QUEST SOLUTION, INC. (OTCMKTS:QUES) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01, Item 2.01, Item 2.03, Item 3.02, Item 7.01 is restated herein without any changes.
Item 1.01 Entry into a Material Agreement.
Purchase Agreement (Related Party Transaction)
On October 05, 2018, Quest Solution, Inc. (the “Company”) entered into a purchase agreement (the “Purchase Agreement”) with Walefar Investments, Ltd. (“Walefar”), and Campbeltown Consulting, Ltd., (“Campbeltown”), (Walefar and Campbeltown are collectively referred to as the “Sellers”). to the Agreement, the Company purchased 50% of the capital stock of HTS Image Processing, Inc., a Delaware company (“HTS”) from the Sellers. As consideration, the Company (i) issued to the Sellers 22,452,954 shares of the Company’s common stock (“Common Stock”), having a value of $5,298,897 based on the average closing price of the common stock for the 20 days’ preceding the Purchase Agreement (the “Per Share Value”), (ii) cash in the amount of $300,000, and (iii) a 12 month convertible promissory note with a principal amount of $700,000 and an interest rate of six percent (6%) per annum (the “Note”). The Note also provides the Sellers the right to convert all or any portion of the then outstanding and unpaid principal amount and interest into fully paid and non-assessable shares of the Company’s common stock at a conversion price of $0.236.
The Purchase Agreement constitutes a “related party transaction” as defined by Item 404 of Regulation S-K (§229.404) because of Company director Shai Lustgarten’s position as Chief Executive Officer of HTS and stock ownership in HTS. Additionally, Campbeltown is a “related party” because Carlos Jaime Nissenson, a beneficial owner of Campbeltown, is a consultant to the Company, a principal stockholder of the Company, and father of Company director Niv Nissenson. Carlos Jaime Nissenson is also a stockholder and director of HTS. to the Purchase Agreement, Shai Lustgarten shall receive 11,226,477 shares of the Company’s Common Stock and Carlos Jaime Nissenson shall receive 11,226,477 shares of the Company’s Common Stock.
Because of the related party nature of the Purchase Agreement, the Board formed a special committee consisting of Andrew MacMillan, an “independent director” of the Company as defined by Item 407 of Regulation S-K (§229.407) (the “Special Independent Director”) who had no financial interest in HTS. The Special Independent Director was responsible for negotiating the terms of the Purchase Agreement. The Special Independent Director was also given the power to work with the Company’s counsel on the Purchase Agreement and coordinate with the Company’s financial advisor. The Board received an analysis of what it believed was a fair valuation range for the purchase of HTS (the “Valuation Analysis”). Each of the Board members participated in a presentation of the HTS’ artificial intelligence (“AI”) technology and how that AI technology can complement the Company’s business and opportunities. Based on the Valuation Analysis, the Company’s vision of a combined company and the recommendation of the Special Independent Director, the Company made an offer to the shareholders of HTS (the “Offer”). Additionally, the Board received a fairness opinion with respect to the Offer. Following further deliberation and the recommendation of the Special Independent Director, the Purchase Agreement was unanimously approved by the independent directors of the Company. Shai Lustgarten and Niv Nissenson abstained from the vote because of their aforementioned related party interest in the Purchase Agreement.
The foregoing description of the Purchase Agreement is qualified in their entirety by the full text of such agreements, which are incorporated herein by reference and filed as exhibits hereto.
Item 2.01 Completion of Acquisition or Disposition of Assets
As described in Item 1.01 above, the Company entered into a Purchase Agreement with Walefar and Campbeltown, to which the Company has purchased 50% of the capital stock of HTS. As consideration, the Company (i) issued to the Sellers 22,452,954 shares of Common Stock, having a value of $5,298,897 based on the Per Share Value, (ii) cash in the amount of $300,000, and (iii) a 12 month convertible promissory note with a principal amount of $700,000 and an interest rate of six percent (6%) per annum (the “Note”). The Note also provides the Sellers the right to convert all or any portion of the then outstanding and unpaid principal amount and interest into fully paid and non-assessable shares of the Company’s common stock at a conversion price of $0.236.
Item 2.03 Creation of a Direct Financial Obligation
As described in Item 1.01 above, the Company issued to the Sellers a 12 month convertible promissory note in the principal amount of $700,000 which encompasses the total amount owed by the Company to the Sellers.
Item 3.02 Unregistered Sales of Equity Securities
As described in Section 1.01 hereof, the Company issued an aggregate of 22,452,954 shares of Common Stock in connection with the October 05, 2018 Purchase Agreement.
Item 7.01 Regulation FD Disclosure
On October 11, 2018, the Company issued a press release (the “Press Release”) announcing the acquisition. A copy of the Press Release is attached hereto and incorporated herein by reference in its entirety as Exhibit 99.1.
Item 9.01 Financial statements and Exhibits
| (a) | Financial Statements of Business Acquired. |
In accordance with Item 9.01(a), the following are filed as exhibits to this Current Report on Form 8-K:
Audited financial statements of the Acquired Entity as of, and for the year ended December 31, 2017are filed as Exhibit 99.2 hereto.
Unaudited Financial Statements of the Acquired Entity for the Nine Months Ended September 30, 2018 are filed as Exhibit 99.3 hereto.
Pro Forma Financial Statements for the Nine Months Ended September 30, 2018 are filed as Exhibit 99.4 hereto.
Reference is made to the Exhibit Index following the page of this Current Report on Form 8-K, which is incorporated herein by reference.
Quest Solution, Inc. Exhibit
EX-99.2 2 ex99-2.htm HTS Image Processing,…
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About QUEST SOLUTION, INC. (OTCMKTS:QUES)
Quest Solution, Inc., formerly Amerigo Energy, Inc., is a national mobility systems integrator. The Company focuses on the design, delivery, deployment and support of integrated mobile solutions. It offers end-to-end solutions, which include hardware, software, communications and lifecycle management services. It offers a suite of configurable packaged software solutions, which include Order Entry, DSD and Route, Intelligent Order Entry, ITrack, Warehouse, Proof of Delivery, WTMiP and Easy Order. In addition, it guides companies through the development and deployment process, from selecting technology to the company-wide rollout of a customized solution that fits a company’s requirements. It performs a technical evaluation of the client’s operations and specific operational problems, and then determines the optimal hardware and software solutions. It delivers ongoing services provided throughout the deployment process and product life cycle. It also delivers installation services.