UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 21, 2020
| Kingfish Holding Corporation |
| (Exact name of registrant as specified in charter) |
| Delaware | | 000-52375 | | 20-4838580 |
| (State or Other Jurisdiction of Incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
| 2641 49th Street, Sarasota, Florida | | 34234 |
| (Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (941) 870-2986
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| None | | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
In order for the Company to finance the preparation and filing of its delinquent periodic reports with the Securities and Exchange Commission (the “Commission”), as described in Item 7.01 of this Current Report on Form 8-K, James K. Toomey, the Company’s corporate secretary and a director, made the following loans to the Company in an aggregate amount of $130,000 during the fiscal years ended September 30, 2021 and 2020 (referred to as the Toomey Loans):
| | · | On May 5, 2020, a loan of $5,000 in principal amount; |
| | · | On October 19, 2020, a loan of $25,000 in principal amount; and |
| | · | On December 21, 2020, a loan of $100,000 in principal amount. |
The Toomey Loans are evidenced by a consolidated promissory note, dated February 1, 2021, issued by the Company to Mr. Toomey (the “2021 Promissory Note”). The 2021 Promissory Note bears interest, commencing on the date of the loan, at an initial rate of 2% per annum and the note matures on December 31, 2023. The maturity date of the 2021 Promissory Notes will accelerate and be due and payable immediately upon any change of control, merger, or other business combination (as defined in the 2021 Promissory Note). If the maturity date is extended for any reason whatsoever (including in connection with an acceleration event), the 2021 Promissory Note will bear interest at a rate of 5% per annum, commencing on the date of any such extension. The 2021 Promissory Note is not convertible into our common shares. The foregoing description of the 2021 Promissory Note does not purport to be complete and is qualified in its entirety by reference to the complete text of the 2021 Promissory Note, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated into this Form 8-K by reference.
Item 4.01. Changes in Registrant’s Certifying Accountant.
On October 21, 2020, we retained Accell Audit & Compliance P.A. (“Accell”), as our new independent registered public accounting firm, to audit our financial statements for the fiscal years ending September 30, 2016 through 2020, in connection with the filing of our delinquent SEC filings. This engagement was further extended on October 5, 2021 to include the audit our financial statements for the fiscal year ending September 30, 2021 and performance of the required quarterly reviews during the fiscal year ending September 30, 2021. The appointment and extension was approved by our Board of Directors. As a result of our engagement of Accell on October 21, 2020, we dismissed Warren Averett, LLC (“Warren Averett”) as our independent auditor.
During the fiscal years ended year ended September 30, 2015 and 2014 (the date of the last audits prepared by Warren Averett), during the two most recent fiscal years (September 30, 2021 and 2020), and through date of dismissal, there were no disagreements with Warren Averett on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Warren Averett, would have caused Warren Averett to make reference to the subject matter of the disagreement in its report. There have been no reportable events as provided in Item 304(a)(1)(v) of Regulation S-K up to and including the dismissal of Warren Averett, except that such reports contained an explanatory paragraph in respect to uncertainty as to the Company’s ability to continue as a going concern.
Warren Averett’s report on the consolidated financial statements of the Company as, at, and for the fiscal years ended September 30, 2015 and 2014 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that such reports contained an explanatory paragraph in respect to uncertainty as to the Company’s ability to continue as a going concern and identified certain material weakness in our internal controls over financial reportiog. There were and are no limitations placed on Warren Averett or Warren Averett concerning the inquiry of any matter related to the Company’s financial reporting.
On February 15, 2022, the Company provided Warren Averett with a copy of the foregoing disclosure and requested that it furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made therein. A copy of the letter from Warren Averett dated February 17, 2022 is attached hereto as Exhibit 16.1 to this Form 8-K.
During the Company’s two most recent fiscal years and any subsequent interim period preceding such engagement, we have not previously consulted with Accell with respect to either (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and no written or oral advice was given to the Company by Accell that Accell concluded was an important factor considered by the Company in reaching its decision as to the accounting, auditing, or financial reporting issue; or (b) any matter that was either the subject of a disagreement, as that term is described in Item 304(a)(1)(iv) of Regulation S-K and the related instruction to Item 304 of Regulation S-K, or a reportable event as that term is described in Item 304(a)(1)(v) of Regulation S-K.
Item 7.01. Regulation FD Disclosure.
The Company was unsuccessful in its endeavor to identify and engage in a business combination with a potential target company or business following the reactivation of its reporting obligations under the Securities Exchange Act of 1934 (“Exchange Act”) in December 2014 and, as of the fiscal year ended September 30, 2016, the Company had expended substantially all of its available cash and was unable to secure any additional funds to finance its operations. As a result, the Company was unable to prepare and timely file its periodic reports under the Exchange Act, commencing with its Annual Report on Form 10-K for the fiscal year ended September 30, 2016 and, other than maintaining its corporate status, was dormant from such date through May 2020.
In 2020, the Company re-evaluated the current business environment and determined that circumstances had changed sufficiently so that identifying target and completing a business combination may be more likely than was previously the case. As part of this strategy, the Company determined to attempt to seek the financing necessary to prepare and file all of its delinquent periodic reports on Form 10-K that it was required to make under the Exchange Act since 2016, as well as Forms 10-Q for the most recently completed fiscal year end, and to again aggressively pursue an acquisition target. In order for the Company to finance the preparation and filing of such delinquent periodic report with the Commission, the Company borrowed approximately $130,000 through the Toomey Loans as described in item 1.01 of this Form 8-K. Following receipt of the Toomey Loans, the Company engaged legal and accounting professionals to assist in preparing and filing with the Commission all of such delinquent periodic reports and expects to make such filings on or about March 1, 2022.
As of the date of filing of this Form 10-K, the Company entered into preliminary discussions regarding a potential business combination and equity financing transaction with Renovo Resource Solutions, Inc. (“Renovo”), a Florida corporation located in Manatee County, Florida, and 6, LLC, a Florida limited liability real estate holding company controlled by Renovo which owns the land on which Renovo conducts its business (Renovo and 6 LLC, collectively the “Renovo Group”). Renovo is engaged in an environmentally friendly scrap yard operation. Renovo’s operation are located on a site specifically engineered for its business and includes a new constructed facility for its operations. Renovo is a privately held company in which Mr. Toomey and his family have a one-third ownership interest. The Company has only commenced preliminary discussions with the Renovo Group and has not entered into a letter of intent or other undertaking with Renovo. It is anticipated that when the Company is analyzing the available alternatives, it will consider and evaluate, among other things, a potential business combination with Renovo in combination with a simultaneous equity financing transaction.
The Renovo Group has incurred indebtedness of approximately $6.1 million in connection with its business operations and land holdings, consisting primarily of the construction costs incurred in connection with its newly constructed facilities. In order for a business combination with the Renovo Group to be feasible, the Company and Renovo would need to simultaneously raise approximately $12,500,000 in equity financing (“Equity Financing”) at the time of any such potential business combination in order (a) to repay the Company’s outstanding indebtedness owed to Mr. Toomey, (b) to pay the costs associated with any business combination transaction and Equity Financing, and (c) for the Renovo Group to repay its outstanding debt obligations, to pay its operating expenses until such expenses can be paid from operating income, to finance the completion of the permitting and improvements needed on its operational site, and to permit it to take advantage of operational opportunities in its local community. Accordingly, if the Company were to pursue a business combination with Renovo under such circumstances, it would likely require as a condition to any such business combination that the necessary Equity Financing be firmly committed and made available at the time of the consummation of such business combination. In the event that the Renovo Group is unable to commit to timely raising such Equity Financing, the Company would have no interest in pursuing a business combination transaction with the Renovo Group. Although we have commenced negotiations with the Renovo Group, we have not entered into a letter of intent or other undertaking with the Renovo Group for a business combination and no source of Equity Financing has been secured or is in the process of negotiations at this time. In view of the number of significant uncertainties surrounding a possible transaction, there is no assurance that the Company and the Renovo Group will reach any agreement with respect to a business combination and, if so, that they will be able to secure the Equity Financing necessary to consummation of such a transaction..
The information included in Item 7.01 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
SIGNATURE
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 hereunto duly authorized.
| | KINGFISH HOLDING CORPORATION | |
| | | | |
| Date: February 17, 2022 | By: | /s/ Ted Sparling | |
| | | Ted Sparling | |
| | | President and Chief Executive Officer | |
EXHIBIT 10.1
PROMISSORY NOTE
| U.S. $130,000.00 | Effective Date: February 1, 2021 |
FOR VALUE RECEIVED, the undersigned, KINGFISH HOLDING CORPORATION, a Delaware corporation (the “Borrower”), promises to pay to the order of JAMES K. TOOMEY, an individual (the “Lender”), at Lender’s address set forth below (or by wire transfer to Lender’s wire address set forth below) or at such other place as Lender may designate in writing pursuant to the notice provisions below, the principal sum of ONE HUNDRED THIRTY THOUSAND DOLLARS (US $130,000.00), together with interest accruing on the outstanding principal balance from the date hereof, in lawful money of the United States of America in immediately available funds all as provided below.
1. Rate of Interest. Subject to the provisions of Section 3 hereof, the amounts due under this Note shall bear simple interest on the outstanding principal amount of this Promissory Note (this “Note”) at an annual fixed rate of two percent (2%) per annum commencing on March 1, 2021 until paid in full. Interest shall be calculated on the actual number of days that principal is outstanding over a year of 360 days. In no event will the rate of interest hereunder exceed the maximum rate allowed by law.
2. Maturity Date and Payment Terms. All outstanding principal and accrued and unpaid interest on this Note, plus all fees, costs and expenses then due under this Note, shall become fully due and payable on the earlier of (i) a Change of Control (as defined below) or (ii) December 31, 2023 (the “Maturity Date”). No principal amount of this Note or any accrued interest on the principal balance of this Note is due or payable until the Maturity Date. If any payment under this Note shall become due on a Saturday, Sunday or public holiday under the laws of the State of Florida, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing interest in connection with such payment. Payments received will be applied to charges, fees and expenses (including attorneys’ fees), accrued interest and principal in any order that the Lender may choose, in its sole discretion.
For purposes of this Note, a “Change of Control” shall mean: (a) any consolidation or merger of the Borrower with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the shareholders of the Borrower immediately prior to such consolidation, merger or reorganization, continue to hold at least a majority of the voting power of the surviving entity (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization; (b) any transaction or series of related transactions to which the Borrower is a party and in which in excess of 50% of the Borrower’s voting power is transferred or issued to an unrelated third party in such transaction or related transactions, including, without limitation, any transaction or series of transactions involving the issuance of the Borrower’s voting securities (whether in connection with an equity financing or other purposes) resulting in the shareholders of the Borrower on the date of this Note holding 50% or less of the voting power of the Borrower or any successor thereto; (c) a sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Borrower; or (d) any liquidation, dissolution, or winding up of the affairs of the Borrower, whether voluntary or involuntary.
The Borrower shall give the Lender notice of a Change of Control transaction not less than five (5) business days prior to the anticipated date of consummation of the Change of Control transaction. Upon the consummation of a Change of Control the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder shall be immediately due and payable without demand or any notice of any kind and shall be subject to any required tax withholdings. Any such payments upon a Change of Control may be made by the Borrower (or any party to such Change of Control or its agent) following the Change of Control transaction in connection with payment procedures established in connection with such Change of Control transaction.
3. Late Payments; Extensions; Default Rate. Upon (a) the Maturity Date, whether by acceleration, a Change of Control or otherwise, and at the Lender’s option upon the occurrence of any Event of Default (as hereinafter defined) and during the continuance thereof, or (b) an agreement by the Lender to extend the Maturity Date and until full payment of principal, interest or other amount coming due pursuant to the provisions of this Note, this Note shall bear interest at a rate of five percent (5%) per annum (based on the actual number of days that principal is outstanding over a year of 360 days) (the “Default Rate”). The Default Rate shall continue to apply whether or not judgment shall be entered on this Note. Both the Late Charge and the Default Rate are imposed as liquidated damages for the purpose of defraying the Lender’s expenses incident to the handling of delinquent payments or the costs of additional risk associated with extension of the Maturity Date, but are in addition to, and not in lieu of, the Lender’s exercise of any rights and remedies hereunder or under applicable law, and any fees and expenses of any agents or attorneys which Lender may employ. In addition, the Default Rate reflects the increased credit risk to Lender of carrying a loan that is in default or beyond the Maturity Date. The Borrower agrees that the Late Charge and Default Rate are reasonable forecasts of just compensation for anticipated and actual harm or risk incurred by the Lender, and that the actual harm or risk incurred by Lender cannot be estimated with certainty and without difficulty.
4. Prepayment. The Borrower may not prepay this Note prior to the Maturity Date without the consent of the Lender.
5. Usury. Regardless of any other provision of this Note, if for any reason the effective interest should exceed the maximum lawful interest, the effective interest shall be deemed reduced to, and shall be, such maximum lawful interest, and (a) the amount which would be excessive interest shall be deemed applied to the reduction of the principal balance of this Note and not to the payment of interest, and (b) if the loan evidenced by this Note has been or is thereby paid in full, the excess shall be returned to the party paying same, such application to the principal balance of this Note or the refunding of excess to be a complete settlement and acquittance thereof.
6. Events of Default. The occurrence of any of the following events will be deemed to be an “Event of Default” under this Note: (a) the nonpayment of any principal, interest or other indebtedness under this Note when due; (b) the filing by or against the Borrower of any proceeding in bankruptcy, receivership, insolvency, reorganization, liquidation, conservatorship or similar proceeding (and, in the case of any such proceeding instituted against the Borrower, such proceeding is not dismissed or stayed within 30 days of the commencement thereof; (c) a default with respect to any other indebtedness of the Borrower for borrowed money, if the effect of such default is to cause or permit the acceleration of such debt; (d) the entry of a final judgment against the Borrower and the failure of the Borrower to discharge the judgment within ten (10) days of the entry thereof; (e) any material adverse change in the Borrower’s assets or financial condition.
Upon the occurrence of an Event of Default: (i) if an Event of Default specified in clause (b) above shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder shall be immediately due and payable without demand or notice of any kind; (ii) if any other Event of Default shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder, at the Lender’s option and without demand or notice of any kind, may be accelerated and become immediately due and payable; and (iii) at Lender’s option, this Note will bear interest at the Default Rate from the date of the occurrence of the Event of Default.
7. Indemnity. The Borrower agrees to indemnify each of the Lender (the “Indemnified Party”), and to defend and hold the Indemnified Party harmless from and against any and all claims, damages, losses, liabilities and expenses (including all fees and charges of internal or external counsel with whom the Indemnified Party may consult and all expenses of litigation and preparation therefor) which the Indemnified Party may incur or which may be asserted against the Indemnified Party by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of Borrower), in connection with or arising out of or relating to the matters referred to in this Note or in the other Loan Documents or the use of any advance hereunder, whether (a) arising from or incurred in connection with any breach of a representation, warranty or covenant by the Borrower, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental authority; provided, however, that the foregoing indemnity agreement shall not apply to any claims, damages, losses, liabilities and expenses solely attributable to the Indemnified Party’s gross negligence or willful misconduct. The indemnity agreement contained in this Section 7 shall survive the termination of this Note, payment of any advance hereunder and the assignment of any rights hereunder. The Borrower may participate at its expense in the defense of any such action or claim.
8. Miscellaneous. All notices, demands, requests, consents, approvals and other communications required or permitted hereunder (“Notices”) must be in writing (except as may be agreed otherwise above with respect to borrowing requests) and will be effective upon receipt. Notices may be given in any manner to which the parties may separately agree, including electronic mail. Without limiting the foregoing, first-class mail, facsimile transmission and commercial courier service are hereby agreed to as acceptable methods for giving Notices. Regardless of the manner in which provided, Notices may be sent to a party’s address as set below or to such other address as any party may give to the other for such purpose in accordance with this Section 8. No delay or omission on the Lender’s part to exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or power, nor will Lender’s action or inaction impair any such right or power. The Lender’s rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Lender may have under other agreements, at law or in equity. No modification, amendment or waiver of, or consent to any departure by the Borrower from, any provision of this Note will be effective unless made in a writing signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. The Borrower agrees to pay on demand, to the extent permitted by law, all costs and expenses incurred by the Lender in the enforcement of its rights in this Note and in any security therefor, including without limitation reasonable fees and expenses of the Lender’s counsel. If any provision of this Note is found to be invalid, illegal or unenforceable in any respect by a court, all the other provisions of this Note will remain in full force and effect. The Borrower and all other makers and indorsers of this Note hereby forever waive presentment, protest, notice of dishonor and notice of non-payment. The Borrower also waives all defenses based on suretyship or impairment of collateral. This Note shall bind Borrower and its administrators, successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns; provided, however, that the Borrower may not assign this Note in whole or in part without the Lender’s written consent and the Lender at any time may assign this Note in whole or in part.
This Note has been delivered to and accepted by the Lender and will be deemed to be made in the State of Florida. THIS NOTE WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE LENDER AND THE BORROWER DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA. The Borrower hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the county or judicial district where Lender’s office indicated above is located; provided, that nothing contained in this Note will prevent the Lender from bringing any action, enforcing any award or judgment or exercising any rights against Borrower individually, against any security or against any property of the Borrower within any other county, state or other foreign or domestic jurisdiction. The Borrower acknowledges and agrees that the venue provided above is the most convenient forum for both the Lender and the Borrower. The Borrower waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Note.
9. Florida Documentary Stamp Tax. Florida documentary stamp tax in the amount required by law has been paid with respect to this Note.
10. WAIVER OF JURY TRIAL. THE BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS THE BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS NOTE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Borrower acknowledges that it has read and understood all the provisions of this Note, including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.
[Signatures on Next Page]
IN WITNESS WHEREOF, the due execution hereof as a document under seal, as of the date first written above, with the intent to be legally bound hereby.
| | THE BORROWER: KINGFISH HOLDING CORPORATION, a Delaware corporation | |
| | | | |
| By: | /s/ Ted Sparling | |
| | Name: | Ted Sparling | |
| | Title: | CEO | |
| | | | |
| | Address for notices to the Borrower: | |
| | | |
| | | |
| | | |
| LENDER: | |
| | |
| /s/ James K. Toomey | |
| James K. Toomey | |
Address for notices to the Lender:
James K. Toomey
6425 28th Avenue East
Bradenton, FL 34208
[Signature Page to Kingfish Holding Corporation Promissory Note dated as of February 1, 2021]
