GOPHER PROTOCOL INC. (OTCMKTS:GOPH) Files An 8-K Entry into a Material Definitive AgreementItem 1.01
| Item 2.01 | Completion or Acquisition or Disposition of Assets |
| Item 2.03 | Creation of Direct Financial Obligation |
| Item 3.02 | Unregistered Sales of Equity Securities |
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On September 1, 2017, Gopher Protocol Inc. (the "Company") entered into and closed an Asset Purchase Agreement (the "Purchase Agreement") with RWJ Advanced Marketing, LLC (“RWJ”), a Georgia corporation, to which the Company purchased certain assets from RWJ, including inventory, terminals, licenses and permits and intangible assets, in consideration of $400,000, an aggregate 5,000,000 shares of common stock of the Company (the "RWJ Shares"), secured promissory note in the amount of $2,600,000 (the “RWJ Note”), warrants to purchase 9,000,000 shares of common stock (the “RWJ Warrants”) and the assumption of certain liabilities incurred by RWJ after the effective date as set forth in the RWJ Agreement (the “RWJ Assumed Liabilities”). RWJ assigned 3,000,000 RWJ Shares and 5,000,000 RWJ Warrants to Robert Warren Jackson and 2,000,000 RWJ Shares and 4,000,000 RWJ Warrants to Gregory Bauer.
The RWJ Warrants are exercisable for a period of five years at a fixed exercise price of $0.50 per share and non-dilutive anti-dilution protection. If, prior to the exercise of the RJW Warrants, the Company (i) declares, makes or issues, or fixes a record date for the determination of holders of common stock entitled to receive, a dividend or other distribution payable in shares of its capital stock, (ii) subdivides the outstanding shares, (iii) combines the outstanding shares (including a reverse stock split), (iv) issues any shares of its capital stock by reclassification of the shares, capital reorganization or otherwise (including any such reclassification or reorganization in connection with a consolidation or merger or and sale of all or substantially all of the Company’s assets to any person), then, notwithstanding any such action the exercise price, and the number and kind of shares receivable upon exercise, in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification shall remain fixed so that the holder of the RJW Warrants exercised after such time shall be entitled to receive the number and kind of shares which, if the RJW Warrants had been exercised immediately prior to such time, the holder would have owned upon such exercise and been entitled to receive.
The RWJ Note accrues interest at the rate of 3.5% interest per annum and is payable in full on December 31, 2019. The Company may prepay this note at any time without penalty. The RWJ Note is a long-term debt obligation that is material to the Company.
The Company is incorporating a wholly-owned subsidiary, UGopherServices Corp., to hold the acquired assets. The Company is required to provide $100,000 in working capital for the new subsidiary.
At closing, the Company and Mr. Bauer entered into an Employment Agreement to which Mr. Bauer was retained as Chief Executive Officer for a term of one year, subject to an automatic extension, unless terminated, in consideration of a base salary of $250,000 and a bonus of 10% of net profit generated by the assets acquired. Mr. Bauer was also appointed to the Board of Directors of the Company. As of the closing date, Mr. Murray resigned as Chief Executive Officer of the Company but will remain as a director of the Company.
Mr. Bauer, since 2004 through present, has served as executive director with W.L. Petrey Wholesale, Inc. where he was in charge of the UGO/Preway operations. Mr. Bauer holds a Bachelor of Science degree from University of Maryland College Park. Mr. Bauer isveteranof the United States Navy and was honorably dischargedin 1983. He held the title of United States Navy SurfaceWarfareQualified.
The Company and Guardian Patch, LLC (“Guardian”), which assisted structuring and negotiating the Purchase Agreement and related asset purchase, entered into a Consulting Agreement dated September 1, 2017. In consideration for the services, the Company issued Guardian 2,000,000 shares of common stock and warrants to purchase 9,000,000 shares of common stock. The warrants contain identical terms to the RJW Warrants. If and when the assets acquired under the Purchase Agreement generate revenues of $10,000,000, the Company shall issue Guardian an additional 3,000,000 shares of common stock. The consulting agreement was effective August 1, 2017 and terminates November 30, 2017. Guardian, to its existing joint venture agreement, agreed to provide the $400,000 in funding needed for the cash purchase price under the Purchase Agreement. Guardian also agreed to provide the needed $100,000 working capital designated to UGopherServices Corp. The parties have agreed to negotiate and finalize the terms of such loans in the near future. In order to transition the Company, the Company and Michael Murray agreed to enter into an employment agreement and to serve as Executive Vice President in charge of business development, which agreement is presently being finalized. In consideration for services, the Company issued a warrant to acquire 4,000,000 shares of common stock to Mr. Murray. The warrants contain identical terms to the RJW Warrants.
The shares of common stock and the warrants were issued to exemptions from registration provided by Section4(2) and/or Regulation D of the 1933 Securities Act, as amended.
The foregoing information is a summary of each of the agreements involved in the transactions described above, is not complete, and is qualified in its entirety by reference to the full text of those agreements, each of which is attached an exhibit to this Current Report on Form 8-K.Readers should review those agreements for a complete understanding of the terms and conditions associated with this transaction.
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements
Audited Consolidated Financial Statements for the assets acquired from RWJ Advanced Marketing, LLC for years ended December 31, 2016 and December 31, 2015 (to be filed by amendment)
Unaudited Consolidated Financial Statements for the assets acquired from RWJ Advanced Marketing, LLC for the six months ended June 30, 2017 (to be filed by amendment)
(b) Pro-Forma Financial Information
Pro Forma Financial Information for Gopher Protocol Inc. and the assets acquired from RWJ Advanced Marketing, LLC (to be filed by amendment)
(d) List of Exhibits
| Exhibit No. |
Description of Exhibit |
| 4.1 | Form of Warrant issued to Robert Warren Jackson, Gregory Bauer, Michael Murray and Guardian Patch, LLC dated September 1, 2017 |
| 4.2 | Balloon Note payable by Gopher Protocol Inc. to RWJ Advanced Marketing, LLC dated September 1, 2017 |
| 10.1 | Asset Purchase Agreement between Gopher Protocol Inc. and RWJ Advanced Marketing, LLC dated September 1, 2017 |
| 10.2 | Addendum to Asset Purchase Agreement between Gopher Protocol Inc. and RWJ Advanced Marketing, LLC dated September 1, 2017 |
| 10.3 | Employment Agreement between Gopher Protocol Inc. and Gregory Bauer dated September 1, 2017 |
| 10.4 | Consulting Agreement between Gopher Protocol Inc. and Guardian Patch, LLC dated September 1, 2017 |
Gopher Protocol Inc. ExhibitEX-4.1 2 s107414_ex4-1.htm EXHIBIT 4.1 Exhibit 4.1 THIS WARRANT MAY NOT BE ASSIGNED OR TRANSFERRED BY THE WARRANT HOLDER,…To view the full exhibit click here
About GOPHER PROTOCOL INC. (OTCMKTS:GOPH)
Gopher Protocol, Inc. (Gopher), formerly Forex International Trading Corp., is in the process of developing a real-time, heuristic-based, mobile technology. Upon development, the technology will consist of a smart microchip, mobile application software and supporting software that run on a server. The Company applied this technology into an electronic circuit, including a microchip that is within a sticky patch package (the Patch). The Patch can be affixed to any object, mobile or static, which will enable the object to which it is affixed to be tracked remotely. The Patch will also perform an emergency feature. The Patch also alerts the user’s friends and family about the user’s location. The Company also developed Gopher Epsilon Software, which is an internal platform that has been developed as a designated tool for the mobile industry to improve signoff Reliability Verification (RV) with Accurate and Precise Interactive Error Detection and Correction.