 financial position and results of operations in the period or periods for which a determination is made.
The Company is not subject to Sarbanes-Oxley regulations and lacks 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 to comply with the management certification and auditor attestation requirements.
The Company has engaged in certain transactions with related persons.
On
The license will be terminated if 1) the Company fails to perform any term or condition of the Agreement and fails to cure such failure within 30 days. or 2) the Company undergoes any direct or indirect sale, merger, consolidation, or transfer of greater than 50% of the Licensee's ownership shares or business assets to a person or group of persons, or 3) the Company substantially discontinues business operations.
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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 . . .
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On
None of the securities were sold through an underwriter and, accordingly, there were no underwriting discounts or commissions involved.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS
In conjunction with Merger, we experienced the following changes to our executive team and Board of Directors:
Dawn Cames resigned as President on
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR.
The information regarding amendments to the Company's Article of Incorporation or Bylaws is set forth in Item 2.01, "Completion of Acquisition or Disposition of Assets-The Merger and Related Transactions" and is incorporated herein by reference. Copies of said amendments are attached hereto as 3.1-1.
ITEM 5.06 CHANGE IN SHELL COMPANY STATUS
Prior to the Merger, we were a "shell company" (as such term is defined in Rule 12b-2 under the Exchange Act). As a result of the Merger, we have ceased to be a shell company. The information contained in this Current Report constitutes the current "Form 10 Information" necessary to satisfy the conditions contained in Rule 144(i)(2) of the Securities Act.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
In accordance with Item 9.01(a) Target's audited financial statements for the
year ended
(b) Pro forma financial information.
In accordance with Item 9.01(b), unaudited pro forma condensed combined
financial statements as of
(d) Exhibits
In reviewing the agreements included or incorporated by reference as exhibits to this Current Report on Form 8-K, please remember that the agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
· should not in all instances be treated as categorical statements of fact, but
rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
· have been qualified by disclosures that were made to the other party in
connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
· may apply standards of materiality in a way that is different from what may be
viewed as material to you or other investors; and
· were made only as of the date of the applicable agreement or such other date or
dates as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representations and warranties may not describe the actual
state of affairs as of the date they were made or at any other time. Additional
information about the Company may be found elsewhere in this Current Report on
Form 8-K and the Company's other public filings, which are available without
charge through the
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Exhibits
Filed Incorporated by
herewith reference
Exhibit No. Description (*) (Filing)
2.1 Agreement and Plan of Merger between the *
Company and HyEdge, Inc., dated August 6,
2021
3.1.1 Amendment to the Company's Articles of *
Incorporation dated August 6, 2021
4.1 Certificate of Designation for Series C *
Preferred Stock
4.2 Certificate of Designation for Series D *
Preferred Stock
10.1 Boot Capital Securities Purchase Agreement 8-K filed on
dated May 27, 2021 06/10/2021
10.2 Boot Capital Convertible Promissory Note 8-K filed on
dated May 27, 2021 06/10/2021
10.3 Boot Capital Warrant dated May 27, 2021 8-K filed on
06/10/2021
10.4 Boot Capital Securities Purchase Agreement *
dated July 22, 2021
10.5 Boot Capital Convertible Promissory Note *
dated July 22, 2021
10.6 Boot Capital Warrant dated July 22, 2021 *
17.1 Resignation of Dawn Cames dated August 6, *
2021
23.1 Auditor's Consent *
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