UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

 (Mark One)

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

For the quarterly period ended June 30, 2016

 

or

 

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

For the transition period from _____________ to _____________

 

Commission file number: 333-185046

 

RMR Industrials, Inc.

(Name of registrant in its charter)

 

Nevada 46-0750094
(State or jurisdiction of incorporation or organization)  (IRS Employer Identification No.) 

   

9301 Wilshire Blvd., Suite 312

Beverly Hills, CA 90210

(Address of principal executive offices)

 

(310) 492-5010

(Registrant's telephone number, including area code) 

 

9595 Wilshire Blvd., Suite 310

Beverly Hills, CA 90212

(Former name, former address, and former fiscal year,

if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

As of August 15, 2016, the registrant had 35,785,858 shares of Class A Common Stock and 1,030,957 shares of Class B Common Stock outstanding.

 

 

 

 

RMR INDUSTRIALS, INC.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are "forward-looking statements." Forward-looking statements may include our statements regarding our goals, beliefs, strategies, objectives, plan, including product and service developments, future financial conditions, results or projections or current expectations. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as "believes," "estimates," "intends," "plan" "expects," "may," "will," "should," "predicts," "anticipates," "continues," or "potential," or the negative thereof or other variations thereon or comparable terminology, and similar expressions are intended to identify forward-looking statements. We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements, or industry results, expressed or implied by such forward-looking statements. Such forward-looking statements appear in Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as elsewhere in this Quarterly Report.

 

Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available.  We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

 

Unless otherwise specified or required by context, as used in this Quarterly Report, the terms "we," "our," "us" and the "Company" refer collectively to RMR Industrials, Inc. and its wholly-owned subsidiaries, RMR IP, Inc., United States Talc and Minerals Inc., and RMR Aggregates, Inc. The term "fiscal year" refers to our fiscal year ending March 31. Unless otherwise indicated, the term "common stock" refers to shares of our Class A Common Stock and Class B Common Stock.

 

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). 

 

2  

 

 

RMR INDUSTRIALS, INC.

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS 4
     
ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 5
     
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 7
     
ITEM 4. CONTROLS AND PROCEDURES 7
     
PART II OTHER INFORMATION
     
ITEM 1. LEGAL PROCEEDINGS 8
     
ITEM 1A. RISK FACTORS 8
     
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 8
     
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 8
     
ITEM 4. MINE SAFETY DISCLOSURES 8
     
ITEM 5. OTHER INFORMATION 8
     
ITEM 6. EXHIBITS 8

  

3  

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

RMR INDUSTRIALS, INC.

 

INDEX TO UNAUDITED FINANCIAL STATEMENTS

June 30, 2016

 

  Page(s)
Unaudited Consolidated Balance Sheets as of June 30, 2016 and March 31, 2016 F-1
   
Unaudited Consolidated Statements of Operations for the three months ended June 30, 2016 and 2015 F-2
   
Unaudited Consolidated Statements of Cash Flows for the three months ended June 30, 2016 and 2015 F-3
   
Notes to Unaudited Consolidated Financial Statements F-4

 

4  

 

 

RMR Industrials, Inc.

Consolidated Balance Sheets

 

    June 30, 2016     March 31, 2016  
    (Unaudited)        
ASSETS                
Current assets                
Cash   $ 258,836     $ 356,287  
Prepaid expenses     10,071       -  
Total current assets     268,907       356,287  
                 
Deposits     31,119       -  
Other assets     10,000       7,500  
Total assets   $ 310,026     $ 363,787  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities                
Accounts payable   $ 491,818     $ 531,491  
Accounts payable, related party     1,618,233       1,368,233  
Accrued liabilities, related party     1,285,743       1,075,743  
Total liabilities (All current)     3,395,794       2,975,467  
                 
Stockholders' Deficit                
  Preferred Stock, $0.001 par value, 50,000,000 shares authorized; none issued and outstanding     -       -  
  Class A Common Stock, $0.001 par value; 2,000,000,000 shares authorized; 35,785,858 shares issued and outstanding     35,786       35,786  
  Class B Common Stock, $0.001 par value; 100,000,000 shares authorized; 1,030,957 and 990,957 shares issued and outstanding on June 30, 2016 and March 31, 2016, respectively     1,031       991  
Common stock subscribed     (100,000 )     -  
Additional paid-in capital     1,769,960       1,370,103  
Accumulated deficit     (4,792,545 )     (4,018,560 )
Total stockholders’ deficit   $ (3,085,768 )   $ (2,611,680 )
                 
Total liabilities and stockholders’ deficit   $ 310,026     $ 363,787  

 

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

 

F- 1  

 

 

RMR Industrials, Inc.

Consolidated Statements of Operations (Unaudited)

 

    For the three
months ended
June 30, 2016
    For the three months ended
June 30, 2015
 
    (Unaudited)     (Unaudited)  
             
Operating Expenses                
Selling, general and administrative   $ 773,825     $ 537,248  
Loss from operations     (773,825 )   $ (537,248 )
Interest income     90       -  
Loss before income tax provision     (773,735 )     (537,248 )
Income tax provision     250       -  
Net loss   $ (773,985 )   $ (537,248 )
                 
Basic and diluted loss per common share*   $ (0.28 )   $ (0.21 )
                 
Weighted average shares outstanding*     2,780,250       2,596,500  

 

* Weighted average equivalent Class B shares outstanding and loss per equivalent Class B share are shown on an equivalent Class B common stock basis. Equivalent Class A shares outstanding are one-twentieth (1/20) of the equivalent Class B amount.

 

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

 

F- 2  

 

 

RMR Industrials, Inc.

Consolidated Statements of Cash Flows (Unaudited)

 

    Three months ended June 30, 2016     Three months ended June 30, 2015  
    (Unaudited)     (Unaudited)  
Cash flow from operating activities                
Net loss   $ (773,985 )   $ (537,248 )
Amortization expense     -       4,467  
Adjustments to reconcile net loss to net cash used in operating activities                
Changes in operating assets and liabilities                
Prepaid expenses     (10,071 )     -  
Deposits     (31,119 )     -  
Accounts payable     (39,673 )     (49,689 )
Accounts payable, related parties     250,000       372,470  
Accrued liabilities, related parties     210,000       210,000  
Net cash used in operating activities     (394,848 )     -  
                 
 Purchase of other assets                
Net cash used in investing activities     (2,500 )     -  
      (2,500 )     -  
                 
  Proceeds from issuance of common stock     299,897       65  
Net cash provided by financing activities     299,897       65  
                 
Net (decrease) increase in cash     (97,451 )     65  
                 
Cash at beginning of period     356,287       4,733  
Cash at end of period   $ 258,836     $ 4,798  
                 
Supplemental cash flow information                
Cash paid for interest   $ -     $ -  
Cash paid for income taxes   $ -     $ -  

 

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

 

F- 3  

 

 

RMR INDUSTRIALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

 

NOTE A – FORMATION, CORPORATE CHANGES AND MATERIAL MERGERS AND ACQUISITIONS

 

Online Yearbook was incorporated in the State of Nevada on August 6, 2012. Online Yearbook was a development stage company with the principal business objective of developing and marketing an online yearbook.

 

On November 17, 2014, Rocky Mountain Resource Holdings LLC, a Nevada limited liability company (the “Purchaser”) became the majority shareholder of Online Yearbook, by acquiring 5,200,000 shares of common stock of Online Yearbook (the “Shares”), or 69.06% of the issued and outstanding shares of common stock, pursuant to stock purchase agreements with Messrs. El Maraana and Salah Blal. The Shares were acquired for an aggregate purchase price of $357,670. The Purchaser was the source of the funds used to acquire the Shares. In connection with Online Yearbook’s receipt of approval from the Financial Industry Regulatory Authority (“FINRA”), effective December 8, 2014, Online Yearbook amended its Articles of Incorporation to change its name from “Online Yearbook” to “RMR Industrials, Inc.”

 

RMR Industrials, Inc. (the “Company” or “RMRI”) seeks to acquire and consolidate complimentary industrial assets. Typically these small to mid-sized assets are the core manufacturer and supplier of specific bulk commodity minerals and chemicals distributed to the global manufacturer industry. RMRI’s consolidation strategy is to assemble a portfolio of mature and value-add industrial commodities businesses to generate scalable enterprises with a vast portfolio of products and services addressing a common and stable customer base.

 

On February 27, 2015 (the “Closing Date”), the Company entered into and consummated a merger transaction pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, OLYB Acquisition Corporation, a Nevada corporation and wholly owned subsidiary of the Company (“Merger Sub”) and RMR IP, Inc., a Nevada corporation (“RMR IP”). In accordance with the terms of Merger Agreement, on the Closing Date, Merger Sub merged with and into RMR IP (the “Merger”), with RMR IP surviving the Merger as our wholly owned subsidiary.

 

RMR IP was formed to acquire and consolidate complimentary industrial commodity assets through capitalizing on the volatile oil markets, down cycles in commodity markets, and other ancillary opportunities. RMR IP is focused on managing the supply chain in order to offer a large and diverse set of products and services.

 

The Merger Agreement includes customary representations, warranties and covenants made by the Company, Merger Sub and RMR IP as of specific dates. The assertions embodied in those representations and warranties were made solely for purposes of the Merger Agreement and are not intended to provide factual, business, or financial information about the Company, Merger Sub and RMR IP. Moreover, some of those representations and warranties (i) may not be accurate or complete as of any specified date, (ii) may be subject to a contractual standard of materiality different from those generally applicable to shareholders or different from what a shareholder might view as material, (iii) may have been used for purposes of allocating risk among the Company, Merger Sub and RMR IP, rather than establishing matters as facts, and/or (iv) may have been qualified by certain disclosures not reflected in the Merger Agreement that were made to the other party in connection with the negotiation of the Merger Agreement and generally were solely for the benefit of the parties to the Merger Agreement.

 

For financial reporting purposes, the Merger represents a “reverse merger” rather than a business combination and RMR IP is deemed to be the accounting acquirer in the transaction. Consequently, the assets and liabilities and the historical operations that will be reflected in the Company’s future financial statements will be those of RMR IP. The Company’s assets, liabilities and results of operations will be consolidated with the assets, liabilities and results of operations of RMR IP after consummation of the Merger, and the historical financial statements of the Company before the Merger will be replaced with the historical financial statements of RMR IP before the Merger in all future filings with the SEC.

 

On March 10, 2015, we formed United States Talc and Minerals Inc. (“US Talc and Minerals”), incorporated in the State of Nevada as a wholly-owned subsidiary of the Company for the purpose of facilitating future acquisitions.

 

F- 4  

 

 

Basis of Presentation and Consolidation

 

The accompanying unaudited consolidated financial statements for the period ended June 30, 2016 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information in accordance with Securities and Exchange Commission (SEC) Regulation S-X rule 8-03. The unaudited consolidated financial statements include the financial condition and results of operations of our wholly-owned subsidiary, US Talc and Minerals, where intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, the unaudited consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of June 30, 2016 and the results of operations and cash flows for the periods then ended. The financial data and other information disclosed in these notes to the interim consolidated financial statements related to the period are unaudited.

  

NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied in the preparation of the accompanying consolidated financial statements. These consolidated financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.

 

Consolidation

 

The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The unaudited consolidated financial statements include the financial condition and results of operations of our wholly-owned subsidiary, US Talc and Minerals, where intercompany balances and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that impact the reported amounts of assets, liabilities, and expenses, and disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from those estimated amounts and assumptions used in the preparation of the financial statements.

 

Segment Reporting

 

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as one operating segment.

 

F- 5  

 

 

Cash and Cash Equivalents

 

The Company considers all highly liquid securities with original maturities of three months or less at the date of purchase to be cash equivalents. As of June 30, 2016, the Company had cash of $258,836 and no cash equivalents. The Company may occasionally maintain cash balances in excess of amounts insured by the Federal Deposit Insurance Corporation (“FDIC”). The amounts are held with major financial institutions and are monitored by management to mitigate credit risk.

 

Deposits

 

Deposits consist of a security deposit in connection with an office lease.

 

Other Assets

 

Other assets consist of a deposit towards the acquisition of certain intellectual property rights.

 

Impairment of Long-Lived Assets

 

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Factors considered include:

 

  Significant changes in the operational performance or manner of use of acquired assets or the strategy for our overall business,

 

  Significant negative market conditions or economic trends, and

 

  Significant technological changes or legal factors which may render the asset obsolete.

 

The Company evaluated long-lived assets based upon an estimate of future undiscounted cash flows. Recoverability of these assets is measured by comparing the carrying value to the future net undiscounted cash flows expected to be generated by the asset. An impairment loss is recognized when the carrying value exceeds the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset. Future net undiscounted cash flows include estimates of future revenues and expenses which are based on projected growth rates. The Company continually uses judgment when applying these impairment rules to determine the timing of the impairment tests, the undiscounted cash flows used to assess impairments and the fair value of a potentially impaired asset.

  

Fair Value Measurements

 

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

 

- Level 1: Quoted market prices in active markets for identical assets or liabilities

- Level 2: Observable market-based inputs or inputs that are corroborated by market data

- Level 3: Unobservable inputs that are not corroborated by market data

  

Net Loss per Common Share

 

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period, without consideration for the potentially dilutive effects of converting stock options or restricted stock purchase rights outstanding. Diluted net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period and the potential dilutive effects of stock options or restricted stock purchase rights outstanding during the period determined using the treasury stock method. There are no such anti-dilutive common share equivalents outstanding as June 30, 2016 which were excluded from the calculation of diluted loss per common share.

 

F- 6  

 

 

Income Taxes

 

The Company accounts for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between the tax bases of the Company's assets and liabilities and their financial statement reported amounts. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

 

A valuation allowance is recorded by the Company when it is more likely than not that some portion or all of a deferred tax asset will not be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

 

Additionally, the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. Accordingly, the Company establishes reserves for uncertain tax positions. The Company has not recognized interest or penalties in its statement of operations and comprehensive loss since inception.

 

Recent Accounting Pronouncements

 

The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.

 

Management believes recently issued accounting pronouncements will have no impact on the financial statements of the Company.

 

NOTE C – GOING CONCERN

 

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.

 

The Company’s net loss and working capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements for the three months ended June 30, 2016 do not include any adjustments to reflect the possible future effects of the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern. The Company may never become profitable, or if it does, it may not be able to sustain profitability on a recurring basis.

 

F- 7  

 

 

Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the business plan and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

 

During the next year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with research and development. The Company may experience a cash shortfall and be required to raise additional capital.

 

Historically, it has mostly relied upon funds from the sale of shares of stock and from acquiring loans to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.

 

In the past year, the Company funded operations by using cash proceeds received through the issuance of common stock and proceeds from related party debt. For the coming year, the Company plans to continue to fund the Company through debt and securities sales and issuances until the company generates enough revenues through the operations as stated above.

 

NOTE D – TRANSACTIONS WITH RELATED PARTIES

 

Since inception, the Company accrued $1,618,233 in amounts owed to related parties for services performed or reimbursement of costs on behalf of the Company. In addition, the Company has accrued $1,285,000 for unpaid officers’ compensation expense in accordance with consulting agreements with our Chief Executive Officer and President. Under the terms of each consulting agreement, each consultant shall serve as an executive officer to the Company and receive monthly compensation of $35,000. The consulting agreements may be terminated by either party for breach or upon thirty days prior written notice.

 

On February 1, 2015, RMR, IP entered into a management services agreement with Industrial Management LLC (“IM”), to provide services to RMR, IP and affiliated entities, which include assistance in operational and administrative matters, identifying, analyzing, and structuring growth initiatives, and potential strategic acquisitions. As compensation for these services, RMR, IP will pay to IM an annual cash management fee in an amount equal to the greater of 2% of the Company’s annual gross revenues or $1,000,000, and a development fee with respect to any capital project incurred by RMR IP equal to 2% of total project costs. In addition, IM has the option to be assigned all available royalties from RMR IP’s mineral holdings, leases or interests greater than 75% of net revenue interests for all mineral rights or production of minerals. At IM’s sole discretion, it may choose to accept a preferred convertible security with a 15% dividend accruing quarterly in lieu of cash for some or all of the annual management fee, development fee and royalty assignments. Such preferred convertible securities shall be convertible into either Class A Common Stock or Class B Common Stock (as applicable) at a conversion price equal to fifty percent of the market price of the applicable Class B Common Stock on the day prior to the date of issuance. In addition, these preferred convertible securities are callable for a cash, for a period of six months following the date of issuance; provided, however, that if called, IM shall have the option to convert the called preferred stock into either Class A Common Stock or Class B Common Stock (as applicable) at a conversion price equal to sixty-six and two thirds percent of the market price of the applicable Class B Common Stock on the business day immediately preceding the issuance date of preferred stock, and will include a blocker provision. In connection with the management services agreement with IM, RMR IP entered into a registration rights agreement which requires RMR IP to register for resale any securities issued as consideration under the management services agreement. The registration rights agreements provide for both demand and piggy back registration rights, and requires that IM not transfer any shares of RMR IP during a 90 day period following the effective date of a registration statement. The registration rights agreement terminates when the shares held by IM become eligible for resale pursuant to Rule 144.

 

On June 15, 2016, Rocky Mountain Resource Holdings Inc., entered into a Standard Office Lease agreement (the “Lease Agreement”) for its principal headquarters located in Beverly Hills, California, with a commencement date of July 1, 2016. Although the Company is not a party to the Lease Agreement, the security deposit and monthly rent payments will be funded by the Company in exchange for use of office space. Future rent payments by the Company will be recorded as a period cost in its operating expenses.

 

F- 8  

 

 

NOTE E – INTANGIBLE ASSETS

 

The Company obtained an Option Agreement (“Option Agreement”) from RMR Holdings, Inc. with the Colorado School of Mines (“CSM”), which grants the Company an exclusive nine month option period to obtain an exclusive license for any patent rights owned by CSM. On August 25, 2014, CSM entered into the Option Agreement with the Company for a non-refundable fee of $30,000. Since the Company was in the process of formation, RMR Holdings, Inc. countersigned the Option Agreement with CSM on behalf of the Company. On October 15, 2014, the Company was incorporated in Nevada (Note 1) and RMR Holdings, Inc. assigned the Option Agreement to the Company. RMR Holdings, Inc. recorded amortization expense of $5,625 through October 15, 2014, which represented the elapsed time of holding the option since it was executed. The Company owed RMR Holdings, Inc. $24,375 which represented the approximate carrying value of RMR Holdings, Inc. at October 15, 2014, for an exclusive period which was initially set to expire on May 25, 2015, to evaluate CSM’s existing patent rights, technology and market potential. The Option Agreement was amended to extend the evaluation period until September 1, 2016, in exchange for an advance payment of $2,500 creditable towards a licensing fee. The Company may extend the Option Agreement for two (2) three month periods in exchange for a $3,000 extension fee per each patent or patent application. The value of the Option Agreement has been fully amortized over the term of the exclusivity period. The advance payments towards a licensing fee was capitalized as a progress payment towards the purchase of an intangible asset.

 

NOTE F – SHAREHOLDERS’ DEFICIT

 

Reverse Stock Split

 

On September 4, 2015, the Company implemented a reverse stock split of all of its authorized and issued and outstanding shares of Class B Common Stock in ratio of one-for-twenty. All historical and per share amounts have been adjusted to reflect the reverse stock split.

 

Preferred Stock

 

The Company has authorized 50,000,000 shares of preferred stock for issuance. At March 31, 2016, no preferred stock was issued and outstanding.

 

Common Stock

 

The Company has authorized 2,100,000,000 shares of common stock for issuance, including 2,000,000,000 shares of Class A Common Stock, 100,000,000 shares of Class B Common Stock. At June 30, 2016, the Company had 35,785,858 and 1,030,957 shares issued and outstanding of Class A Common Stock and Class B Common Stock, respectively.

 

The holders of Class A Common Stock will have the right to vote on all matters on which stockholders have the right to vote. The holders of Class B Common Stock will have the right to vote solely on matters where the vote of such holders is explicitly required under Nevada law.  The holders of Class A Common Stock and Class B Common stock will have equal distribution rights, provided that distributions in securities shall be made in either identical securities or securities with similar voting characteristics.  The holders of Class A Common Stock and Class B Common Stock will be entitled to receive identical per-share consideration upon a merger, conversion or exchange of the Company with another entity, and will have equal rights upon dissolutions, liquidation or winding-up. 

 

On June 30, 2016 the Company entered into a subscription agreement with an accredited investor (the "Purchaser") to offer and sell 40,000 units of the Company’s securities (the “Units”) at $10.00 per Unit for which the Company received $299,897 in initial proceeds and $100,000 in common stock subscribed. Each Unit entitles the Purchaser to one share of Class B Common Stock of the Company and a warrant to purchase one share of Class B Common Stock at an exercise price of $10.00 with a term of two years. In the event the Company’s Class B Common Stock is not quoted or listed on a qualified national stock exchange by November 1, 2016, the Company will issue an additional warrant to purchase one share of Class B Common Stock at an exercise price of $10.00 with a term of two years.

  

NOTE G – SUBSEQUENT EVENT

 

On July 28, 2016, the Company formed RMR Aggregates, Inc., a Colorado corporation, as its wholly owned subsidiary.

 

F- 9  

 

 

Item 2. Management's Discussion and Analysis of Financial Condition And Results Of Operations

 

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.

 

Overview

 

We were incorporated in the State of Nevada on August 6, 2012 under the name “Online Yearbook” with the principal business objective of developing and marketing online yearbooks for schools, companies and government agencies.

 

On November 17, 2014, Rocky Mountain Resource Holdings, Inc. (“RMRH”) became our majority shareholder by acquiring 5,200,000 shares of our common stock (the “Shares”), or 69.06% of the issued and outstanding shares of our common stock, pursuant to stock purchase agreements with Messrs. El Maraana and Salah Blal, our former officers and directors. The Shares were acquired for an aggregate purchase price of $357,670.

 

On December 8, 2014, we changed our name to “RMR Industrials, Inc.” in connection with the change in our business plan.

 

On February 27, 2015 (the “Closing Date”), we entered into and consummated a merger transaction pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, OLYB Acquisition Corporation, a Nevada corporation and wholly owned subsidiary of the Company (“Merger Sub”) and RMR IP, Inc., a Nevada corporation (“RMR IP”). In accordance with the terms of Merger Agreement, on the Closing Date, Merger Sub merged with and into RMR IP (the “Merger”), with RMR IP surviving the Merger as our wholly owned subsidiary. Chad Brownstein and Gregory M. Dangler are the directors of the Company and co-owners of RMRH which was the majority shareholder of the Company prior to the Merger. Additionally, Chad Brownstein and Gregory Dangler were indirect controlling shareholders and directors of RMR IP prior to the Merger. As such, the Merger was among entities under the common control of Chad Brownstein and Gregory Dangler.

 

On May 11, 2016, our Board of Directors changed our fiscal year end from September 30 to March 31.

 

On July 28, 2016, we formed RMR Aggregates, Inc., a Colorado corporation (“RMR Aggregates”), as our wholly owned subsidiary. RMR Aggregates was formed to hold assets whose primary focus is the mining and processing of industrial minerals for the manufacturing, construction and agriculture sectors.  These minerals include limestone, aggregates, marble, silica, barite and sand.

 

We have acquired the rights to certain intellectual property from the Colorado School of Mines (“CSM”), including issued US patent 7,662,275 and US patent applications 61/946062, 61/941869 and 61/950500 through payment of an advance deposit in accordance with our option agreement with CSM in July 2015. We currently have the right to market and pursue licensing opportunities with these patents. We will obtain full title and ownership to the patent rights once we have paid the remaining balance under the option agreement, which terminates on September 1, 2016. Our negotiations on the valuation of these patent rights are currently ongoing. These patents describe a process to increase oil and gas production through modified injection processes. Our management views CSM as a highly respected institution which specializes in industrial minerals technology research and believes that CSM could be a valuable technical resource for future intellectual property development. 

  

We plan to develop intellectual property and acquire and consolidate complementary industrial assets.  Typically these small to mid-sized assets are the core manufacturer and supplier of specific bulk commodity minerals and chemicals distributed to the global manufacturer industry. Our consolidation strategy is to assemble a portfolio of mature and value-add industrial commodities businesses to generate scalable enterprises with a large portfolio of products and services addressing a common and stable customer base. We believe that smaller, legacy-owned industrial companies will benefit from economies of scale and professional asset allocation. Our acquisition strategy seeks to capitalize on the price differential between public company and private company valuations, while also providing the platform to access capital markets and professional management oversight.

 

5  

 

 

Results of Operations

 

Comparison of the Three Month Periods Ended June 30, 2016 and June 30, 2015

 

Revenues

 

We have a limited operational history. We did not generate any revenues in either period.

 

Operating Expenses 

 

Our operating expenses for the three months ended June 30, 2016 were $773,825, compared to $537,248 for the three months ended June 30, 2015. Operating expenses consisted of consulting services from related parties, public company costs, personnel and other administrative expenses. The increase in our operating expenses was due to higher spending in consulting, personnel costs and legal fees related to sourcing and development of mergers and acquisition-related activities.

  

Net Loss

 

Our net loss for the three months ended June 30, 2016 was $773,985, compared to a net loss of $537,248 for the three months ended June 30, 2015. The increase in our net loss was due to an increase in our operating expense, as described above.

 

Liquidity and Capital Resources

 

As of June 30, 2016, we had current assets of $268,907, total current liabilities of $3,395,794 and working capital deficit of $3,126,887. We have incurred an accumulated loss of $4,792,545 since inception. Our independent auditors issued an audit opinion for our financial statements for the six month transition period ended March 31, 2016, which includes a statement expressing substantial doubt as to our ability to continue as a going concern due to our limited liquidity and our lack of revenues.

 

We will be seeking additional capital to execute our business plan and reach positive cash flow from operations. Our base monthly expenses are $50,000 per month. In order to successfully execute our business plan, the net proceeds of a $10-20 million offering will be required to finance our planned acquisitions and for general working capital purposes.

 

We do not internally generate adequate cash flows to support our existing operations. Moreover, the historical and existing capital structure is not adequate to fund our planned growth. Our current cash requirements are significant due to our business plan which will depend on future acquisitions. We anticipate generating losses through 2016. We anticipate that we will be able to raise sufficient amounts of working capital in the near term through debt or equity offerings as may be required to meet short-term obligations. On July 1, 2015, we filed with the Securities and Exchange Commission a registration statement for a public offering of 700,000 units at an offering price of $10.00 per unit. Each unit is comprised of one share of our Class B Common Stock and a warrant to purchase one share of our Class B Common Stock at an initial exercise price of $12.50. In November 2015, we sold 147,500 units to several accredited investors for $1,475,000 in proceeds under this offering. 

 

On March 28, 2016, we issued 10,000 shares of our Class B common stock valued at $100,000 in accordance with a Loan Settlement Agreement and Release for repayment of $100,000 of outstanding liabilities owed to an affiliate of the Company.

 

6  

 

 

On June 30, 2016, we sold 40,000 units to an accredited investor for which we received $299,897 in initial proceeds and $100,000 in common stock subscribed. Each unit is comprised of one share of our Class B Common Stock and a warrant exercisable to purchase one share of our Class B Common Stock at an exercise price of $10.00 per share, exercisable over a two (2) year period. In the event our Class B Common Stock is not quoted or listed on a qualified national stock exchange by November 1, 2016, we will issue an additional warrant to purchase one share of Class B Common Stock at an exercise price of $10.00 with a term of two years.

 

Other than as stated above, we currently do not have any arrangements for additional financing and we may not be able to obtain financing when required. Our future is dependent upon our ability to obtain financing, a successful marketing and promotion program and, further in the future, achieving a profitable level of operations. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.   We will require additional funds to maintain our reporting status with the SEC and remain in good standing with the state of Nevada. There are no assurances that we will be able to raise the required working capital on terms favorable, or that such working capital will be available on any terms when needed. Any failure to secure additional financing may force us to modify our business plan. In addition, we cannot be assured of profitability in the future.

 

Going Concern

 

We have incurred net losses since our inception on October 15, 2014 through June 30, 2016 totaling $4,792,545 and have completed the preliminary stages of our business plan.  We anticipate incurring additional losses before realizing any revenues and will depend on additional financing in order to meet our continuing obligations and ultimately, to attain profitability.  Our ability to obtain additional financing, whether through the issuance of additional equity or through the assumption of debt, is uncertain.  Accordingly, our independent auditors’ report on our financial statements for the transition period ended March 31, 2016 includes an explanatory paragraph regarding concerns about our ability to continue as a going concern, including additional information contained in the notes to our financial statements describing the circumstances leading to this disclosure.  The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business.

 

Recently Issued Accounting Pronouncements

 

We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not Required

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure.

 

7  

 

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act, during the fiscal quarter ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A. Risk Factors

 

Not required.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On June 30, 2016, we entered into a Subscription Agreement with an accredited investor (the “Purchaser”) to offer and sell 40,000 units of the Company’s securities at $10.00 per unit for aggregate proceeds of $400,000. Each unit entitles the Purchaser to one share of the Company’s Class B Common Stock, and a warrant to purchase one share of Class B Common Stock at an exercise price of $10.00 with a term of two (2) years (the “Warrant”). We intend to use the proceeds from the sale for general working capital purposes and acquisitions. This sale was to an “accredited investor,” as defined by Rule 501 of Regulation D promulgated under the Securities Act. The sale was exempt from the registration requirements of the Securities Act pursuant to the exemption for transactions by an issuer not involved in any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D.

 

The foregoing description of the Subscription Agreement and the Warrant does not purport to be complete, and is qualified in its entirety by reference to the full text of the form of Subscription Agreement and form of Warrant, which are filed as Exhibit 10.1 attached hereto and incorporated herein by reference.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

   

Exhibit

Number

Exhibit

Description

3.1* Amended and Restated Articles of Incorporation, as amended.  
3.2 Amended and Restated Bylaws (incorporated by reference to our Current Report on Form 8-K filed on February 27, 2015).
10.1* Form of Subscription agreement and Warrant to Purchase Shares of the Company’s Class B Common Stock, dated as of June 30, 2016.
31.1* Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101* Interactive Data Files

 

* Filed herewith

 

8  

 

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  RMR Industrials, Inc.
     
DATED: August 15, 2016 By:   /s/ Gregory Dangler
  Gregory Dangler
 

President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

 

9  

 

 

Exhibit 3.1

 













































 

Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

THIS SUBSCRIPTION AGREEMENT (this “ Agreement ”) is by and between the undersigned Subscriber identified on the signature page attached hereto (the “ Subscriber ”) and RMR Industrials, Inc., a Nevada corporation, located at 9301 Wilshire Boulevard, Suite 312 Beverly Hills, CA 90210 (the “ Company ”).

 

In connection with a private placement offering (the “ Offering ”) of up to _________ shares of the Company’s Class B Common Stock, par value $0.001 per share (the “ Shares ”) and warrants to purchase up to _________ Shares in substantially the form attached hereto as Exhibit B (the “ Warrants ”), the Company desires to sell, and the Subscriber desires to purchase the number of Shares set forth on the signature page attached hereto.

 

NOW THEREFORE, in consideration of the foregoing recitals, the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

Section 1. Subscription and Purchase .

 

Section 1.1 . Subscription . Subject to the conditions set forth in Section 2 hereof, the Subscriber hereby subscribes for and agrees to purchase that number of Shares indicated on the signature page hereto on the terms and conditions described herein.

 

Section 1.2 . Purchase of Shares . The Subscriber understands and acknowledges that the purchase price to be remitted to the Company in exchange for each Share is $10.00 per Share, for an aggregate purchase price as set forth on the signature page hereof (the “ Aggregate Purchase Price ”). The Subscriber’s delivery of this Agreement shall be accompanied by the completed Confidential Subscriber Questionnaire attached hereto as Schedule A and by payment for the Shares subscribed for hereunder, payable in United States Dollars, by check or by wire transfer and delivered contemporaneously with delivery of this Agreement. The Subscriber and the Company understand and agree that, subject to Section 2 and applicable laws, by the Subscriber’s execution and delivery this Agreement, and by the Company’s receipt thereof together with the completed Confidential Subscriber Questionnaire and payment for the Shares subscribed for hereunder, the Subscriber and the Company are entering into a binding agreement.

 

Section 1.3 . Delivery of Certificates . The Subscriber hereby authorizes and directs the Company to deliver any certificates or other written instruments representing the Securities to be issued to such Subscriber pursuant to this Agreement to the address indicated on the signature page hereof. Certificates representing the Shares purchased by Subscriber shall be delivered promptly upon the Company’s receipt of this Agreement and the Confidential Subscriber Questionnaire.

 

Section 1.4 . Initial Warrants . For each Share purchased by the Subscriber, the Company agrees to issue a Warrant exercisable to purchase one Share (the “ Warrant Stock ” and collectively with the Shares and the Warrants, referred to herein as the “ Securities ”) at an exercise price of $10.00 per share, exercisable over a two (2) year period and in accordance with the terms set forth in the Warrants.

 

Section 1.5 . Subsequent Warrants . In the event the Company’s Common Stock is not quoted on or listed for trading on either The New York Stock Exchange, The Nasdaq Global Market, The NASDAQ Capital Market, The Nasdaq Global Select Market or the NYSE MKT, by November 1, 2016, the Company agrees to issue a subsequent Warrant exercisable to purchase one Share at an exercise price of $10.00 per share, exercisable over a two (2) year period and in accordance with the terms set forth in the Warrants.

 

Section 2. Representations and Warranties of the Subscriber . The Subscriber hereby represents and warrants to the Company as follows:

 

Section 2.1 . Power and Authority . The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized, if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber. The Subscriber is either an individual or 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 hereunder.

 

 

 

 

Section 2.2 . Exempt Sale . The Subscriber acknowledges that the sale of the Securities is intended to be exempt from registration under the Securities Act of 1933, as amended (the “ Securities Act ”), by virtue of Section 4(a)(2) of the Securities Act and the provisions of Regulation D promulgated thereunder (“ Regulation D ”).

 

Section 2.3 . Acquisition for Own Account . The Subscriber is acquiring the Securities solely for the Subscriber’s own beneficial account, for investment purposes, and not with a view towards, or resale in connection with, any distribution of the Securities (this representation and warranty shall in no way limit Subscriber’s right to sell the Securities in compliance with applicable federal and state securities laws).

 

Section 2.4 . Financial Condition . The Subscriber’s financial condition is such that the Subscriber is able to bear the risk of holding the Securities for an indefinite period of time, the Subscriber has adequate means to provide for the Subscriber’s current financial needs and contingencies, the Subscriber has no need for liquidity in this investment and the Subscriber is able to risk the loss of the Subscriber’s entire investment in the Securities. The Subscriber’s overall commitment to investments that are not readily marketable such as an investment in the Securities is not disproportionate to the Subscriber’s net worth and the Subscriber’s investment in the Securities will not cause such overall commitments to become excessive.

 

Section 2.5 . Sophistication . The Subscriber and the Subscriber’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, the “ Advisors ”) have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of a prospective investment in the Securities. The Subscriber, either alone or together with its Advisors, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the purchase of the Securities, and has so evaluated the merits and risks of such investment. The Subscriber has not authorized any Person to act as its “purchaser representative” (as that term is defined in Regulation D) in connection with purchase of the Securities.

 

Section 2.6 . Review of Information . The Subscriber acknowledges that it has had access to the documents filed by the Company with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and has carefully reviewed the same. The Subscriber has been furnished by the Company during the course of this transaction with all information regarding the Company and the Securities which the Subscriber has requested or desires to know; and the Subscriber and its Advisors, if any, have been afforded the opportunity to ask questions of and receive answers from duly authorized officers or other representatives of the Company concerning the purchase of the Securities, the business, financial condition, results of operation and prospects of the Company, and any additional information which the Subscriber has requested, and all such questions have been answered to the full satisfaction of the Subscriber and its Advisors, if any.

 

Section 2.7 . Evaluation of Risks . The Subscriber has carefully considered the potential risks relating to the Company and a purchase of the Securities, including but not limited to a thorough review of the “Risk Factors” section of the Company’s public filings with the Securities Exchange Commission, and fully understands that the Securities are a speculative investment that involve a high degree of risk of loss of the Subscriber’s entire investment.

 

Section 2.8 . No Oral Representations . The Subscriber confirms that no oral or written representations or warranties have been made to the Subscriber by the Company or any of its officers, employees, agents, sub-agents, affiliates or advisors, other than any representations of the Company contained herein, and in subscribing for the Securities, the Subscriber is not relying upon any representations other than those contained herein.

 

  2  

 

 

Section 2.9 . No Reliance . The Subscriber is not relying on the Company or any of its employees, agents, sub-agents or advisors with respect to the legal, tax, economic and related considerations involved in this investment. The Subscriber has relied on the advice of, or has consulted with, only the Subscriber’s Advisors. Each Advisor, if any, is capable of evaluating the merits and risks of an investment in the Securities.

 

Section 2.10 . Accredited Investor . The Subscriber has accurately completed the Confidential Subscriber Questionnaire attached hereto and is an “accredited investor” as that term is defined in Rule 501 of Regulation D.

 

Section 2.11 . Restrictions on Transfer . The Subscriber will not sell or otherwise transfer any Securities without registration under the Securities Act or an exemption therefrom, and fully understands and agrees that the Subscriber must bear the economic risk of Subscriber’s purchase because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities laws of such states, or an exemption from such registration is available. In particular, the Subscriber is aware that the Securities are “restricted securities,” as such term is defined in Rule 144 promulgated under the Securities Act (as such rule may be amended or superseded by a similar rule or regulation having substantially the same effect, “ Rule 144 ”), and they may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The Subscriber also understands that the Company is under no obligation to register the Securities on behalf of the Subscriber or to assist the Subscriber in complying with any exemption from registration under the Securities Act or applicable state securities laws. The Subscriber understands that any sales or transfers of the Securities are further restricted by state securities laws and the provisions of this Agreement.

 

Section 2.12 . Restrictive Legends . The Subscriber understands and agrees that the certificates for the Securities shall bear substantially the following legend until (i) such Securities shall have been registered under the Securities Act and effectively disposed of in accordance with a registration statement that has been declared effective or (ii) in the opinion of counsel reasonably acceptable to the Company, such Securities may be sold without registration under the Securities Act, as well as any applicable “blue sky” or state securities laws:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS, AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) HOLDER CAN ESTABLISH TO THE REASONABLE SATISFACTION OF THE COMPANY (WHICH MAY INCLUDE RECEIPT OF AN OPINION OF COUNSEL FROM THE HOLDER OF SUCH SECURITIES) THAT AN EXEMPTION FROM SUCH REGISTRATION EXISTS AND THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

 

Section 2.13 . Address . The Subscriber hereby represents that the address of the Subscriber furnished at the end of this Agreement is the undersigned’s principal residence, if the Subscriber is an individual, or its principal business address if it is a corporation or other entity.

 

Section 2.14 . Prohibited Party to Transaction . Neither Subscriber nor any Person who owns an interest in Subscriber (a “ Purchaser Party ”) is now, or shall be at any time prior to or at the date of closing of the sale of the Securities hereunder, a Person with whom a United States citizen, entity organized under the laws of the United States or its territories or entity having its principal place of business within the United States or any of its territories, or a United States Financial Institution as defined in 31 U.S.C. Section 5312, as amended, is prohibited from transacting business of the type contemplated by this Agreement, whether such prohibition arises under United States law, regulation, or executive orders and lists published by the Office of Foreign Assets Control, Department of the Treasury (“ OFAC ”).

 

  3  

 

 

Section 2.15 . Payment of Purchase Price . Subscriber has taken, and shall continue to take until the closing of the sale, such measures as are required by law to assure that the funds used to pay to the purchase price for the Securities are derived: (i) from transactions that do not violate United States law nor, to the extent such funds originate outside the United States, do not violate the laws of the jurisdiction in which they originated; and (ii) from permissible sources under United States law and to the extent such funds originate outside the United States, under the laws of the jurisdiction in which they originated.

 

Section 2.16 . Money Laundering . To the best of Subscriber’s knowledge, neither Subscriber nor any Purchaser Party, nor any Person providing funds to Subscriber: (i) is under investigation by any governmental authority for, or has been charged with, or convicted of, money laundering, drug trafficking, terrorist related activities, any crimes which in the United States would be predicate crimes to money laundering, or any violation of any Anti-Money Laundering Laws (as defined below); (ii) has been assessed civil or criminal penalties under any Anti-Money Laundering Laws; or (iii) has had any of its funds seized or forfeited in any action under any Anti-Money Laundering Laws. For purposes of this Section 2.16 , the term “ Anti-Money Laundering Laws ” shall mean laws, regulations and sanctions, state and federal, criminal and civil, that: (i) limit the use of and/or seek the forfeiture of proceeds from illegal transactions; (ii) limit commercial transactions with designated countries or individuals believed to be terrorists, narcotics dealers or otherwise engaged in activities contrary to the interests of the United States; (iii) require identification and documentation of the parties with whom a Financial Institution conducts business; or (iv) are designed to disrupt the flow of funds to terrorist organizations. Such laws, regulations and sanctions shall be deemed to include the USA PATRIOT Act of 2001, Pub. L. No. 107-56 (the “ Patriot Act ”), the Bank Secrecy Act, 31 U.S.C. Section 5311 et. seq. (the “ Bank Secrecy Act ”), the Trading with the Enemy Act, 50 U.S.C. Appendix, the International Emergency Economic Powers Act, 50 U.S.C. Section 1701 et. seq., and the sanction regulations promulgated pursuant thereto by the OFAC, as well as laws relating to prevention and detection of money laundering in 18 U.S.C. Sections 1956 and 1957.

 

Section 2.18 . Short Covering . Subscriber will not use any of the Securities acquired pursuant to this Agreement to cover any short position in the Common Stock of the Company if doing so would be in violation of applicable securities laws.

 

Survival . The foregoing representations and warranties of the Subscriber shall survive the closing of the purchase and sale of the Securities.

 

Section 3. Representations and Warranties of the Company . The Company hereby represents and warrants to the Subscriber as follows:

 

Section 3.1 . Organization and Qualification . The Company is an entity duly incorporated, validly existing and in good standing under the laws of the State if Nevada, with the requisite power and authority to own and all requisite licenses, permits and franchises to own, operate, use or lease its properties and assets, to carry on its business as currently conducted and to enter into and perform its obligations under this Agreement.

 

Section 3.2 . Authorization; Enforcement . The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement has been duly authorized, executed and delivered by the Company and is valid, binding and enforceable against the Company in accordance with its terms. Upon the execution and delivery of this Agreement by an authorized representative of the Company, this Agreement will become the valid and binding obligation of the Company, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors' rights generally.

 

Section 3.3 . Issuance of Securities . The Shares to be issued to the Subscriber pursuant to this Agreement, when issued and delivered in accordance with the terms of this Agreement will be duly authorized and validly issued and will be fully paid and non-assessable, free and clear of all liens, charges, security interests, encumbrances, rights of first refusal, preemptive rights or other restrictions imposed by the Company other than restrictions on transfer described in this Agreement.

 

  4  

 

 

Section 3.4 . No Conflicts . The execution and delivery and the performance of this Agreement by the Company does not and will not (i) conflict with the Company’s articles of incorporation or bylaws, as amended to date, (ii) conflict with or result in a breach of any terms or provisions of, or constitute a default under, any material contract, agreement or instrument to which the Company is a party or by which the Company is bound, (iii) result in the creation of any liens upon any of the properties or assets of the Company, or (iv) conflict with or 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), (iii) or (iv), such as would not reasonably be expected to adversely affect the Company or its operations in a material manner.

 

Section 3.5 . Proceedings . There is not pending, or, to the knowledge of the Company, threatened, any material action, suit, litigation, arbitration or other proceeding that involves the Company, its business or any of its assets, or that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the transactions contemplated by this Agreement.

 

Section 3.6 . Licenses; Permits . The Company is not in violation of or in default under any governmental licenses, franchises, permits, approvals or other authorizations necessary for the ownership, lease, operation or use of its assets or for the conduct of its business as now conducted.

 

Section 3.7 . Compliance with Laws . The Company and its business and assets have been and are currently owned, used and operated in substantial compliance in all material respects with all applicable federal, state and local statutes, ordinances, codes, regulations, and other laws.

 

Section 3.8 . Taxes . Each federal, state and local tax required to have been paid, or claimed by any governmental authority to be payable, by the Company relating to its operations, assets, employees and properties has been duly paid in full on a timely basis. Each federal, state and local tax required to have been withheld or collected by the Company with respect to its operations, assets, employees and properties has been duly withheld and collected, and (to the extent required) each such tax has been paid to the appropriate governmental agency or other party, and no such taxes are owing.

 

Section 3.9 . Survival . The foregoing representations and warranties of the Company shall survive the closing of the purchase and sale of the Securities.

 

Section 4. Indemnification . Each party to this Agreement acknowledges that the such party understands the meaning and legal consequences of the representations and warranties and certifications contained in Section 2 and Section 3 above, as applicable, and that the other party is relying on such representations and warranties in consummating the transactions contemplated by this Agreement. Each party hereby agrees to indemnify and hold harmless the other party and its directors, officers, members, managers, representatives and agents from and against any and all loss, damage and liability due to or arising out of a breach of any representation, warranty or covenant of such party contained in this Agreement.

 

Section 5. Expenses. Each of the Subscriber and the Company shall be responsible for their respective fees and expenses incurred in connection with the consummation of the transactions contemplated by this Agreement.

 

Section 6. Miscellaneous.

 

Section 6.1 . Execution; Counterparts, Binding Effect; Assignment; Integration . This Agreement may be executed in one or more counterparts, which together shall constitute one and the same agreement. Facsimile and electronically imaged signatures shall have the same force and effect as originals. This Agreement shall be binding upon and inure to the benefit of the heirs, executors, successors and permitted assigns of the parties. The Company may not assign this Agreement without the written consent of Subscriber (other than by merger). Subscriber may assign any or all of its rights under this Agreement to an assignee or transferee of its Securities, provided such assignee or transferee agrees in writing to be bound to the provisions of this Agreement that apply to “Subscriber” with respect to such Securities. This Agreement contains 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.

 

  5  

 

 

Section 6.2 . Modifications . No provision of this Agreement may be amended or waived except in a writing signed by both parties (in the case of an amendment) or signed by the party against whom enforcement of any such waived provision is sought (in the case of a waiver).

 

Section 6.3 . Severability . If any term, provision or covenant of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of this Agreement shall remain in full force and effect and the parties shall use their commercially reasonable best efforts to find and employ an alternative means to achieve substantially the same result as that contemplated by such term, provision or covenant.

 

Section 6.4 . Governing Law; Venue . This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without reference to the conflicts of law provisions thereof.

 

Section 6.5 Attorneys Fees . In the event of any controversy, claim, dispute or suit between the parties affecting or relating to the subject matter or performance of this Agreement or any portion thereof, the prevailing party shall be entitled to recovery from the non-prevailing party of all of its reasonable expenses, including reasonable attorneys’ fees and accountants’ fees and costs.

 

Section 6.6 . WAIVER OF JURY TRIAL : THE PARTIES HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

  6  

 

 

SIGNATURE PAGE TO RMR INDUSTRIALS, INC. SUBSCRIPTION AGREEMENT

 

The undersigned Subscriber hereby certifies that he, she or it has received and relied solely upon this Subscription Agreement, including the exhibits hereto, and (ii) agrees to all the terms and makes all the representations set forth in this Subscription Agreement.

 

Total Subscription Amount: $_______________  
# of Shares (@$10.00 per Share): ________________  

 

     
Name of Subscriber (Print)   Name of Joint Subscriber (if any) (Print)
     
     
Signature of Subscriber (or authorized representative)   Signature of Joint Subscriber (if any)

 

   
Capacity of Signatory (authorized representative for entities)  

 

     
Social Security or Taxpayer Identification Number   Country of Residence (if a non-U.S. Subscriber)

  

Subscriber Contact Information:

 

         
Street Address   Telephone   Fax

  

         
City State Zip Code   Email

 

Name in which Securities should be issued if different than Name of Subscriber above:
   

 

Instructions for Delivery of Securities:

 

¨ Deliver to the address above   ¨ Deliver to an alternate address:
     
     

 

The Subscriber certifies under penalty of perjury that (1) the Social Security Number or Taxpayer ID and address provided above is correct, (2) the Subscriber is not subject to backup withholding (unless otherwise noted above) either because he has not been notified that he is subject to backup withholding or because the Internal Revenue Service has notified him that he is no longer subject to backup withholding and (3) the Subscriber (unless a non-U.S. Subscriber) is not a nonresident alien, foreign partnership, foreign trust or foreign estate.

 

THE SUBSCRIPTION FOR SHARES OF RMR INDUSTRIALS, INC. BY THE ABOVE NAMED SUBSCRIBER(S) IS ACCEPTED THIS ________ DAY OF ______________________, 2016.

 

  RMR INDUSTRIALS, INC.
     
  By:  
  Name:  
  Title:  

 

 

 

 

EXHIBIT A - CONFIDENTIAL SUBSCRIBER QUESTIONNAIRE

 

This Confidential Subscriber Questionnaire is provided to a prospective Subscriber who has expressed interest in purchasing securities of RMR Industrials, Inc. (the “ Company ”). The purpose of this Questionnaire is to determine whether Subscribers are accredited investors and can invest in the Company’s securities. This material does not constitute an offer to sell nor is it a solicitation of an offer to buy securities, which offer may be made only pursuant to the terms and conditions of the Subscription Agreement to which this Questionnaire is an exhibit.

 

Answers to this Questionnaire will be kept confidential, provided they may be disclosed to (i) such parties as required to provide assurance that the sale of Securities will not result or has not resulted in violations of securities laws which are being relied upon by the Company in connection with the offer and sale thereof, and (ii) governmental authorities as may be required by law pursuant to subpoena, investigation or enforcement action from or by such authority.

 

If securities are to be purchased by more than one individual or entity, a separate Questionnaire should be completed for each.

 

Name of Subscriber:                     

 

The undersigned qualifies as an “accredited investor” pursuant to the following definition (please check one or more of the following which apply to Subscriber; if none apply, do not check any items):

 

¨ The undersigned is an individual who is a director or executive officer of the Company . An “executive officer” is the president, a vice president in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function or any other person who performs similar policy making functions for the Company.

 

¨ The undersigned is an individual that (1) had individual income of more than $200,000 in each of the two most recent fiscal years and reasonably expects to have individual income in excess of $200,000 in the current year, or (2) had joint income together with the undersigned’s spouse in excess of $300,000 in each of the two most recent fiscal years and reasonably expects to have joint income in excess of $300,000 in the current year. “Income” means adjusted gross income, as reported for federal income tax purposes, less any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (but not including any amounts attributable to a spouse or to property owned by a spouse): (i) the amount of any tax-exempt interest income under Section 103 of the Internal Revenue Code of 1986, as amended (the “ Code ”), received; (ii) the amount of losses claimed as a limited partner in a limited partnership as reported on Schedule E of Form 1040; (iii) any deduction claimed for depletion under Section 611 et seq. of the Code; (iv) amounts contributed to an Individual Retirement Account (as defined in the Code) or Keogh retirement plan; (v) alimony paid;(vi) any elective contributions to a cash or deferred arrangement under Section 401(k) of the Code; and (vii) for applicable taxable years, any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Code.

 

¨ The undersigned is an individual with individual net worth, or combined net worth together with the undersigned’s spouse, in excess of $1,000,000. “Net worth” means the excess of an investor’s total assets at fair market value, including cash, stock, securities, personal property and real estate ( other than an investor’s primary residence ), over total liabilities ( other than a mortgage or other debt secured by an investor’s primary residence, unless such mortgage or other debt exceeds the fair market value of the residence, in which case such excess should also be deducted from an investor’s net worth ). In addition, any mortgage or indebtedness secured by an investor’s primary residence that is incurred within sixty (60) days before the time of the investor’s purchase of securities must also be deducted from an investor’s net worth unless it was the result of the acquisition of the primary residence.

 

 

 

 

¨ The undersigned is a Trust with total assets in excess of $5,000,000 , was not formed for the specific purpose of acquiring securities of the Company, and the purchase of the securities is directed by a person with such knowledge and experience in financial and business matters that he is capable of evaluating the risks and merits of the prospective investment in such securities.

 

¨ The undersigned is a corporation, partnership, limited liability company or limited liability partnership that has total assets in excess of $5,000,000 and was not formed for the specific purpose of acquiring securities of the Company.

 

¨ The undersigned is an entity in which all of its equity owners are “accredited investors”. If this box is checked each equity owner must complete and submit a Confidential Subscriber Questionnaire.

 

The Subscriber by signing below represents that the information provided in this Questionnaire is true and complete in all material respects.

 

   
Name of Subscriber (Print)  
   
   
Signature of Subscriber (or authorized representative)  
   
   
Capacity of Signatory (authorized representative for entities)  
   
     
Date  

 

  9  

 

 

EXHIBIT B – WARRANT TO PURCHASE CLASS B COMMON STOCK

 

THE SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD, TRANSFERRED, OR ASSIGNED, UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT COVERING SUCH SECURITIES, OR THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT.

 

Warrant Stock: ___________   Date: ____________ (the “Date”)

   

WARRANT

TO PURCHASE CLASS B COMMON STOCK

OF

RMR INDUSTRIALS, INC.

 

THIS WARRANT is being issued in connection with a private placement offering of up to 80,000 shares of RMR Industrials, Inc., a Nevada corporation (the “ Company ”) Class B Common Stock, par value $0.001 per share and the corresponding subscription agreement between the Company and _______ (the “ Holder ”).

 

1.       Issuance of Warrant . FOR VALUE RECEIVED , on and after the date of issuance of this Warrant, and subject to the terms and conditions herein set forth, the Holder is entitled to purchase from RMR Industrials, Inc., a Nevada corporation (the “ Company ”), at any time during the Exercise Period (as defined below), at a price per share equal to the Warrant Price (as defined below and subject to adjustment as described below), the Warrant Stock (as defined below and subject to adjustment as described below) upon exercise of this warrant (this “ Warrant ”) pursuant to Section 6 hereof. This Warrant is being issued pursuant to the terms of the Subscription Agreement, dated as of even date herewith by and between the Company and the Holder (the “ Agreement ”). Capitalized terms not otherwise defined herein shall have the meanings given to them in the Agreement.

 

2.       Definitions . As used in this Warrant, the following terms have the definitions ascribed to them below:

 

(a)     Common Stock ” means the Class B Common Stock, $0.001 par value, of the Company.

 

(b)    Exercise Period ” means the period commencing on the Date and ending at 5:00 p.m. Pacific Standard Time on the Termination Date (as defined below); provided , however , the Exercise Period shall end and this Warrant shall no longer be exercisable and shall become null and void (except the right to receive the securities and property to which the Holder is entitled by virtue of exercising or converting this Warrant in connection with any Termination Event) upon consummation of any of the following (each, a “ Termination Event ”): (i) the lease of all or substantially all of the assets of the Company or the exclusive license of all or substantially all of the Company’s intellectual property to a third party, (ii) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including without limitation, any reorganization, merger or consolidation, but excluding any merger or conversion effected exclusively for the purpose of changing the domicile of the Company), (iii) the sale, conveyance or disposal of all or substantially all of the assets of the Company, unless the Company’s shareholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Company’s acquisition or sale or otherwise) hold at least fifty percent (50%) of the voting power of the surviving or acquiring entity, or (iv) upon redemption by the Company under Section 7 of this Warrant. Notwithstanding anything to the contrary herein, this Warrant shall continue in full force and effect until the Termination Date unless (y) no less than thirty (30) days prior to any Termination Event, the Company shall have given the Holder notice of such Termination Event, which notice shall include a reasonably detailed description of the terms of such Termination Event, and (z) the Company shall have given the Holder a reasonable opportunity to exercise or convert this Warrant.

 

 

 

 

(c)     Termination Date ” means two (2) years from the Date.

 

(d)    Warrant Price ” means a price per Warrant Stock equal to $10.00, subject to adjustment hereunder.

 

(e)     Warrant Stock ” means the shares of Common Stock purchasable upon exercise of this Warrant.

 

3.       Adjustments and Notices . The Warrant Price and the number of shares of Warrant Stock shall be subject to adjustment from time to time in accordance with this Section 3.

 

(a)     Adjustments to Warrant Stock . When any adjustment is required to be made to the Warrant Price, the number of shares of Warrant Stock purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Warrant Price in effect immediately prior to such adjustment, by (ii) the Warrant Price in effect immediately after such adjustment.

 

(b)    Reclassification, Exchange, Substitution, In-Kind Distribution . Upon any reclassifications, exchange, substitution or other event that results in a change of the number and/or class of the securities issuable upon exercise of this Warrant or upon the payment of a dividend in securities or property other than shares of Common Stock, the Holder shall be entitled to receive, upon exercise of this Warrant, the number and kind of securities and property that Holder would have received if this Warrant had been exercised or converted immediately before the record date for such reclassification, exchange, substitution, or other event or immediately prior to the record date for such dividend. The Company or its successor shall promptly issue to Holder a new warrant for such new securities or other property. The new warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The provisions of this Section 3(b) shall similarly apply to successive reclassifications, exchanges, substitutions, or other events and successive dividends.

 

(c)     Certificate of Adjustment . In each case of an adjustment or readjustment of the Warrant Price, the Company, at its own expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate executed by the Company’s Chief Financial Officer showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to the Holder.

 

(d)    No Impairment . The Company shall not, by amendment of its Articles of Incorporation or through a reorganization, transfer of assets, consolidation, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out all of the provisions of this Section 3 and in taking all such action as may be necessary or appropriate to protect the Holder’s rights under this Section 3 against impairment.

 

  2  

 

 

(e)     Fractional Shares . No fractional shares shall be issuable upon exercise or conversion of the Warrant and the number of shares to be issued shall be rounded to the nearest whole share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying the Holder an amount computed by multiplying the fractional interest by the fair market value of a full share.

 

4.       Reservation of Stock . On and after the Date, the Company shall reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Warrant Stock upon the exercise or conversion of this Warrant. Issuance of this Warrant shall constitute full authority to the Company’s officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Warrant Stock issuable upon the exercise or conversion of this Warrant.

 

5.       Exercise of Warrant .

 

(a)     This Warrant may be exercised as a whole or part by the Holder, at any time after the date hereof prior to the termination of this Warrant, by the surrender of this Warrant, together with the Notice of Exercise and Investment Representation Statement in the forms attached hereto as Attachments 1 and 2 , respectively, duly completed and delivered to the principal office of the Company, specifying the portion of the Warrant to be exercised and accompanied by payment in full of the Warrant Price in cash or by check with respect to the shares of Warrant Stock being purchased. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the shares of Warrant Stock issuable upon such exercise shall be treated for all purposes as the holder of such shares of record as of the close of business on such date. As promptly as practicable after such date, the Company shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of full shares of Warrant Stock issuable upon such exercise. If this Warrant shall be exercised for less than the total number of shares of Warrant Stock then issuable upon exercise, promptly after surrender of this Warrant upon such exercise, the Company will execute and deliver a new warrant, dated the date hereof, evidencing the right of the Holder to the balance of this Warrant Stock purchasable hereunder upon the same terms and conditions set forth herein.

 

(b)    Notwithstanding anything to the contrary contained in this Warrant, this Warrant shall not be exercisable by the Holder hereof to the extent (but only to the extent) necessary to ensure that, following such exercise, the total number of shares of Common Stock then beneficially owned by Holder and its affiliates and any other persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% of the total number of issued and outstanding shares of Company Common Stock. For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations thereunder. Notwithstanding the foregoing, Holder may waive such limitation on exercise contained in this Section 5(b) or increase or decrease such limitation percentage to any other percentage as specified in a written notice to the Company no less than sixty (60) days from the effective date of such increase or decrease.

 

(c)     If at any time after the six (6) month anniversary of the Date, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Stock by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Stock equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

  3  

 

 

(A) = the volume weighted average price (“ VWAP ”) on the business day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

(B) = the Warrant Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Stock that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 5(c).

 

6.       Transfer of Warrant . Notwithstanding anything to the contrary herein, subject to applicable securities laws, this Warrant may be transferred or assigned in whole or in part by the Holder, and the Company shall permit such transfer or assignment to an affiliate of the Holder.

 

7.       Redemption

 

(a)     Warrants may be redeemed, at the option of the Company, upon the notice referred to in Section 7(b) at the prevailing market price or $17.00, whichever is greater, per Warrant (the “ Redemption Price ”), provided, that the Common Stock is quoted on or listed for trading on either The New York Stock Exchange, The Nasdaq Global Market, The NASDAQ Capital Market, The Nasdaq Global Select Market or the NYSE MKT.

 

(b)    In the event the Company shall elect to redeem the Warrant, the Company shall fix a date for the redemption. Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the date fixed for redemption to the Holder at their last addresses as they shall appear on the registration books. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date sent whether or not the Holder received such notice.

 

(c)     The Warrant may be exercised for cash in accordance with Section 5 of this Warrant at any time after notice of redemption shall have been given by the Company and prior to the time and date fixed for redemption. On and after the redemption date, the record holder of the Warrant shall have no further rights except to receive the Redemption Price upon surrender of the Warrant.

 

(d)    The Company understands that the redemption rights provided for by this Section 7 apply only to outstanding Warrants. To the extent a person holds rights to purchase Warrant, such purchase rights shall not be extinguished by redemption. However, once such purchase rights are exercised, the Company may redeem the Warrant issued upon such exercise provided that the criteria for redemption is met, including the opportunity of the holders to exercise prior to redemption pursuant to Section 7.

 

8.       Termination . This Warrant shall terminate at 5:00 p.m. Pacific Standard Time on the Termination Date, subject to earlier termination as set forth in Section 2(c) hereof.

 

9.       Miscellaneous . This Warrant shall be governed by the laws of the State of Nevada, as such laws are applied to contracts to be entered into and performed entirely in Nevada. In the event of any dispute among the Holder and the Company arising out of the terms of this Warrant, the parties hereby consent to the exclusive jurisdiction of the federal and state courts located in the State of Nevada for resolution of such dispute, and agree not to contest such exclusive jurisdiction or seek to transfer any action relating to such dispute to any other jurisdiction. The headings in this Warrant are for purposes of convenience and reference only, and shall not be deemed to constitute a part hereof. Neither this Warrant nor any term hereof may be changed or waived orally, but only by an instrument in writing signed by the Company and the Holder of this Warrant.

 

  4  

 

 

  RMR Industrials, Inc.
     
  By:  
  Name: Gregory M. Dangler
  Title: President

 

  5  

 

 

ATTACHMENT 1

 

NOTICE OF EXERCISE

 

To: RMR INDUSTRIALS, Inc.

 

(1)    The undersigned hereby elects to purchase ________ Warrant Stock of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)    Payment shall take the form of (check applicable box):

 

[ ] in lawful money of the United States; or

 

[ ] [if permitted the cancellation of such number of Warrant Stock as is necessary, in accordance with the formula set forth in Section 5(c), to exercise this Warrant with respect to the maximum number of Warrant Stock purchasable pursuant to the cashless exercise procedure set forth in Section 5(c).

 

(3)    Please issue said Warrant Stock in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

 

The Warrant Stock shall be delivered to the following DWAC Account Number:

 

_______________________________

 

_______________________________

 

_______________________________

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:     

 

Signature of Authorized Signatory of Investing Entity :     

 

Name of Authorized Signatory:     

 

Title of Authorized Signatory:     

 

Date:     

  

 

 

 

ATTACHMENT 2

 

INVESTMENT REPRESENTATION STATEMENT

 

Shares of Common Stock of RMR Industrials, Inc., a Nevada corporation (the “ Company ”)

 

In connection with the purchase of the above-listed securities, the undersigned hereby represents to the Company as follows:

 

(a)                 The securities to be received upon the exercise of the Warrant (the “ Securities ”) will be acquired for investment for its own account, not as a nominee or agent, and not with a view to the sale or distribution, within the meaning of the Securities Act of 1933, as amended (the “ Securities Act ”) of any part thereof, and the undersigned has no present intention of selling, granting participation in or otherwise distributing the same, other than to its affiliates, but subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. By executing this statement, the undersigned further represents that it does not, other than in connection with transfers to its affiliates, have any contract, undertaking, agreement or arrangement with any person to sell, transfer, or grant participations to such person or to any third person, with respect to any Securities issuable upon exercise of the Warrant.

 

(b)                The undersigned understands that the Securities issuable upon exercise of the Warrant at the time of issuance may not be registered under the Securities Act and applicable state securities laws, on the ground that the issuance of such securities is exempt pursuant to Section 4(2) of the Securities Act and state law exemptions relating to offers and sales not by means of a public offering, and that the Company’s reliance on such exemptions is predicated on the undersigned’s representations set forth herein.

 

(c)                 The undersigned agrees that in no event will it make a disposition of any Securities acquired upon the exercise of the Warrant unless and until the undersigned provides, at the Company’s request, an opinion of counsel reasonably satisfactory to the Company that such transfer does not require registration under the Securities Act and the securities laws applicable with respect to any other applicable jurisdiction. Notwithstanding the foregoing, no opinion of counsel shall be necessary and such transfer or assignment by the undersigned shall be permitted (a) if such transfer or assignment is to an affiliate of the undersigned or (b) if the Company becomes the subject of foreign ownership, control or influence and such transfer or assignment is to a charitable organization.

 

(d)                The undersigned acknowledges that an investment in the Company is highly speculative and represents that it is able to fend for itself in the transactions contemplated by this statement, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investments, and has the ability to bear the economic risks (including the risk of a total loss) of its investment. The undersigned represents that it has had the opportunity to ask questions of the Company concerning the Company’s business and assets and to obtain any additional information which it considered necessary to verify the accuracy of or to amplify the Company’s disclosures, and has had all questions which have been asked by it satisfactorily answered by the Company

 

(e)                 The undersigned acknowledges that the Securities issuable upon exercise or conversion of the Warrant must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. The undersigned is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than six months after a party has purchased and paid for the security to be sold from the Company or any affiliate of the Company, the sale being through a “broker’s transaction” or in transactions directly with a “market maker” (as provided by Rule 144(f)) and the number of shares being sold during any three month period not exceeding specified limitations.

 

 

 

 

Dated:________________________

 

   
  (Typed or Printed Name)
   
   
  (Signature)
   
   
  (Title)

 

  - 8 -  

 

 

 

Exhibit 31.1

CERTIFICATION PURSUANT TO

EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Chad Brownstein, certify that:

 

1. I have reviewed this Quarterly Report of RMR Industrials, Inc. for the period ended June 30, 2016.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

 

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which the report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

  

(a) All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date: August 15, 2016 By:  /s/ Chad Brownstein
  Chad Brownstein
  Chief Executive Officer (Principal Executive Officer)

 

 

 

Exhibit 31.2

 

CERTIFICATION PURSUANT TO

EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Gregory Dangler, certify that:

 

1. I have reviewed this Quarterly Report of RMR Industrials, Inc. for the period ended June 30, 2016.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

 

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which the report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

 

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

  

(a) All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

 

Date: August 15, 2016 By:  /s/ Gregory Dangler
  Gregory Dangler
  President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

  

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report on Form 10-Q of RMR Industrials, Inc. (the “Company”) for the period ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

By: /s/ Chad Brownstein  
Chad Brownstein  
Chief Executive Officer (Principal Executive Officer)  
   
August 15, 2016  

 

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report on Form 10-Q of RMR Industrials, Inc. (the “Company”) for the period ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

 

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

 

By: /s/ Gregory Dangler  
Gregory Dangler  
President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)  
   
Date: August 15, 2016