UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-1/A
AMENDMENT NO. 2 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

ICOX Innovations Inc.

 

(Exact name of registrant as specified in its charter)

 

Nevada

 

(State or other jurisdiction of incorporation or organization)

 

8742

 

(Primary Standard Industrial Classification Code Number)

 

27-3098487

 

(I.R.S. Employer Identification Number)

 

4101 Redwood Ave., Building F
Los Angeles, CA 90066
Telephone: (424) 570-9446

 

(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)

 

GKL Registered Agents of NV, Inc.
3064 Silver Sage Drive, Suite 150
Carson City, NV 89701
Telephone: (775) 841-0644

 

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

 

Copy of Communications To:
Clark Wilson LLP
Suite 900 - 885 West Georgia Street
Vancouver, British Columbia V6C 3H1, Canada
Telephone: (604) 687-5700
Attention: Mr. Virgil Z. Hlus

 

From time to time after the effective date of this registration statement.

 

(Approximate date of commencement of proposed sale to the public)

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [X]

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]
(Do not check if a smaller reporting company)   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 to Section 7(a)(2)(B) of the Securities Act. [  ]

 

Calculation of Registration Fee

 

Title of Each Class
of Securities to be
Registered
    Amount to be
Registered (1)
       Proposed Maximum
Offering Price
Per Share
              Proposed Maximum
Aggregate Offering
Price
              Amount of
Registration Fee
   
Common stock to be offered for resale by selling stockholders     5,901,823 (2)   $ 0.60 (3),(4)   $ 3,541,093.80 (3),(4)   $ 440.87 (5)

 

(1) Pursuant to Rule 416 under the Securities Act of 1933, there is also being registered hereby such indeterminate number of additional shares of common stock of ICOX Innovations Inc. as may be issued or issuable because of stock splits, stock dividends, stock distributions, and similar transactions.
   
(2)

Consists of (i) up to 1,020,000 shares of common stock, (ii) up to 325,000 shares of common stock that may be issued upon conversion of convertible notes and (iii) up to 4,556,823 shares of common stock issued upon conversion of subscription receipts.

   
(3) Estimated in accordance with Rule 457(c) under the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee based on a bona fide estimate of the maximum offering price.
   

(4)

Based on the last sale price ($0.60) on March 19, 2018 of ICOX Innovations Inc.’s subscription receipts, each of which is convertible into one share of common stock.
 
(5) Previously paid.

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 
 

 

 

The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

 

Subject to Completion, Dated July 17 , 2018

Prospectus

5,901,823 Shares

 

ICOX Innovations Inc.

Common Stock
_________________________________

 

The selling stockholders identified in this prospectus may offer and sell up to 1,020,000 shares of our common stock, up to 325,000 shares of our common stock that may be issued upon conversion of convertible notes and up to 4,556,823 shares of our common stock issued upon conversion of subscription receipts. The shares of our common stock, convertible notes and subscription receipts were acquired by the selling stockholders directly from us in private placements that were exempt from the registration requirements of the Securities Act of 1933.

 

The selling stockholders may sell all or a portion of the shares being offered pursuant to this prospectus at a fixed price of $0.60 per share until shares of our common stock are quoted on the OTC Markets Group’s OTCQB or OTCQX or listed on a Canadian stock exchange or any other stock exchange, and thereafter at prevailing market prices at the time of sale, at varying prices or at negotiated prices.

 

Our common stock is quoted on the OTC Markets Group’s OTC Pink under the symbol “ICOX”, but there have not been any trades for our common stock on the OTC Pink operated by the OTC Markets Group.

 

We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders. We will pay for expenses of this offering, except that the selling stockholders will pay any broker discounts or commissions or equivalent expenses and expenses of their legal counsels applicable to the sale of their shares.

 

Investing in our common stock involves risks. See “Risk Factors” beginning on page 4.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is __________________, 2018.

 

 
 

 

Table of Contents

 

Page Number
   
About This Prospectus 3
Prospectus Summary 3
Risk Factors 4
General Cryptocurrency Risks 4
Risks Related to Our Business 8
Risks Related to Our Common Stock 11
Forward-Looking Statements 12
Use of Proceeds 13
Private Placements 13
Selling Stockholders 14
Plan of Distribution 40
Description of Securities 41
Experts and Counsel 44
Interest of Named Experts and Counsel 44
Information with respect to Our Company 44
Description of Business 47
Description of Property 53
Legal Proceedings 53
Market Price of and Dividends on Our Common Equity and Related Stockholder Matters 53
Financial Statements F-1
Management’s Discussion and Analysis of Financial Condition and Results of Operations 55
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 60
Directors and Executive Officers 61
Executive Compensation 64
Security Ownership of Certain Beneficial Owners and Management 68
Transactions with Related Persons, Promoters and Certain Control Persons and Corporate Governance 69
Where You Can Find More Information 70

 

2
 

 

About This Prospectus

 

You should rely only on the information that we have provided in this prospectus and any applicable prospectus supplement. We have not authorized anyone to provide you with different information. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus and any applicable prospectus supplement. You must not rely on any unauthorized information or representation. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information in this prospectus and any applicable prospectus supplement is accurate only as of the date on the front of the document, regardless of the time of delivery of this prospectus, any applicable prospectus supplement, or any sale of a security.

 

As used in this prospectus, the terms “we”, “us” “our” and “ICOX” mean ICOX Innovations Inc. and its wholly-owned subsidiary, AppCoin Innovations (USA) Inc., unless otherwise specified. Unless otherwise stated, “$” refers to United States dollars.

 

Prospectus Summary

Our Business

 

Our new business is a services and development business that provides a turnkey set of services for companies to develop and integrate blockchain and cryptocurrency technologies into their business operations.

 

A blockchain is a distributed ledger technology which has the potential to bring significant efficiencies to many applications in a diversity of fields ranging from global supply chains to financial services and beyond. One of the key promises of blockchains is reduced transaction and networking costs by removing the need for traditional third party intermediaries, such as banks, lawyers, escrow agents, etc. Blockchain is considered a foundational technology.

 

A cryptocurrency is a digital asset – often referred to as a coin or token – that is used as a medium of exchange using cryptography and decentralized control via a blockchain to secure the transaction and to control the creation of additional units of the currency. Not all digital assets qualify as a currency and may be securities or other types of assets. Current and future legislations and regulations, including interpretations released by a regulatory authority, may impact the manner in which cryptocurrency is viewed or treated for classification and clearing purposes. In particular, cryptocurrency may be deemed securities under federal securities laws.

 

We anticipate that we will enable companies to focus on their core competencies while providing the necessary resources and expertise to execute a strategy that will enable companies to integrate new blockchain plus cryptocurrency technologies into their business operations. Our plan is to be compensated on a fee-for-services model. We may also accept tokens, coins or equity in payment for our services, including tokens and coins issued by our clients and customers in initial coin offerings, to the extent permitted under applicable law.

 

Our services include strategic planning, project planning and program management, structure development and administration, business plan modelling, customer development, including customer discovery and scoping as well as product commercialization and support, technology development and support, whitepaper preparation, due diligence reporting, governance planning and management.

 

We currently have one client, WENN Digital Inc., a related party to our company, which has engaged us to build out its business model, technology strategy, market entry strategy and capital structure, which includes a blockchain platform launch. While we have several potential clients in our sales pipeline, there can be no assurance that we will engage additional clients. If our sole client, a related party to our company, discontinues its business with us, or if our client modifies the terms of its business with us on less favorable terms, the effect on our business, operating results and financial condition may become adverse.

 

We have not yet established a source of revenues sufficient to cover our operating costs and to allow us to continue as a going concern. We have incurred losses since inception resulting in an accumulated deficit of $693,008 as at December 31, 2017 (December 31, 2016: $225,950). Our ability to operate as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable.

 

Our principal offices are located at 4101 Redwood Ave., Building F, Los Angeles, CA 90066. Our telephone number is (424) 570-9446.

 

3
 

 

Number of Shares Being Offered

 

This prospectus covers the resale by the selling stockholders named in this prospectus of up to 1,020,000 shares of our common stock, up to 325,000 shares of our common stock that may be issued upon conversion of convertible notes and up to 4,556,823 shares of our common stock issued upon conversion of subscription receipts.

 

Number of Shares Outstanding

 

There were 20,874,524 shares of our common stock issued and outstanding as at July 17 , 2018.

 

Use of Proceeds

 

We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders. We will pay for expenses of this offering, except that the selling stockholders will pay any broker discounts or commissions or equivalent expenses and expenses of their legal counsels applicable to the sale of their shares.

 

Summary of Financial Data

 

The following information represents selected audited financial information for our company for the years ended December 31, 2017 and 2016 and selected unaudited financial information for our company for the three months ended March 31, 2018 and March 31, 2017. The summarized financial information presented below is derived from and should be read in conjunction with our audited and unaudited financial statements, as applicable, including the notes to those financial statements which are included elsewhere in this prospectus along with the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 55 of this prospectus.

 

Statements of Operations Data   Three Months Ended
March 31, 2018
    Three Months Ended
March 31, 2017
    Year Ended
December 31, 2017
    Year Ended
December 31, 2016
 
Revenue   $ -     $ -     $ 500,000     $ -  
Total Operating Expenses   $ 1,006,197     $ 29,241     $ 932,843     $ 74,183  
Net Loss   $ (1,022,518 )   $ (36,556 )   $ (467,058 )   $ (88,196 )

 

Balance Sheets Data   As of
March 31, 2018
    As of
December 31, 2017
    As of
December 31, 2016
 
Cash and Cash Equivalents   $ 28,448     $ 214,993     $ 56,050  
Working Capital   $ 5,203,837     $ 697,847     $ 7,037  
Total Assets   $ 5,798,632     $ 880,803     $ 56,050  
Total Liabilities   $ 1,163,827     $ 736,193     $ 212,283  
Accumulated Deficit   $ (1,715,526 )   $ (693,008 )   $ (225,950 )
Total Stockholders’ Equity (Deficit)   $ (833,390 )   $ (144,610 )   $ (156,233 )

 

Risk Factors

 

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this prospectus in evaluating our company and our business before purchasing our securities. Our business, operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of these risks. You should invest in our common stock only if you can afford to lose your entire investment.

 

General Cryptocurrency Risks

 

Cryptocurrency exchanges and other trading venues are relatively new and, in most cases, largely unregulated and may therefore be subject to fraud and failures.

 

When cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, such events could result in a reduction in cryptocurrency prices or confidence and impact our success and have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects and operations.

 

4
 

 

Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, commodities or currencies. For example, during the past three years, a number of bitcoin exchanges have closed due to fraud, business failure or security breaches. In many of these instances, the customers of the closed exchanges were not compensated or made whole for partial or complete losses of their account balances. While smaller exchanges are less likely to have the infrastructure and capitalization that may provide larger exchanges with some stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action. We do not maintain any insurance to protect from such risks, and do not expect any insurance for customer accounts to be available (such as federal deposit insurance) at any time in the future, putting customer accounts at risk from such events. In the event we face fraud, security failures, operational issues or similar events such factors would have a material adverse effect on our ability of to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects and operations.

 

Regulatory changes or actions may alter the nature of an investment in us or restrict the use of cryptocurrencies in a manner that adversely affects our business, prospects or operations.

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies, with certain governments deeming them illegal while others have allowed their use and trade.

 

Governments may in the future curtail or outlaw the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency companies to additional regulation. The effect of any future regulatory change on our business or any cryptocurrency that may impact our business is impossible to predict, but such change could be substantial and would have a material adverse effect on our business, prospects and operations.

 

To date, the Securities and Exchange Commission (the “SEC” ) has released statements that state that the United States would, in some circumstances, consider the offer and sale of blockchain tokens pursuant to an initial coin offering (an “ICO” ) subject to federal securities laws. China has released statements and taken similar actions. Canada has also released a notice which indicated that the Canadian Securities Administrators would, in some circumstances, consider the offer and sale of blockchain tokens pursuant to an ICO subject to Canadian securities laws. Although we do not participate in ICOs, our clients and customers may participate in ICOs, and we may receive a portion of the tokens or coins issued by our clients and customers in ICOs as payment for our services, and these actions may be a prelude to further action which chills widespread acceptance of blockchain and cryptocurrency adoption and have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. Similar actions by governments or regulatory bodies could result in restriction of the acquisition, ownership, holding, selling, use or trading in our securities. Such a restriction could have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, raise new capital which would have a material adverse effect on our business, prospects or operations and harm investors in our securities.

 

On-going and future regulatory actions and regulatory change related to our business or cryptocurrencies, may impact our ability to continue to operate and such actions could affect our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations.

 

5
 

 

The development and acceptance of cryptographic and algorithmic protocols governing the issuance of and transactions in cryptocurrencies is subject to a variety of factors that are difficult to evaluate.

 

The use of cryptocurrencies to, among other things, buy and sell goods and services and complete transactions, is part of a new and rapidly evolving industry that employs digital assets based upon a computer-generated mathematical and/or cryptographic protocol. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of developing protocols may occur and is unpredictable. The factors include, but are not limited to:

 

  Continued worldwide growth in the adoption and use of cryptocurrencies;
  Governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency systems;
  Changes in consumer demographics and public tastes and preferences;
  The maintenance and development of the open-source software protocol of the network;
  The availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;
  General economic conditions and the regulatory environment relating to digital assets; and
  Negative consumer sentiment and perception of bitcoin specifically and cryptocurrencies generally.

 

Such events would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors in our securities.

 

Banks and financial institutions may not provide banking services , or may cut off services , to businesses that provide cryptocurrency-related services or that accept cryptocurrencies as payment, including financial institutions of investors in our securities.

 

A number of companies that provide bitcoin and/or other cryptocurrency-related services have been unable to find banks or financial institutions that are willing to provide them with bank accounts and other services . Similarly, a number of companies and individuals or businesses associated with cryptocurrencies may have had and may continue to have their existing bank accounts closed or services discontinued with financial institutions. We also may be unable to obtain or maintain these services for our business. The difficulty that many businesses that provide bitcoin and/or other cryptocurrency-related services have and may continue to have in finding banks and financial institutions willing to provide them services may be decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies and could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks or financial institutions were to close the accounts of businesses providing bitcoin and/or other cryptocurrency-related services . This could occur as a result of compliance risk, cost, government regulation or public pressure. The risk applies to securities firms, clearance and settlement firms, national stock and commodities exchanges, the over the counter market and the Depository Trust Company, which, if any of such entities adopts or implements similar policies, rules or regulations, could result in the inability of our investors to open or maintain stock or commodities accounts, including the ability to deposit, maintain or trade our securities. Such factors would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and harm investors.

 

The impact of geopolitical events on the supply and demand for cryptocurrencies is uncertain.

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of any cryptocurrencies we hold or expect to acquire for our own account. Such risks are similar to the risks of purchasing commodities in general uncertain times, such as the risk of purchasing, holding or selling gold.

 

6
 

 

As an alternative to gold or fiat currencies that are backed by central governments, cryptocurrencies, which are relatively new, are subject to supply and demand forces. How such supply and demand will be impacted by geopolitical events is uncertain but could be harmful to us and investors in our securities. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Such events would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account.

 

Acceptance and/or widespread use of cryptocurrency is uncertain.

 

Currently, there is a relatively small use of bitcoins and/or other cryptocurrencies in the retail and commercial marketplace for goods or services . In comparison there is relatively large use by speculators contributing to price volatility.

 

The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services . Such lack of acceptance or decline in acceptances would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account.

 

Political or economic crises may motivate large-scale sales of Bitcoins and Ethereum, or other cryptocurrencies, which could result in a reduction in value and adversely affect us.

 

As an alternative to fiat currencies that are backed by central governments, digital assets such as bitcoins and Ethereum, which are relatively new, are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of bitcoins and Ethereum and other cryptocurrencies either globally or locally. Large-scale sales of bitcoins and Ethereum or other cryptocurrencies would result in a reduction in their value and could adversely affect us. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors.

 

It may be illegal now, or in the future, to acquire, own, hold, sell or use bitcoins, Ethereum, or other cryptocurrencies, participate in the blockchain or utilize similar digital assets in one or more countries, the ruling of which would adversely affect us.

 

One or more countries such as China and Russia may take regulatory actions in the future that could severely restrict the right to acquire, own, hold, sell or use cryptocurrencies or the blockchain or digital assets or to exchange these digital assets for fiat currency. Such restrictions may adversely affect us. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors.

 

7
 

 

If regulatory changes or interpretations require the regulation of bitcoins or other digital assets under the securities laws of the United States or elsewhere, including the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 or similar laws of other jurisdictions and interpretations by the SEC, CFTC, IRS, Department of Treasury or other agencies or authorities, we may be required to register and comply with such regulations, including at a state or local level. To the extent that we decide to continue operations, the required registrations and regulatory compliance steps may result in extraordinary expense or burdens to us. We may also decide to cease certain operations. Any disruption of our operations in response to the changed regulatory circumstances may be at a time that is disadvantageous to us.

 

Current and future legislation and SEC rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which bitcoins or other cryptocurrency is viewed or treated for classification and clearing purposes. In particular, bitcoins and other cryptocurrency may not be excluded from the definition of “security” by SEC rulemaking or interpretation requiring registration of all transactions, unless another exemption is available, including transacting in bitcoin or cryptocurrency amongst owners and require registration of trading platforms as “exchanges” such as Coinsquare. We cannot be certain as to how future regulatory developments will impact the treatment of bitcoins and other cryptocurrencies under the law. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations or be subjected to fines, penalties and other governmental action. Any such action may adversely affect an investment in us. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors.

 

Lack of liquid markets, and possible manipulation of blockchain/cryptocurrency based assets may adversely affect us.

 

Digital assets that are represented and trade on a ledger-based platform may not necessarily benefit from viable trading markets. Stock exchanges have listing requirements and vet issuers, requiring them to be subjected to rigorous listing standards and rules and monitoring investors transacting on such platform for fraud and other improprieties. These conditions may not necessarily be replicated on a distributed ledger platform, depending on the platform’s controls and other policies. The more lax a distributed ledger platform is about vetting issuers of digital assets or users that transact on the platform, the higher the potential risk for fraud or the manipulation of digital assets. These factors may decrease liquidity or volume, or increase volatility of digital securities or other assets trading on a ledger-based system, which may adversely affect us. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors.

 

Risks Related to Our Business

 

We have an evolving business model.

 

As digital assets and blockchain technologies become more widely available, we expect the services and products associated with them to evolve. As a result, to stay current with the industry, our business model may need to evolve as well. From time to time, we may modify aspects of our business model relating to our product mix and service offerings. We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to the business. We may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results. In addition, we intend to spend between $500,000 and $1,000,000 on various expenses to assist client companies to develop and integrate blockchain and cryptocurrency technologies into their business operations. These expenses that we incur are risk capital and can only be recovered by us if the applicable clients can successfully launch their businesses. Therefore, we risk losing substantial amounts of capital in the event any of our clients do not successfully launch their businesses. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors.

 

8
 

 

The loss or potential loss of our exclusion from regulation pursuant to the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisors Act of 1940 or any related state exemptions, could require us to restructure our operations.

 

The SEC heavily regulates the manner in which “investment companies,” “investment advisors,” and “broker-dealers” are permitted to conduct their business activities. We believe we will conduct our business in a manner that does not result in us being characterized as an investment company, an investment advisor or a broker-dealer, as we do not believe that we will engage in any of the activities that require registration under the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisors Act of 1940 or any similar provisions under state law. We intend to continue to conduct our business in such manner. If, however, we are deemed to be an investment company, an investment advisor, or a broker-dealer, we may be required to institute burdensome compliance requirements and our activities may be restricted, which would affect our business to a material degree. The loss or potential loss of our exclusion from regulation pursuant to the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisors Act of 1940 or any related state exemptions, could require us to restructure our operations, which could have an adverse effect on our financial condition and results of operations. In addition, we are determined to have engaged in activities that require any such registration, without obtaining such registration, we could be subject to civil and/or criminal liability, which could have an adverse effect on our financial condition and results of operations.

 

Cryptocurrency inventory, including that maintained by or for us, may be exposed to cybersecurity threats and hacks.

 

As with any computer code generally, flaws in cryptocurrency codes may be exposed by malicious actors. Several errors and defects have been found previously, including those that disabled some functionality for users and exposed users’ information. Flaws in and exploitations of the source code allow malicious actors to take or create money have previously occurred. To date, several hackings have become public knowledge whereby hackers have exploited security vulnerabilities in computer code used by cryptocurrency exchanges, digital wallets and companies that hold cryptocurrency to steal the equivalent of hundreds of millions of dollars based on current exchange rates. Such events would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account.

 

Competing blockchain platforms and technologies may adversely affect our business.

 

The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or an alternative to distributed ledgers altogether. This may adversely affect us and our exposure to various blockchain technologies. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors.

 

Competition in our market could harm our business.

 

Many of our current and potential competitors may have greater brand recognition, longer operating histories, larger customer bases and significantly greater financial, marketing and other resources than we do. Accordingly, these competitors may be able to spend greater amounts on product development, marketing and distribution. This advantage could enable our competitors to acquire larger market share and develop and offer more competitive products and services. Such competition could adversely impact our ability to attain the financing necessary for us to develop our business plan. In the face of competition, we may not be successful in sufficient market share to make our business profitable.

 

The cryptocurrency assets we hold may be subject to loss, theft or restriction on access.

 

There is a risk that some or all of the cryptocurrency assets we hold from time to time could be lost or stolen. Access to the cryptocurrency assets we hold from time to time could also be restricted by cybercrime (such as a denial of service attack) against a service at which we maintain a hosted online wallet. Any of these events may adversely affect our operations and, consequently, our investments and profitability. The loss or destruction of a private key required to access our digital wallets may be irreversible and we may be denied access for all time to our cryptocurrency holdings. Our loss of access to our private keys or our experience of a data loss relating to our digital wallets could adversely affect our investments and assets.

 

9
 

 

Cryptocurrencies are controllable only by the possessor of both the unique public and private keys relating to the local or online digital wallet in which they are held, which wallet’s public key or address is reflected in the network’s public blockchain. We will publish the public key relating to digital wallets in use when we verify the receipt of transfers and disseminate such information into the network, but we will need to safeguard the private keys relating to such digital wallets. To the extent such private keys are lost, destroyed or otherwise compromised, we will be unable to access the cryptocurrency assets we hold from time to time and such private keys will not be capable of being restored by any network. Any loss of private keys relating to digital wallets used to store the cryptocurrency assets we hold from time to time would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account.

 

Incorrect or fraudulent coin transactions may be irreversible.

 

Cryptocurrency transactions are irrevocable and stolen or incorrectly transferred coins may be irretrievable. As a result, any incorrectly executed or fraudulent coin transactions could adversely affect our investments and assets.

 

Coin transactions are not, from an administrative perspective, reversible without the consent and active participation of the recipient of the transaction. In theory, cryptocurrency transactions may be reversible with the control or consent of a majority of processing power on the network. Once a transaction has been verified and recorded in a block that is added to the blockchain, an incorrect transfer of a coin or a theft of coin generally will not be reversible and we may not be capable of seeking compensation for any such transfer or theft. It is possible that, through computer or human error, or through theft or criminal action, our coins could be transferred in incorrect amounts or to unauthorized third parties, or to uncontrolled accounts. Such events would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account.

 

Since there has been limited precedence set for financial accounting of bitcoin, Ethereum, and other digital assets, it is unclear how we will be required to account for digital assets transactions in the future.

 

Since there has been limited precedence set for the financial accounting of digital assets, it is unclear how we will be required to account for digital asset transactions or assets. Furthermore, a change in regulatory or financial accounting standards could result in the necessity to restate our financial statements. Such a restatement could negatively impact our business, prospects, financial condition and results of operation. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors.

 

The current state of capital markets, particularly for small companies, is expected to reduce our ability to obtain the financing necessary to continue our business. If we cannot raise the funds that we need to operate and expand our new business, we may go out of business and investors may lose their entire investment in us.

 

Like other smaller companies, we face difficulties in raising capital for our continued operations and to operate and expand our new business. We may not be able to raise money through the sale of our equity securities or through borrowing funds on terms we find acceptable.

 

We have had negative cash flows from operations and if we are not able to obtain further financing, our business operations may fail.

 

We had cash and cash equivalents in the amount of $28,448 and working capital of $5,203,837 as of March 31, 2018. We anticipate that we will require additional financing while we operate and expand our new business. Further, we anticipate that we will not have sufficient capital to fund our ongoing operations for the next twelve months. We would likely secure any additional financing necessary through a private placement of our common stock through a debt financing. There can be no assurance that any financing will be available to us, or, even if it is, if it will be offered on terms and conditions acceptable to us. Our inability to obtain additional financing in a sufficient amount when needed and upon terms and conditions acceptable to us, could have a material adverse effect upon us. If additional funds are raised by issuing equity securities, dilution to existing or future stockholders will result. If adequate funds are not available on acceptable terms when needed, we may be required to delay, scale back or eliminate the expansion of our new business.

 

We are currently dependent on one client which is a related party to our company.

 

We currently have one client, WENN Digital Inc., a related party to our company, which has engaged us to build out its business model, technology strategy, market entry strategy and capital structure, which includes a blockchain platform launch. While we have several potential clients in our sales pipeline, there can be no assurance that we will engage additional clients. If our sole client, a related party to our company, discontinues its business with us, or if our client modifies the terms of its business with us on less favorable terms, the effect on our business, operating results and financial condition may become adverse.

 

10
 

 

Our board of directors is composed of an equal number of independent directors and non-independent directors and our board composition may afford less protection to our stockholders than if our board of directors were composed of a majority of independent directors.

 

Our board of directors is comprised of six directors, three of whom are not independent. As a result, there may be a low level of board oversight on our management and our board of directors may be influenced by the concerns, issues or objectives of management, including the compensation and governance issues, to a greater extent than would occur with a majority of independent directors. In addition, non-independent directors may make a decision on a merger, change of control or other transactions or actions affecting our company without the consent of an independent director, which may lead to a conflict with the interest of our stockholders. As a result, our board composition may afford less protection to our stockholders than if our board of directors were composed of a majority of independent directors.

 

Our chief financial officer devotes approximately 50% of his working time to our company.

 

Michael Blum, our chief financial officer, secretary and treasurer, devotes approximately 50% of his working time, or approximately 20 hours per week, to our company. Because Mr. Blum works only part-time, instances may occur where he may not be immediately available to provide solutions to problems or address concerns that arise in the course of us conducting our business and thus adversely affect our business. In addition, Mr. Blum can become subject to conflicts of interest because he devotes part of his working time to other business endeavors, including consulting relationships with other entities, and have responsibilities to these other entities. Such conflicts include deciding how much time to devote to our affairs, as well as what business opportunities should be presented to us. Because of these relationships, Mr. Blum could be subject to conflicts of interest.

 

The directors and officers of our company, including Mr. Blum, are aware of the existence of laws governing the accountability of directors and officers for corporate opportunity and requiring disclosures by the directors and officers of conflicts of interest, and we will rely upon such laws in respect of any directors’ and officers’ conflicts of interest or in respect of any breaches of duty by any of our directors and officers. All such conflicts are to be disclosed by such directors or officers in accordance with applicable laws and the directors and officers are to govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.

 

Risks Related to Our Common Stock

 

Because our directors and officers control a large percentage of our voting stock, they have the ability to influence matters affecting our stockholders.

 

Our directors and officers control approximately 20.34% of our voting stock. As a result, they have the ability to influence matters affecting our stockholders, including the election of our directors, the acquisition of assets, and the issuance of securities. Because they control a significant portion of votes, it would be very difficult for investors to replace our management if the investors disagree with the way our business is being operated. Because the influence by our directors and officers could result in management making decisions that are in their best interest and not in the best interest of the investors, you may lose some or all of the value of your investment in our common stock.

 

Because we can issue additional shares of common stock, our stockholders may experience dilution in the future.

 

We are authorized to issue up to 75,000,000 shares of common stock, of which 20,874,524 shares of common stock were issued and outstanding as of July 17 , 2018. Our board of directors has the authority to cause us to issue additional shares of common stock without consent of our stockholders. Consequently, stockholders may experience dilution in their ownership of our stock in the future.

 

If the outstanding stock options or convertible notes are exercised or converted, then we would be required to issue additional shares of our common stock, which will result in dilution to our stockholders’ ownership of our stock.

 

There is currently no established public trading market for our common stock, which makes it difficult for our stockholders to resell their shares.

 

There is currently no established public trading market for our common stock. There is a limited public market for our common stock through our quotation on the OTC Pink operated by the OTC Markets Group. Trading in stocks quoted on the OTC Pink is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated or have little to do with a company’s operations or business prospects. Moreover, the OTC Pink is not a stock exchange, and trading of securities on the OTC Pink is often more sporadic than the trading of securities listed on a national securities exchange like the NASDAQ or the NYSE. Accordingly, stockholders may have difficulty reselling any of our shares. We cannot assure you that there will be a market for our common stock in the future.

 

11
 

 

Because we do not intend to pay any cash dividends on our common stock in the near future, our stockholders will not be able to receive a return on their shares unless they sell them.

 

We do not anticipate paying any cash dividends on our common stock in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, our results of operations, cash flows and financial condition, operating and capital requirements, and other factors the board considers relevant. We may never pay any dividends. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.

 

Our stock is a penny stock. Trading of our stock is restricted by the SEC’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our stock.

 

Our stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined in Rule 15g-9) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

 

The Financial Industry Regulatory Authority sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

 

In addition to the “penny stock” rules promulgated by the SEC, the Financial Industry Regulatory Authority ( “FINRA” ) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

 

Forward-Looking Statements

 

This prospectus contains forward-looking statements. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “intend”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, including the risks in the section entitled “Risk Factors”, uncertainties and other factors, which may cause our company’s or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

12
 

 

Use of Proceeds

 

We will not receive any proceeds from the sale of the shares of our common stock by the selling stockholders.

 

We will pay for expenses of this offering, except that the selling stockholders will pay any broker discounts or commissions or equivalent expenses and expenses of their legal counsels applicable to the sale of their shares.

 

Private Placements

 

The selling stockholders identified in this prospectus may offer and sell up to 1,020,000 shares of our common stock, up to 325,000 shares of our common stock that may be issued upon conversion of convertible notes and up to 4,556,823 shares of our common stock issued upon conversion of subscription receipts. The shares of our common stock, convertible notes and subscription receipts were acquired by the selling stockholders directly from us in private placements that were exempt from the registration requirements of the Securities Act of 1933.

 

October 30, 2017 Private Placement

 

On October 30, 2017, we entered into private placement subscription agreements, whereby we issued unsecured convertible notes to two subscribers in the aggregate principal amount of $325,000 and agreed to pay interest on the balance of the principal amount at the rate of 10.0% per annum. The principal amount of the convertible notes and the interest is payable in full on October 30, 2020. The principal amount, plus any interest accrued thereon, may be converted into shares of our common stock at a conversion price of $0.10 per share. We issued the convertible notes to two non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction in which we relied on the exemptions from the registration requirements provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

325,000 of the shares issuable upon conversion of these convertible notes are being offered pursuant to this prospectus by these two subscribers.

 

On October 30, 2017, we issued an aggregate of 5,600,000 shares of common stock to 35 subscribers for total consideration of $560,000. Of the 5,600,000 shares of our common stock we issued: (i) 1,150,000 shares pursuant to the exemption from registration under the Securities Act of 1933 , as amended provided by Section 4(a)(2), Section 4(a)(6) and/or Rule 506 of Regulation D promulgated under the Securities Act of 1933 , as amended to 5 investors who were “accredited investors” within the respective meanings ascribed to that term in Regulation D promulgated under the Securities Act of 1933 , as amended; and (ii) 4,450,000 shares to 30 non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

1,020,000 of these 5,600,000 shares are being offered pursuant to this prospectus by 34 of these 35 subscribers.

 

March 2018 Private Placements

 

On March 12 and 19, 2018, we completed private placements of an aggregate of 9,113,659 subscription receipts at a price of $0.60 per subscription receipt for aggregate gross proceeds of $5,468,195.40. On May 31, 2018, upon the occurrence of the escrow release condition (as defined below), each subscription receipt was automatically converted into one share of our common stock, for no additional consideration. The subscription amounts were held by an escrow agent until the escrow release condition. The escrow release condition was the receipt by our company of conditional approval for the listing of the shares of our common stock on a Canadian stock exchange. On May 29, 2018, the TSX Venture Exchange in Canada conditionally approved the listing of the shares of our common stock subject to our company fulfilling all requirements of the TSX Venture Exchange, including the conditions described below. Because the escrow release condition was satisfied prior to 5:00 p.m. (Vancouver time) on May 31, 2018, we delivered a notice to the escrow agent confirming that the escrow release condition had been satisfied. Upon receipt of the notice, the escrow agent released the subscription amounts to our company and each subscription receipt automatically converted into one share of our common stock without payment of any additional consideration. In connection with the closing of the private placements, we paid cash finder’s fees in the aggregate amount of $29,399.97 and we issued 160,865 shares of our common stock at a deemed price of $0.60 per share as the finder’s fee.

 

13
 

 

Of the 9,113,659 shares of our common stock we issued upon conversion of the subscription receipts: (i) 358,333 shares were issued pursuant to the exemption from registration under the  Securities Act of 1933 , as amended provided by Section 4(a)(2) and/or Rule 506 of Regulation D promulgated under the  Securities Act of 1933 , as amended to 11 investors who were “accredited investors” within the respective meanings ascribed to that term in Regulation D promulgated under the Securities Act of 1933 , as amended; and (ii) 8,755,326 shares were issued to 207 non-U.S. persons (as that term is defined in Regulation S of the  Securities Act of 1933 , as amended) in offshore transactions relying on Regulation S and/or Section 4(a)(2) of the  Securities Act of 1933 , as amended.

 

In connection with these private placements, we agreed with each selling stockholder who purchased these subscription receipts to prepare and file a registration statement with respect to 50% of the shares of our common stock issued upon conversion of the subscription receipts with the Securities and Exchange Commission within 90 days following the closing of the private placement and agreed to use commercially reasonable efforts to have the registration statement declared effective by the Securities and Exchange Commission as soon as possible after filing.

 

The conversion of the subscription receipts was the result of our company satisfying the escrow release condition, which was the receipt by our company of conditional approval for the listing of the shares of our common stock on a Canadian stock exchange. On May 29, 2018, the TSX Venture Exchange in Canada conditionally approved the listing of the shares of our common stock subject to our company fulfilling all requirements of the TSX Venture Exchange, including the following conditions:

 

the execution of a definitive business services agreement by our company with one of its arm’s length potential clients;
   
the engagement of a sponsor who will provide a comprehensive sponsor report to the satisfaction of the TSX Venture Exchange;
   
satisfactory receipt of Form 2A Personal Information Forms from, and the completion of satisfactory background checks relating to, all members/representatives of Business Instincts Group Inc. who have been previously disclosed to the TSX Venture Exchange to be performing services on behalf of our company;
   
the appointment of a director with strong public company experience (to the satisfaction of the TSX Venture Exchange) to our board of directors;
   
the appointment of a chief financial officer with a certified designation and strong auditing background (to the satisfaction of the TSX Venture Exchange);
   
satisfactory evidence/confirmation that the independent directors of our company have reviewed and approved all non-arm’s length/related party agreements;
   
satisfactory evidence that all related party agreements have been amended to ensure that the termination provisions do not allow for “golden parachute” provisions; and
   
receipt of a satisfactory legal opinion respecting (a) the regulatory framework under which we engage in our business; and (b) affirming that the business being conducted is legal in the relevant jurisdictions.

 

There can be no assurance that the shares of our common stock will be listed on the TSX Venture Exchange.

 

Selling Stockholders

 

The selling stockholders may offer and sell, from time to time, any or all of shares of our common stock that are issued and outstanding, shares of our common stock that may be issued upon conversion of convertible notes and shares of our common stock issued upon conversion of subscription receipts.

 

The following table sets forth certain information regarding the beneficial ownership of shares of common stock by the selling stockholders as of July 17 , 2018 and the number of shares of our common stock being offered pursuant to this prospectus. Except as otherwise described below, we believe that the selling stockholders have sole voting and investment powers over their shares.

 

Because the selling stockholders may offer and sell all or only some portion of the 5,901,823 shares of our common stock being offered pursuant to this prospectus, the numbers in the table below representing the amount and percentage of these shares of our common stock that will be held by the selling stockholders upon termination of the offering are only estimates based on the assumption that each selling stockholder will sell all of its shares of our common stock being offered in the offering.

 

Except as disclosed below, to our knowledge, none of the selling stockholders had or have any position or office, or other material relationship with us or any of our affiliates over the past three years.

 

Except as disclosed below, to our knowledge, none of the selling stockholders is a broker-dealer or an affiliate of a broker-dealer. We may require the selling stockholders to suspend the sales of the shares of our common stock being offered pursuant to this prospectus upon the occurrence of any event that makes any statement in this prospectus or the related registration statement untrue in any material respect or that requires the changing of statements in those documents in order to make statements in those documents not misleading.

 

                Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 

Name of Selling

Stockholder

  Shares Owned by the Selling Stockholder before the Offering (1)     Total Shares Offered in the Offering       # of
Shares (2)
    % of
Class (2),(3)
 
Oggy Talic     100,000 (4)     20,000 (5)     80,000       *  
Sohrab Mehregani     183,333 (6)     61,666 (7)     121,667       * %
Anthony Kook     50,000 (8)     10,000 (9)     40,000       *  

 

14
 

 

            Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder   Shares Owned by the Selling Stockholder before the Offering (1)            Total Shares Offered in the Offering              # of
Shares (2)
    % of
Class (2),(3)
 
SS Investment Group Inc. (10)     150,000 (11)     45,000 (12)     105,000       *  
Robert Shewchuk     420,000 (13)     90,000 (14)     330,000       1.58 %
Ryan Larkin     50,000 (15)     10,000 (16)     40,000       *  
Serafino Paul Mantini (17)     141,666 (18)     40,833 (19)     100,833       *  
Red to Black Inc. (20)     50,000 (21)     10,000 (22)     40,000       *  
Paul Readwin     100,000 (23)     20,000 (24)     80,000       *  
Michael A. Blum (25)     250,000 (26)     50,000 (27)     200,000       *
The Futura Corporation (28)     100,000 (29)     20,000 (30)     80,000       *  
Michael Mansfield     170,000 (31)     55,000 (32)     115,000       *  
727 Capital (33)     500,000 (34)     100,000 (35)     400,000       1.92 %
Anthony Jackson     250,000 (36)     50,000 (37)     200,000       *
Aussie Jiwani     25,000 (38)     5,000 (39)     20,000       *  
D. Ross McDonald     100,000 (40)     20,000 (41)     80,000       *  
Amin Somani     160,000 (42)     35,000 (43)     125,000       *
Corry Glass     100,000 (44)     20,000 (45)     80,000       *  
Voyager Holdings (46)     250,000 (47)     50,000 (48)     200,000       *
Cedarpoint Capital Inc. (49)     150,000 (50)     30,000 (51)     120,000       *
Adam Ross     100,000 (52)     20,000 (53)     80,000       *  
George Haddad     250,000 (54)     50,000 (55)     200,000       *
Copper Lion Capital (KRW Inc.) (56)     250,000 (57)     50,000 (58)     200,000       *
Kerry Moller     50,000 (59)     10,000 (60)     40,000       *  
Mark Marcello     100,000 (61)     20,000 (62)     80,000       *  
John Crawford     60,000 (63)     15,000 (64)     45,000       *  
Matthew Johansen     165,000 (65)     52,500 (66)     112,500       *  

 

15
 

 

                                           Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder   Shares Owned by the Selling Stockholder before the Offering (1)     Total Shares Offered in the Offering     # of
Shares (2)
    % of
Class (2),(3)
 
Brian Paes-Braga     500,000 (67)     100,000 (68)     400,000       1.92 %
Todd Eymann     120,000 (69)     30,000 (70)     90,000       *  
Scott Townsend     116,666 (71)     28,333 (72)     88,333       *  
0896323 B.C. Ltd. (73)     150,000 (74)     30,000 (75)     120,000       *
Pouya Joudaki     25,000 (76)     5,000 (77)     20,000       *  
Aaron Chan (78)     250,000 (79)(80)     50,000 (79)(81)     200,000       *
Hagen Ho (82)     50,000 (83)(84)     10,000 (83)(85)     40,000       *  
Oceanside Strategies Inc. (86)    

1,359,476

(87)     250,000 (88)     1,109,476       4.99 %
Hospitality Investors Special Situation Group Pvt. Ltd. (89)    

1,334,000

(90)(91)     367,000 (90)(92)    

967,000

      4.47 %
Justin Sleiman     16,666 (93)     8,333 (94)     8,333       *  
Anthony Ricci     16,666 (95)     8,333 (96)     8,333       *  
David DesLauriers     833,333 (97)     416,666 (98)     416,667       2.00 %
Michael DesLauriers     833,333 (99)     416,666 (100)     416,667       2.00 %
Pamela DesLauriers     833,333 (101)     416,666 (102)     416,667       2.00 %
Paul DesLauriers     833,333 (103)     416,666 (104)     416,667       2.00 %
Brett Whalen     41,667 (105)(106)     20,833 (105)(107)     20,834       *  
James Crawford     30,000 (108)     15,000 (109)     15,000       *  
Corey Shewchuk     20,000 (110)     10,000 (111)     10,000       *  
Muhammed Fatih Uran     20,000 (112)     10,000 (113)     10,000       *  
Michelle Shewchuk     20,000 (114)     10,000 (115)     10,000       *  
Ryan Lailey     20,000 (116)     10,000 (117)     10,000       *  
Ryder L. Holdings Ltd. (118)     20,000 (119)     10,000 (120)     10,000       *  
Shafik Hirani     20,000 (121)     10,000 (122)     10,000       *  
Neil Shanks     20,000 (123)     10,000 (124)     10,000       *  

 

16
 

 

                                             Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder   Shares Owned by the Selling Stockholder before the Offering (1)     Total Shares Offered in the Offering     # of
Shares (2)
    % of
Class (2),(3)
 
Palletcore Limited (125)     41,667 (126)     20,833 (127)     20,834       *  
Vanhart Capital Corporation (128)     20,000 (129)     10,000 (130)     10,000       *  
Daryl G. Jones     83,333 (131)     41,666 (132)     41,667       *  
Blackstone Capital Partners Inc. (133)     16,666 (134)     8,333 (135)     8,333       *  
Infinity Edge Consultants (136)     16,666 (137)(138)     8,333 (137)(139)     8,333       *  
Fortuna Investment Corp. (140)     16,666 (141)     8,333 (142)     8,333       *  
Justus Parmar     16,666 (137)(143)     8,333 (137)(144)     8,333       *  
Patriot Capital Corporation (145)     20,000 (146)     10,000 (147)     10,000       *  
Taylor MacDonald     80,000 (148)     40,000 (149)     40,000       *  
Ryan Bozajian     16,666 (150)     8,333 (151)     8,333       *  
Fraser Atkinson     20,000 (152)     10,000 (153)     10,000       *  
Countryman Investments Limited (154)     36,666 (155)     18,333 (156)     18,333       *  
Kyle de Jong     20,000 (157)     10,000 (158)     10,000       *  
Paul Roupinian     50,000 (159)     25,000 (160)     25,000       *  
Steven H. Bozajian     16,667 (161)     8,333 (162)     8,334       *  
AltEnergy, LLC (163)     41,667 (164)     20,833 (165)     20,834       *  
Ivano Veschini     25,000 (166)(167)     12,500 (166)(168)     12,500       *  
Roberto Chu     10,000 (166)(169)     5,000 (166)(170)     5,000       *  
Tyler Ross     10,000 (166)(171)     5,000 (166)(172)     5,000       *  
Prit Sidhu     10,000 (166)(173)     5,000 (166)(174)     5,000       *  
CSM Consulting Inc. (175)     10,000 (166)(176)     5,000 (166)(177)     5,000       *  
Chris Jackson     10,000 (166)(178)     5,000 (166)(179)     5,000       *  
Vibraslim Sales Inc. (180)     10,000 (166)(181)     5,000 (166)(182)     5,000       *  

 

17
 

 

                                                  Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder   Shares Owned by the Selling Stockholder before the Offering (1)     Total Shares Offered in the Offering     # of
Shares (2)
    % of
Class (2),(3)
 
Brady Middleditch     10,000 (166)(183)     5,000 (166)(184)     5,000       *  
Marco Pontillo Prec (185)     10,000 (166)(186)     5,000 (166)(187)     5,000       *  
Jennifer Pink     10,000 (166)(188)     5,000 (166)(189)     5,000       *  
Pink Holdings Inc. (190)     10,000 (166)(191)     5,000 (166)(192)     5,000       *  
Contact Financial Corporation (193)     10,000 (166)(194)     5,000 (166)(195)     5,000       *  
Kirk Gamley     10,000 (166)(196)     5,000 (166)(197)     5,000       *  
Andrea Bernicki     10,000 (166)(198)     5,000 (166)(199)     5,000       *  
Hatchette Holdings Ltd. (200)     10,000 (166)(201)     5,000 (166)(202)     5,000       *  
Nevin Sangha     10,000 (166)(203)     5,000 (166)(204)     5,000       *  
Edward D. Ford     10,000 (166)(205)     5,000 (166)(206)     5,000       *  
Dockside Capital Group Inc. (207)     10,000 (166)(208)     5,000 (166)(209)     5,000       *  
Adam Nothstein     10,000 (166)(210)     5,000 (166)(211)     5,000       *  
1022698 B.C. Ltd. (212)     33,333 (213)     16,666 (214)     16,667       *  
Michael Marosits     50,000 (137)(215)     25,000 (137)(216)     25,000       *  
Denny Hop     25,000 (217)     12,500 (218)     12,500       *  
Colleen Hop     25,000 (219)     12,500 (220)     12,500       *  
Al De Lucrezia     35,000 (137)(221)     17,500 (137)(222)     17,500       *  
Maurizio Grande     25,000 (137)(223)     12,500 (137)(224)     12,500       *  
Thomas O’Neill     25,000 (137)(225)     12,500 (137)(226)     12,500       *  
Steven Bone     10,000 (137)(227)     5,000 (137)(228)     5,000       *  
Bret Jones     10,000 (137)(229)     5,000 (137)(230)     5,000       *  
Pouya Joudaki     20,000 (137)(231)     10,000 (137)(232)     10,000       *  
Justin Kates     10,000 (137)(233)     5,000 (137)(234)     5,000       *  
Andrzej Kowalski     20,000 (137)(235)     10,000 (137)(236)     10,000       *  

 

18
 

 

                                                  Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder   Shares Owned by the Selling Stockholder before the Offering (1)     Total Shares Offered in the Offering     # of
Shares (2)
    % of
Class (2),(3)
 
Criterion Capital Corp. (237)     20,000 (137)(238)     10,000 (137)(239)     10,000       *  
Theresa H. Sheehan     20,000 (137)(240)     10,000 (137)(241)     10,000       *  
Jesse Levesque     20,000 (137)(242)     10,000 (137)(243)     10,000       *  
Brent Bonney     10,000 (137)(244)     5,000 (137)(245)     5,000       *  
Capital Event Management Ltd. (246)     20,000 (137)(247)     10,000 (137)(248)     10,000       *  
Melvyn Ackerman     10,000 (137)(249)     5,000 (137)(250)     5,000       *  
William T. Ellis     20,000 (137)(251)     10,000 (137)(252)     10,000       *  
Daniel Balter     25,000 (137)(253)     12,500 (137)(254)     12,500       *  
Pamela Parmar     16,666 (255)     8,333 (256)     8,333       *  
Millennium Trust Co., LLC Custodian FBO Paul E. Roupinian ROTH IRA (257)     18,334 (258)(259)     9,167 (258)(260)     9,167       *  
Timothy LeDoux     15,000 (261)     7,500 (262)     7,500       *  
Angelique G. Brunner Living Trust (263)     20,000 (264)     10,000 (265)     10,000       *  
Michael Ho     41,667 (266)     20,833 (267)     20,834       *  
Shawn Perger     16,700 (268)     8,350 (269)     8,350       *  
Bryan Henry     30,000 (137)(270)     15,000 (137)(271)     15,000       *  
Minicucci Financial Freedom Corp. (272)     20,000 (137)(273)     10,000 (137)(274)     10,000       *  
Calvin Everett     20,000 (137)(275)     10,000 (137)(276)     10,000       *  
MM Ventures BV (277)     41,667 (278)     20,833 (279)     20,834       *  
Nicholas Watters     20,000 (280)     10,000 (281)     10,000       *  
David Berg     25,000 (282)     12,500 (283)     12,500       *  
Charlene Berg     25,000 (284)     12,500 (285)     12,500       *  
Dino Minicucci     30,000 (286)     15,000 (287)     15,000       *  
Erminia Minicucci     30,000 (288)     15,000 (289)     15,000       *  

 

19
 

 

                                               Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder   Shares Owned by the Selling Stockholder before the Offering (1)     Total Shares Offered in the Offering       # of
Shares (2)
    % of
Class (2),(3)
 
Jonathan C. Farber     41,666 (290)     20,833 (291)     20,833       *  
Christopher LeDoux     15,000 (292)     7,500 (293)     7,500       *  
Bill Robinson     20,000 (294)     10,000 (295)     10,000       *  
Water Street Assets Inc. (296)     40,000 (297)     20,000 (298)     20,000       *  
Mani Chopra     30,000 (299)     15,000 (300)     15,000       *  
David Kiess     16,000 (301)     8,000 (302)     8,000       *  
Dave Kerr     10,000 (303)     5,000 (304)     5,000       *  
Seth Shapiro     40,000 (305)     20,000 (306)     20,000       *  
Dragon Capital Corp. (307)     50,000 (166)(308)     25,000 (166)(309)     25,000       *  
Trevor T. Isfeld and/or Lori Gunson     30,000 (166)(310)     15,000 (166)(311)     15,000       *  
Suk Mei Grace Lau     20,000 (166)(312)     10,000 (166)(313)     10,000       *  
Wayne You     15,000 (166)(314)     7,500 (166)(315)     7,500       *  
Jacky Y. Y. Chan     30,000 (166)(316)     15,000 (166)(317)     15,000       *  
Man Yin Chin     20,000 (166)(318)     10,000 (166)(319)     10,000       *  
Rosaire Bondy     15,000 (166)(320)     7,500 (166)(321)     7,500       *  
444175 BC Ltd. (322)     15,000 (166)(323)     7,500 (166)(324)     7,500       *  
Moyen Holdings Ltd. (325)     15,000 (166)(326)     7,500 (166)(327)     7,500       *  
Clifford E. Horwood Inc. (328)     15,000 (166)(329)     7,500 (166)(330)     7,500       *  
Richard T. Tuckey Inc. (331)     15,000 (166)(332)     7,500 (166)(333)     7,500       *  
Andy An Ti Tso     10,000 (166)(334)     5,000 (166)(335)     5,000       *  
Stacy Westphal-Larsen     83,300 (90)(336)     41,650 (90)(337)     41,650       *  
496001 Alberta Ltd. (338)     24,000 (90)(339)     12,000 (90)(340)     12,000       *  
Leung Seto and/or Kit Seto     6,300 (90)(341)     3,150 (90)(342)     3,150       *  

 

20
 

 

                                              Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder   Shares Owned by the Selling Stockholder before the Offering (1)     Total Shares Offered in the Offering     # of
Shares (2)
    % of
Class (2),(3)
 
Shameer Dada and/or Selina Dada     12,500 (90)(343)     6,250 (90)(344)     6,250       *  
Kelvin Luk     9,100 (90)(345)     4,550 (90)(346)     4,550       *  
Paul G. Daly     28,500 (90)(347)     14,250 (90)(348)     14,250       *  
Capitalize Consulting Corp. (349)     10,000 (90)(350)     5,000 (90)(351)     5,000       *  
B.D. Corporate Services Inc. (352)     10,000 (90)(353)     5,000 (90)(354)     5,000       *  
Brad Docherty     10,000 (90)(355)     5,000 (90)(356)     5,000       *  
Jacob Plotsky     12,500 (90)(357)     6,250 (90)(358)     6,250       *  
Brad Makowecki     17,000 (90)(359)     8,500 (90)(360)     8,500       *  
Joshua Herman     34,000 (90)(361)     17,000 (90)(362)     17,000       *  
Janice Yu     17,000 (90)(363)     8,500 (90)(364)     8,500       *  
Raul Ikonen     8,300 (90)(365)     4,150 (90)(366)     4,150       *  
Darren Cardno     25,000 (90)(367)     12,500 (90)(368)     12,500       *  
Tracy Yang Hui Qin     25,000 (90)(369)     12,500 (90)(370)     12,500       *  
Chung Raymond Yuen     17,000 (90)(371)     8,500 (90)(372)     8,500       *  
Anju Fan     17,000 (90)(373)     8,500 (90)(374)     8,500       *  
Ryan Wong     12,500 (90)(375)     6,250 (90)(376)     6,250       *  
1883159 Alberta Ltd. (377)     17,000 (90)(378)     8,500 (90)(379)     8,500       *  
Felix Seto     4,100 (90)(380)     2,050 (90)(381)     2,050       *  
Karim Mohamedani     40,000 (90)(382)     20,000 (90)(383)     20,000       *  
Devin Itterman     12,500 (90)(384)     6,250 (90)(385)     6,250       *  
Craig Lees     31,600 (90)(386)     15,800 (90)(387)     15,800       *  
Donald Eilers     18,500 (90)(388)     9,250 (90)(389)     9,250       *  
Sami Hirji     20,000 (90)(390)     10,000 (90)(391)     10,000       *  
Eli Abergel     10,000 (90)(392)     5,000 (90)(393)     5,000       *  

 

21
 

 

                Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder   Shares Owned by the
Selling Stockholder before the Offering (1)
                      Total Shares Offered in the Offering                       # of
Shares (2)
    % of
Class (2),(3)
 
Clarke Pilkington     40,000 (90)(394)     20,000 (90)(395)     20,000       *  
Hui Wen Zhou     17,000 (90)(396)     8,500 (90)(397)     8,500       *  
Thurman So     17,000 (90)(398)     8,500 (90)(399)     8,500       *  
Yuxing Zhou     26,000 (90)(400)     13,000 (90)(401)     13,000       *  
Tero Kosonen     12,500 (90)(402)     6,250 (90)(403)     6,250       *  
Naizer Kabani     20,000 (90)(404)     10,000 (90)(405)     10,000       *  
Mason Kent     12,500 (90)(406)     6,250 (90)(407)     6,250       *  
Rania Botts     12,000 (166)(408)     6,000 (166)(409)     6,000       *  
Greencastle Resources Ltd. (410)     2,000 (90)(411)     1,000 (90)(412)     1,000       *  
Paul Dipasquale     2,000 (90)(413)     1,000 (90)(414)     1,000       *  
Lorne Warner     2,000 (90)(415)     1,000 (90)(416)     1,000       *  
Carla Bodor     2,000 (90)(417)     1,000 (90)(418)     1,000       *  
Lori Quinn     2,000 (90)(419)     1,000 (90)(420)     1,000       *  
Burton Egger     6,000 (90)(421)     3,000 (90)(422)     3,000       *  
Rex Obermann     2,000 (90)(423)     1,000 (90)(424)     1,000       *  
Brian Tingle     2,000 (90)(425)     1,000 (90)(426)     1,000       *  
Terry Sklavenitis     2,000 (90)(427)     1,000 (90)(428)     1,000       *  
Sandina Sklavenitis     2,000 (90)(429)     1,000 (90)(430)     1,000       *  
Michael Blady     2,000 (90)(431)     1,000 (90)(432)     1,000       *  
Guy Elliott     2,000 (90)(433)     1,000 (90)(434)     1,000       *  
Ronald Bourgeois     2,000 (90)(435)     1,000 (90)(436)     1,000       *  
James Gibson     2,000 (90)(437)     1,000 (90)(438)     1,000       *  
Tamara Gibson     2,000 (90)(439)     1,000 (90)(440)     1,000       *  
Michael J. Thompson     2,000 (90)(441)     1,000 (90)(442)     1,000       *  
Kelly Dhaliwal     2,000 (90)(443)     1,000 (90)(444)     1,000       *  
Farshad Shirvani     2,000 (90)(445)     1,000 (90)(446)     1,000       *  

 

22
 

 

            Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder  

SharesOwned by the Selling Stockholder before the Offering (1)

                   Total Shares Offered in the Offering                   # of
Shares (2)
    % of
Class (2),(3)
 
Yazan Al Homsi     2,000 (90)(447)     1,000 (90)(448)     1,000       *  
Darryl Glenn     2,000 (90)(449)     1,000 (90)(450)     1,000       *  
Sharilyn Glenn     2,000 (90)(451)     1,000 (90)(452)     1,000       *  
799462 Alberta Ltd. (453)     60,000 (90)(454)     30,000 (90)(455)     30,000       *  
Harvey Lawson     2,000 (90)(456)     1,000 (90)(457)     1,000       *  
Ron Stefanucci     2,000 (90)(458)     1,000 (90)(459)     1,000       *  
Jennifer Auton     2,000 (90)(460)     1,000 (90)(461)     1,000       *  
Ying (Annie) Liu     50,000 (90)(462)     25,000 (90)(463)     25,000       *  
Fujian (James) Conh     14,000 (90)(464)     7,000 (90)(465)     7,000       *  
Ellen Chew     2,000 (90)(466)     1,000 (90)(467)     1,000       *  
Harry Chew     2,000 (90)(468)     1,000 (90)(469)     1,000       *  
Galloway Financial Services (470)     2,000 (90)(471)     1,000 (90)(472)     1,000       *  
Birchpoint Holdings Inc. (473)     2,000 (90)(474)     1,000 (90)(475)     1,000       *  
Cristin Johansen     65,000 (90)(476)     32,500 (90)(477)     32,500       *  
Hugh Harlingten     20,000 (90)(478)     10,000 (90)(479)     10,000       *  
Lorill Harlingten     7,000 (90)(480)     3,500 (90)(481)     3,500       *  
Seann Harlingten     7,000 (90)(482)     3,500 (90)(483)     3,500       *  
Daniel Whittaker     2,000 (90)(484)     1,000 (90)(485)     1,000       *  
Brenda Kops     2,000 (90)(486)     1,000 (90)(487)     1,000       *  
Peter Espig     100,000 (90)(488)     50,000 (90)(489)     50,000       *  
Song Chen     20,000 (90)(490)     10,000 (90)(491)     10,000       *  
Lorena E. Brammer     6,000 (90)(492)     3,000 (90)(493)     3,000       *  
Parvaneh Shirvani     2,000 (90)(494)     1,000 (90)(495)     1,000       *  
Gordon Holmes     100,000 (90)(496)     50,000 (90)(497)     50,000       *  
11285 Holdings Ltd. (498)     335,000 (90)(499)     167,500 (90)(500)     167,500       *

 

23
 

 

              Number of Shares to Be Owned by Selling Stockholder After the
Offering and Percent of Total
Issued and Outstanding Shares (1)
 
Name of Selling Stockholder  

Shares Owned by the Selling Stockholder before the Offering (1)

    Total Shares Offered in the Offering     # of
Shares (2)
    % of
Class (2),(3)
 
Yuan Zhang and/or Haihua Wu     50,000 (90)(501)     25,000 (90)(502)     25,000       *  
John Welsh     100,000 (90)(503)     50,000 (90)(504)     50,000       *  
Lu Liu     50,000 (90)(505)     25,000 (90)(506)     25,000       *  
Xiao Wei     20,000 (90)(507)     10,000 (90)(508)     10,000       *  
Gu Kai Xiang     20,000 (90)(509)     10,000 (90)(510)     10,000       *  
Gu Li Hua     25,000 (90)(511)     12,500 (90)(512)     12,500       *  
Shuqin Zhao     50,000 (90)(513)     25,000 (90)(514)     25,000       *  
D. Baker Capital Inc. (515)     10,000 (90)(516)     5,000 (90)(517)     5,000       *  
David Baker     10,000 (90)(518)     5,000 (90)(519)     5,000       *  
0702232 BC Ltd. (520)     10,000 (90)(521)     5,000 (90)(522)     5,000       *  
Camille Turner     10,000 (90)(523)     5,000 (90)(524)     5,000       *  
Patrick Chan     80,000 (90)(525)     40,000 (90)(526)     40,000       *  
Gladys Chan     80,000 (90)(527)     40,000 (90)(528)     40,000       *  
Fan Zhang     20,000 (90)(529)     10,000 (90)(530)     10,000       *  
Ka Khoon Tan     41,600 (90)(531)     20,800 (90)(532)     20,800       *  
Jason White     2,000 (90)(533)     1,000 (90)(534)     1,000       *  
Melissa McKenzie     2,000 (90)(535)     1,000 (90)(536)     1,000       *  
Bill Fox     100,000 (90)(537)     50,000 (90)(538)     50,000       *  
Emma Panenka     70,000 (90)(539)     35,000 (90)(540)     35,000       *  
Fab Carella     50,000 (90)(541)     25,000 (90)(542)     25,000       *  
Munir M. Ali     100,000 (90)(543)     50,000 (90)(544)     50,000       *  
William Panenka     70,000 (90)(545)     35,000 (90)(546)     35,000       *  
Dr. William Panenka (547)     70,000 (90)(548)     35,000 (90)(549)     35,000       *  
Totals    

16,323,135

      5,901,823      

10,421,312

         

 

24
 

 

Notes

 

* Less than 1%.

 

  (1) Beneficial ownership is determined in accordance with Securities and Exchange Commission rules and generally includes voting or investment power with respect to shares of common stock. Shares of common stock subject to options, warrants and convertible notes currently exercisable or convertible, or exercisable or convertible within 60 days, are counted as outstanding for computing the percentage of the person holding such options, warrants or convertible notes but are not counted as outstanding for computing the percentage of any other person.
     
  (2) We have assumed that the selling stockholders will sell all of the shares being offered in this offering.
     
  (3)

Based on 20,874,524 shares of our common stock issued and outstanding as of July 17, 2018.

     
  (4) Consists of 100,000 shares of our common stock.
     
  (5) Consists of 20,000 shares of our common stock.
     
  (6) Consists of 100,000 shares of our common stock and 83,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (7) Consists of 20,000 shares of our common stock and 41,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (8) Consists of 50,000 shares of our common stock.
     
  (9) Consists of 10,000 shares of our common stock.
     
  (10) Stavros Stefanopoulos exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by SS Investment Group Inc.
     
  (11) Consists of 100,000 shares of our common stock and 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (12) Consists of 20,000 shares of our common stock and 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (13) Consists of 400,000 shares of our common stock and 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (14) Consists of 80,000 shares of our common stock and 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (15) Consists of 50,000 shares of our common stock.
     
  (16) Consists of 10,000 shares of our common stock.
     
  (17) Serafino Paul Mantini is a business partner of Cameron Chell, a director of our company, via Business Instincts Group Inc., a company of which Mr. Chell is a director, officer and an indirect shareholder.
     
  (18) Consists of 100,000 shares of our common stock and 41,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (19) Consists of 20,000 shares of our common stock and 20,833 shares of our common stock issued upon conversion of subscription receipts.
     
  (20) Swapan Kakumanu exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Red to Black Inc. Swapan Kakumanu is the controller of our company.
     
  (21) Consists of 50,000 shares of our common stock.
     
  (22) Consists of 10,000 shares of our common stock.
     
  (23) Consists of 100,000 shares of our common stock.
     
  (24) Consists of 20,000 shares of our common stock.
     
  (25) Michael A. Blum has been the chief financial officer, secretary, treasurer and a director of our company since October 9, 2017.

 

25
 

 

  (26) Consists of 250,000 shares of our common stock.
     
  (27) Consists of 50,000 shares of our common stock.
     
  (28) To our knowledge, Amar Doman exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by The Futura Corporation.
     
  (29) Consists of 100,000 shares of our common stock.
     
  (30) Consists of 20,000 shares of our common stock.
     
  (31) Consists of 100,000 shares of our common stock and 70,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (32) Consists of 20,000 shares of our common stock and 35,000 shares of our common stock issued upon conversion of subscription receipts.
     
     
  (33) To our knowledge, David Duggan exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by 727 Capital.
     
  (34) Consists of 500,000 shares of our common stock.
     
  (35) Consists of 100,000 shares of our common stock.
     
  (36) Consists of 250,000 shares of our common stock.
     
  (37) Consists of 50,000 shares of our common stock.
     
  (38) Consists of 25,000 shares of our common stock.
     
  (39) Consists of 5,000 shares of our common stock.
     
  (40) Consists of 100,000 shares of our common stock.
     
  (41) Consists of 20,000 shares of our common stock.
     
  (42) Consists of 150,000 shares of our common stock held in the name of Amin Somani and 10,000 shares of our common stock issued upon conversion of subscription receipts held in the name of Haywood Securities Inc.
     
  (43) Consists of 30,000 shares of our common stock held in the name of Amin Somani and 5,000 shares of our common stock issued upon conversion of subscription receipts held in the name of Haywood Securities Inc.
     
  (44) Consists of 100,000 shares of our common stock.
     
  (45) Consists of 20,000 shares of our common stock.
     
  (46) To our knowledge, Dirk Blum exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Voyager Holdings.
     
  (47) Consists of 250,000 shares of our common stock.
     
  (48) Consists of 50,000 shares of our common stock.
     
  (49) To our knowledge, Tarik Elsaghir exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Cedarpoint Capital Inc.
     
  (50) Consists of 150,000 shares of our common stock.
     
  (51) Consists of 30,000 shares of our common stock.
     
  (52) Consists of 100,000 shares of our common stock.
     
  (53) Consists of 20,000 shares of our common stock.
     
  (54) Consists of 250,000 shares of our common stock.
     
  (55) Consists of 50,000 shares of our common stock.
     
  (56) To our knowledge, Kyle Washington exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Copper Lion Capital (KRW Inc.).
     
  (57) Consists of 250,000 shares of our common stock.
     
  (58) Consists of 50,000 shares of our common stock.
     
  (59) Consists of 50,000 shares of our common stock.

 

26
 

 

  (60) Consists of 10,000 shares of our common stock.
     
  (61) Consists of 100,000 shares of our common stock.
     
  (62) Consists of 20,000 shares of our common stock.
     
  (63) Consists of 50,000 shares of our common stock held in the name of John Crawford and Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts held in the name of John (Ted) Crawford.
     
  (64) Consists of 10,000 shares of our common stock held in the name of John Crawford and Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts held in the name of John (Ted) Crawford.
     
  (65) Consists of 100,000 shares of our common stock held in the name of Haywood Securities Inc. and 65,000 shares of our common stock issued upon conversion of subscription receipts held in the name of Canaccord Genuity Corp.
     
  (66) Consists of 20,000 shares of our common stock and 32,500 shares of our common stock issued upon conversion of subscription receipts held in the name of Canaccord Genuity Corp.
     
  (67) Consists of 500,000 shares of our common stock.
     
  (68) Consists of 100,000 shares of our common stock.
     
  (69) Consists of 100,000 shares of our common stock held in the name of PI Financial Corp. ITF Todd Eymann and 20,000 shares of our common stock issued upon conversion of subscription receipts held in the name of PI Financial Corp.
     
  (70) Consists of 20,000 shares of our common stock held in the name of PI Financial Corp. ITF Todd Eymann and 10,000 shares of our common stock issued upon conversion of subscription receipts held in the name of PI Financial Corp.
     
  (71) Consists of 100,000 shares of our common stock and 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (72) Consists of 20,000 shares of our common stock and 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (73) To our knowledge, Dan Kriznic exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by 0896323 B.C. Ltd.
     
  (74) Consists of 150,000 shares of our common stock.
     
  (75) Consists of 30,000 shares of our common stock.
     
  (76) Consists of 25,000 shares of our common stock.
     
  (77) Consists of 5,000 shares of our common stock.
     
  (78) Aaron Chan is registered as a dealing representative (investment dealer) under the laws of the Canadian provinces of Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Prince Edward Island and Saskatchewan. To our knowledge, Mr. Chan is not a broker-dealer registered under the Securities Exchange Act of 1934 and is not engaged in an activity that would require him to be so registered.
     
  (79) Held in the name of Canaccord Genuity Corp. ITF Aaron Chan.
     
  (80) Consists of 250,000 shares of our common stock.
     
  (81) Consists of 50,000 shares of our common stock.
     
  (82) Hagen Ho is registered as a dealing representative (investment dealer) under the laws of the Canadian provinces of Alberta, British Columbia, Manitoba and Ontario. To our knowledge, Mr. Ho is not a broker-dealer registered under the Securities Exchange Act of 1934 and is not engaged in an activity that would require him to be so registered.
     
  (83) Held in the name of Canaccord Genuity Corp. ITF Hagen Ho.
     
  (84) Consists of 50,000 shares of our common stock.
     
  (85) Consists of 10,000 shares of our common stock.

 

27
 

 

  (86) To our knowledge, Dain Currie exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Oceanside Strategies Inc.
     
  (87) Consists of 1,359,476 shares of our common stock issuable upon conversion of the aggregate principal amounts of the convertible notes. The convertible notes are not convertible into shares of our common stock to the extent that, after giving effect to such conversion, the holder or any of its affiliates would beneficially own in excess of 4.99% of the issued and outstanding shares of our common stock after such conversion.
     
  (88) Consists of 250,000 shares of our common stock issuable upon conversion of the convertible note.
     
  (89) Fereed Mangalji exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Hospitality Investors Special Situation Group Pvt. Ltd.
     
  (90) Held in the name of Canaccord Genuity Corp.
     
  (91)

Consists of 750,000 shares of our common stock issuable upon conversion of the principal amount of the convertible note and 584,000 shares of our common stock issued upon conversion of subscription receipts.

     
  (92) Consists of 75,000 shares of our common stock issuable upon conversion of the convertible note and 292,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (93) Consists of 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (94) Consists of 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (95) Consists of 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (96) Consists of 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (97) Consists of 833,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (98) Consists of 416,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (99) Consists of 833,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (100) Consists of 416,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (101) Consists of 833,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (102) Consists of 416,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (103) Consists of 833,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (104) Consists of 416,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (105) Held in the name of Fidelity Clearing Canada ULC ITF Brett Whalen.
     
  (106) Consists of 41,667 shares of our common stock issued upon conversion of subscription receipts.
     
  (107) Consists of 20,833 shares of our common stock issued upon conversion of subscription receipts.
     
  (108) Consists of 30,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (109) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (110) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (111) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (112) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (113) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (114) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (115) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (116) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (117) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (118) To our knowledge, Levi Snow exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Ryder L. Holdings Ltd.

 

28
 

 

  (119) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (120) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (121) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (122) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (123) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (124) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (125) Justin Wall exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Palletcore Limited.
     
  (126) Consists of 41,667 shares of our common stock issued upon conversion of subscription receipts.
     
  (127) Consists of 20,833 shares of our common stock issued upon conversion of subscription receipts.
     
  (128) Paul Reinhart and Theresa Reinhart exercise voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Vanhart Capital Corporation.
     
  (129) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (130) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (131) Consists of 83,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (132) Consists of 41,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (133) Mike Veldhuis exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Blackstone Capital Partners Inc.
     
  (134) Consists of 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (135) Consists of 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (136) Paul Parmar exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Infinity Edge Consultants.
     
  (137) Held in the name of PI Financial Corp.
     
  (138) Consists of 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (139) Consists of 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (140) Justus Parmar exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Fortuna Investment Corp.
     
  (141) Consists of 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (142) Consists of 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (143) Consists of 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (144) Consists of 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (145) Morgan Good exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Patriot Capital Corporation.
     
  (146) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (147) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (148) Consists of 80,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (149) Consists of 40,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (150) Consists of 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (151) Consists of 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (152) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (153) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.

 

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  (154) G. David Richardson exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Countryman Investments Limited.
     
  (155) Consists of 36,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (156) Consists of 18,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (157) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (158) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (159) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (160) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (161) Consists of 16,667 shares of our common stock issued upon conversion of subscription receipts.
     
  (162) Consists of 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (163) Russell Stidolph exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by AltEnergy, LLC.
     
  (164) Consists of 41,667 shares of our common stock issued upon conversion of subscription receipts.
     
  (165) Consists of 20,833 shares of our common stock issued upon conversion of subscription receipts.
     
  (166) Held in the name of Haywood Securities Inc.
     
  (167) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (168) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (169) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (170) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (171) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (172) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (173) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (174) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (175) To our knowledge, Jason Gigliotti exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by CSM Consulting Inc.
     
  (176) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (177) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (178) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (179) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (180) To our knowledge, Chris Jackson exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Vibraslim Sales Inc.
     
  (181) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (182) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (183) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (184) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (185) To our knowledge, Marco Pontillo exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Marco Pontillo Prec.
     
  (186) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (187) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (188) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (189) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.

 

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  (190) To our knowledge, Derek Pink exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Pink Holdings Inc.
     
  (191) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (192) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (193) To our knowledge, Kirk Gamley exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Contact Financial Corporation.
     
  (194) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (195) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (196) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (197) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (198) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (199) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts. .
     
  (200) To our knowledge, Robin Gamley exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Hatchette Holdings Ltd.
     
  (201) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (202) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (203) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (204) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (205) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (206) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (207) Douglas Ford exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Dockside Capital Group Inc.
     
  (208) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (209) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (210) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (211) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (212) Robert Abenante exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by 1022698 B.C. Ltd.
     
  (213) Consists of 33,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (214) Consists of 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (215) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (216) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (217) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (218) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (219) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (220) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (221) Consists of 35,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (222) Consists of 17,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (223) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (224) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (225) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.

 

31
 

 

  (226) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (227) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (228) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (229) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (230) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (231) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (232) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (233) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (234) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (235) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (236) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (237) Douglas Mason exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Criterion Capital Corp.
     
  (238) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (239) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (240) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (241) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (242) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (243) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (244) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (245) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (246) Neil Currie exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Capital Event Management Ltd.
     
  (247) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (248) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (249) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (250) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (251) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (252) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (253) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (254) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (255) Consists of 16,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (256) Consists of 8,333 shares of our common stock issued upon conversion of subscription receipts.
     
  (257) Paul E. Roupinian exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Millennium Trust Co., LLC Custodian FBO Paul E. Roupinian ROTH IRA.
     
  (258) Held in the name of Millennium Trust Co., LLC Custodian FBO Paul E. Roupinian ROTH IRA.
     
  (259) Consists of 18,334 shares of our common stock issued upon conversion of subscription receipts.
     
  (260) Consists of 9,167 shares of our common stock issued upon conversion of subscription receipts.
     
  (261) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (262) Consists of 7,500 shares of our common stock issued upon conversion of subscription receipts.

 

32
 

 

  (263) To our knowledge, Angelique G. Brunner exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Angelique G. Brunner Living Trust.
     
  (264) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (265) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (266) Consists of 41,667 shares of our common stock issued upon conversion of subscription receipts.
     
  (267) Consists of 20,833 shares of our common stock issued upon conversion of subscription receipts.
     
  (268) Consists of 16,700 shares of our common stock issued upon conversion of subscription receipts.
     
  (269) Consists of 8,350 shares of our common stock issued upon conversion of subscription receipts.
     
  (270) Consists of 30,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (271) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (272) Erminia Minicucci exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Minicucci Financial Freedom Corp.
     
  (273) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (274) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (275) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (276) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (277) Maarten Elshove exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by MM Ventures BV.
     
  (278) Consists of 41,667 shares of our common stock issued upon conversion of subscription receipts.
     
  (279) Consists of 20,833 shares of our common stock issued upon conversion of subscription receipts.
     
  (280) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (281) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (282) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (283) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (284) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (285) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (286) Consists of 30,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (287) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (288) Consists of 30,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (289) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (290) Consists of 41,666 shares of our common stock issued upon conversion of subscription receipts.
     
  (291) Consists of 20,833 shares of our common stock issued upon conversion of subscription receipts.
     
  (292) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (293) Consists of 7,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (294) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (295) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (296) Greg Hall exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Water Street Assets Inc.
     
  (297) Consists of 40,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (298) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (299) Consists of 30,000 shares of our common stock issued upon conversion of subscription receipts.

 

33
 

 

  (300) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (301) Consists of 16,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (302) Consists of 8,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (303) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (304) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (305) Consists of 40,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (306) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (307) Mohammad Shaygan exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Dragon Capital Corp.
     
  (308) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (309) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (310) Consists of 30,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (311) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (312) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (313) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (314) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (315) Consists of 7,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (316) Consists of 30,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (317) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (318) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (319) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (320) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (321) Consists of 7,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (322) Ralph Street exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by 444175 BC Ltd.
     
  (323) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (324) Consists of 7,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (325) Archie Campbell exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Moyen Holdings Ltd.
     
  (326) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (327) Consists of 7,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (328) Clifford Horwood exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Clifford E. Horwood Inc.
     
  (329) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (330) Consists of 7,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (331) Richard Tuckey exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Richard T. Tuckey Inc.
     
  (332) Consists of 15,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (333) Consists of 7,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (334) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (335) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.

 

34
 

 

  (336) Consists of 83,300 shares of our common stock issued upon conversion of subscription receipts.
     
  (337) Consists of 41,650 shares of our common stock issued upon conversion of subscription receipts.
     
  (338) Adrian Makowecki and Janice Makowecki exercise voting and dispositive power with respect to the shares of our common stock that are beneficially owned by 496001 Alberta Ltd.
     
  (339) Consists of 24,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (340) Consists of 12,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (341) Consists of 6,300 shares of our common stock issued upon conversion of subscription receipts.
     
  (342) Consists of 3,150 shares of our common stock issued upon conversion of subscription receipts.
     
  (343) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (344) Consists of 6,250 shares of our common stock issued upon conversion of subscription receipts.
     
  (345) Consists of 9,100 shares of our common stock issued upon conversion of subscription receipts.
     
  (346) Consists of 4,550 shares of our common stock issued upon conversion of subscription receipts.
     
  (347) Consists of 28,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (348) Consists of 14,250 shares of our common stock issued upon conversion of subscription receipts.
     
  (349) Brad Docherty and Eli David Abergel exercise voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Capitalize Consulting Corp.
     
  (350) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (351) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (352) Brad Docherty exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by B.D. Corporate Services Inc.
     
  (353) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (354) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (355) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (356) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (357) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (358) Consists of 6,250 shares of our common stock issued upon conversion of subscription receipts.
     
  (359) Consists of 17,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (360) Consists of 8,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (361) Consists of 34,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (362) Consists of 17,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (363) Consists of 17,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (364) Consists of 8,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (365) Consists of 8,300 shares of our common stock issued upon conversion of subscription receipts.
     
  (366) Consists of 4,150 shares of our common stock issued upon conversion of subscription receipts.
     
  (367) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (368) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (369) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (370) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (371) Consists of 17,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (372) Consists of 8,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (373) Consists of 17,000 shares of our common stock issued upon conversion of subscription receipts.

 

35
 

 

  (374) Consists of 8,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (375) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (376) Consists of 6,250 shares of our common stock issued upon conversion of subscription receipts.
     
  (377) Stephen Herman exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by 1883159 Alberta Ltd.
     
  (378) Consists of 17,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (379) Consists of 8,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (380) Consists of 4,100 shares of our common stock issued upon conversion of subscription receipts.
     
  (381) Consists of 2,050 shares of our common stock issued upon conversion of subscription receipts.
     
  (382) Consists of 40,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (383) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (384) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (385) Consists of 6,250 shares of our common stock issued upon conversion of subscription receipts.
     
  (386) Consists of 31,600 shares of our common stock issued upon conversion of subscription receipts.
     
  (387) Consists of 15,800 shares of our common stock issued upon conversion of subscription receipts.
     
  (388) Consists of 18,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (389) Consists of 9,250 shares of our common stock issued upon conversion of subscription receipts.
     
  (390) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (391) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (392) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (393) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (394) Consists of 40,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (395) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (396) Consists of 17,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (397) Consists of 8,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (398) Consists of 17,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (399) Consists of 8,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (400) Consists of 26,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (401) Consists of 13,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (402) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (403) Consists of 6,250 shares of our common stock issued upon conversion of subscription receipts.
     
  (404) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (405) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (406) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (407) Consists of 6,250 shares of our common stock issued upon conversion of subscription receipts.
     
  (408) Consists of 12,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (409) Consists of 6,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (410) Anthony Roodenburg and James Pirie exercise voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Greencastle Resources Ltd.
     
  (411) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.

 

36
 

 

  (412) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (413) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (414) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (415) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (416) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (417) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (418) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (419) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (420) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (421) Consists of 6,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (422) Consists of 3,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (423) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (424) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (425) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (426) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (427) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (428) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (429) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (430) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (431) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (432) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (433) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (434) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (435) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (436) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (437) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (438) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (439) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (440) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (441) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (442) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (443) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (444) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (445) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (446) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (447) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (448) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (449) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (450) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (451) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.

 

37
 

 

  (452) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (453) Tim Bergen and Leah Bergen exercise voting and dispositive power with respect to the shares of our common stock that are beneficially owned by 799462 Alberta Ltd.
     
  (454) Consists of 60,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (455) Consists of 30,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (456) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (457) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (458) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (459) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (460) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (461) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (462) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (463) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (464) Consists of 14,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (465) Consists of 7,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (466) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (467) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (468) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (469) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (470) Wayne Tisdale exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Galloway Financial Services.
     
  (471) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (472) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (473) Dan Whittaker and Brenda Kops exercise voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Birchpoint Holdings Inc.
     
  (474) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (475) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (476) Consists of 65,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (477) Consists of 32,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (478) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (479) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (480) Consists of 7,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (481) Consists of 3,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (482) Consists of 7,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (483) Consists of 3,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (484) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (485) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (486) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (487) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (488) Consists of 100,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (489) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.

 

38
 

 

  (490) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (491) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (492) Consists of 6,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (493) Consists of 3,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (494) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (495) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (496) Consists of 100,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (497) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (498) Morris Chen exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by 11285 Holdings Ltd.
     
  (499) Consists of 335,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (500) Consists of 167,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (501) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (502) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (503) Consists of 100,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (504) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (505) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (506) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (507) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (508) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (509) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (510) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (511) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (512) Consists of 12,500 shares of our common stock issued upon conversion of subscription receipts.
     
  (513) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (514) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (515) David Baker exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by D. Baker Capital Inc.
     
  (516) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (517) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (518) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (519) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (520) Camille Turner exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by 0702232 BC Ltd.
     
  (521) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (522) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (523) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (524) Consists of 5,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (525) Consists of 80,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (526) Consists of 40,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (527) Consists of 80,000 shares of our common stock issued upon conversion of subscription receipts.

 

39
 

 

  (528) Consists of 40,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (529) Consists of 20,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (530) Consists of 10,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (531) Consists of 41,600 shares of our common stock issued upon conversion of subscription receipts.
     
  (532) Consists of 20,800 shares of our common stock issued upon conversion of subscription receipts.
     
  (533) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (534) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (535) Consists of 2,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (536) Consists of 1,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (537) Consists of 100,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (538) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (539) Consists of 70,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (540) Consists of 35,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (541) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (542) Consists of 25,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (543) Consists of 100,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (544) Consists of 50,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (545) Consists of 70,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (546) Consists of 35,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (547) William Panenka exercises voting and dispositive power with respect to the shares of our common stock that are beneficially owned by Dr. William Panenka.
     
  (548) Consists of 70,000 shares of our common stock issued upon conversion of subscription receipts.
     
  (549) Consists of 35,000 shares of our common stock issued upon conversion of subscription receipts.

 

Plan of Distribution

 

Each of the selling stockholders named above and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of his, her or its shares of our common stock covered hereby on the OTC Markets Group’s OTC Pink or any other stock exchange, market or trading facility on which the shares of our common stock are traded or in private transactions. A selling stockholder may sell all or a portion of the shares being offered pursuant to this prospectus at a fixed price of $0.60 per share until shares of our common stock are quoted on the OTC Markets Group’s OTCQB or OTCQX or listed on a Canadian stock exchange or any other stock exchange, and thereafter at prevailing market prices at the time of sale, at varying prices or at negotiated prices. A selling stockholder may use any one or more of the following methods when selling securities:

 

  ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
     
  block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
     
  purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
     
  an exchange distribution in accordance with the rules of the applicable exchange;
     
  privately negotiated transactions;
     
  in transactions through broker-dealers that agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

 

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  through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
     
  a combination of any such methods of sale; or
     
  any other method permitted pursuant to applicable law.

 

The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, if available, rather than under this prospectus.

 

Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. If the selling stockholders effect such transactions by selling shares of common stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the shares of common stock for whom they may act as agent or to whom they may sell as principal. Such commissions will be in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, will not be in excess of a customary brokerage commission in compliance with FINRA Rule 2121 and Supplementary Material .01 and Supplementary Material .02 thereto in the case of an agency transaction.

 

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933 in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933. To our knowledge, each selling stockholder does not have any written or oral agreement, arrangement or understanding, directly or indirectly, with any person to distribute the shares of our common stock.

 

Because selling stockholders may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, they will be subject to the prospectus delivery requirements of the Securities Act of 1933 including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act of 1933 may be sold under Rule 144 rather than under this prospectus. The selling stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the shares of our common stock by the selling stockholders.

 

Under the securities laws of some states, the shares of our common stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states, the shares of our common stock may not be sold unless they have been registered or qualified for sale in such state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the shares of our common stock may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the common stock by the selling stockholders or any other person.

 

Description of Securities

 

General

 

Our authorized capital stock consists of 75,000,000 shares of common stock, with a par value of $0.001 per share. We are not authorized to issue any shares of preferred stock. As of July 17, 2018, there were 20,874,524 shares of our common stock issued and outstanding.

 

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Voting Rights

 

Our common stock is entitled to one vote per share on all matters submitted to a vote of our stockholders, including the election of directors. Except as otherwise required by law, the holders of our common stock possess all voting power. A majority of our outstanding shares entitled to vote, represented in person or by proxy, constitute a quorum at a meeting of our stockholders. If a quorum exists, a majority vote of those shares present and voting at a duly organized meeting will suffice to defeat or enact any proposal unless the statutes of the State of Nevada, our articles of incorporation or bylaws require a greater-than-majority vote, in which event the higher vote will be required for the action to constitute the action of our company. Unless otherwise provided in our articles of incorporation, directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting of our stockholders at which a quorum is present.

 

Any action required or permitted to be taken at a meeting of our stockholders may be taken without a meeting if one or more written consents, setting forth the action so taken, is signed by our stockholders holding a majority of the shares entitled to vote with respect to the subject matter thereof, unless a supermajority vote is required by our bylaws in which case a “supermajority” vote will be required.

 

Our board of directors has the power to amend our bylaws unless our stockholders, in adopting, amending or repealing a particular bylaw, provide expressly that our board of directors may not amend or repeal that bylaw or our bylaw either establishes, amends or deletes a supermajority stockholder quorum or voting requirement. As a result, our board of directors may be able to change the quorum and voting requirements at a meeting of our stockholders, subject to the applicable laws and our articles of incorporation and bylaws.

 

Other Rights

 

Upon our liquidation, dissolution or winding up, the holders of our common stock are entitled to share ratably in all net assets available for distribution to our stockholders after payment to creditors.

 

The holders of our common stock are entitled to receive the dividends as may be declared by our board of directors out of funds legally available for dividends. Our board of directors is not obligated to declare a dividend. Any future dividends will be subject to the discretion of our board of directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, general business conditions and other pertinent factors. It is not anticipated that dividends will be paid in the foreseeable future.

 

Our common stock is not convertible or redeemable and has no pre-emptive, subscription or conversion rights. There are no conversions, redemption, sinking fund or similar provisions regarding our common stock.

 

Anti-Takeover Provisions

 

Some features of the Nevada Revised Statutes, which are further described below, may have the effect of deterring third parties from making takeover bids for control of our company or may be used to hinder or delay a takeover bid. This would decrease the chance that our stockholders would realize a premium over market price for their shares of common stock as a result of a takeover bid.

 

Acquisition of Controlling Interest

 

The Nevada Revised Statutes contain provisions governing the acquisition of a controlling interest of certain Nevada corporations. These provisions provide generally that any person or entity that acquires in excess of a specified percentage of the outstanding voting shares of a Nevada corporation may be denied voting rights with respect to the acquired shares, unless the holders of a majority of the voting power of the corporation, excluding shares as to which any of such acquiring person or entity, an officer or a director of the corporation, and an employee of the corporation exercises voting rights, elect to restore such voting rights in whole or in part. These provisions apply whenever a person or entity acquires shares that, but for the operation of these provisions, would bring voting power of such person or entity in the election of directors within any of the following three ranges:

 

  20% or more but less than 33 1/3%;
     
  33 1/3% or more but less than or equal to 50%; or
     
  more than 50%.

 

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The stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from these provisions through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not exempt our common stock from these provisions.

 

These provisions are applicable only to a Nevada corporation, which:

 

  has 200 or more stockholders of record, at least 100 of whom have addresses in Nevada appearing on the stock ledger of the corporation; and
     
  does business in Nevada directly or through an affiliated corporation.

 

At this time, we do not have 100 stockholders of record who have addresses in Nevada appearing on our stock ledger nor do we conduct any business in Nevada, either directly or through an affiliated corporation. Therefore, we believe that these provisions do not apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may apply to us, these provisions may discourage companies or persons interested in acquiring a significant interest in or control of our company, regardless of whether such acquisition may be in the interest of our stockholders.

 

Combination with Interested Stockholder

 

The Nevada Revised Statutes contain provisions governing the combination of any Nevada corporation that has 200 or more stockholders of record with an interested stockholder. As of July 17, 2018, we had approximately 111 stockholders of record. Therefore, we believe that these provisions do not apply to us and will not until such time as these requirements have been met. At such time as they may apply to us, these provisions may also have effect of delaying or making it more difficult to effect a change in control of our company.

 

A corporation affected by these provisions may not engage in a combination within three years after the interested stockholder acquires his, her or its shares unless the combination or purchase is approved by the board of directors before the interested stockholder acquired such shares. Generally, if approval is not obtained, then after the expiration of the three-year period, the business combination may be consummated with the approval of the board of directors before the person became an interested stockholder or a majority of the voting power held by disinterested stockholders, or if the consideration to be received per share by disinterested stockholders is at least equal to the highest of:

 

  the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or within three years immediately before, or in, the transaction in which he, she or it became an interested stockholder, whichever is higher;
     
  the market value per share on the date of announcement of the combination or the date the person became an interested stockholder, whichever is higher; or
     
  if higher for the holders of preferred stock, the highest liquidation value of the preferred stock, if any.

 

Generally, these provisions define an interested stockholder as a person who is the beneficial owner, directly or indirectly of 10% or more of the voting power of the outstanding voting shares of a corporation. Generally, these provisions define combination to include any merger or consolidation with an interested stockholder, or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an interested stockholder of assets of the corporation having:

 

  an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation;
     
  an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation; or
     
  representing 10% or more of the earning power or net income of the corporation.

 

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Articles of Incorporation and Bylaws

 

There are no provisions in our articles of incorporation or our bylaws that would delay, defer or prevent a change in control of our company and that would operate only with respect to an extraordinary corporate transaction involving our company or any of our subsidiaries, such as merger, reorganization, tender offer, sale or transfer of substantially all of its assets, or liquidation.

 

Experts and Counsel

 

The financial statements of our company included in this prospectus have been audited by Haynie & Company to the extent and for the period set forth in its report (which contains an explanatory paragraph regarding our ability to continue as a going concern) appearing elsewhere in the prospectus, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

 

Clark Wilson LLP has provided an opinion on the validity of the shares of our common stock being offered pursuant to this prospectus.

 

Interest of Named Experts and Counsel

 

No expert named in the registration statement of which this prospectus forms a part as having prepared or certified any part thereof (or is named as having prepared or certified a report or valuation for use in connection with such registration statement) or counsel named in this prospectus as having given an opinion upon the validity of the securities being offered pursuant to this prospectus or upon other legal matters in connection with the registration or offering such securities was employed for such purpose on a contingency basis. Also at the time of such preparation, certification or opinion or at any time thereafter, through the date of effectiveness of such registration statement or that part of such registration statement to which such preparation, certification or opinion relates, no such person had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in our company or any of its parents or subsidiaries. Nor was any such person connected with our company or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.

 

Information with respect to Our Company

Description of Business

 

Corporate Overview

 

We were incorporated under the laws of the State of Nevada on July 20, 2010 under the name “Redstone Literary Agents, Inc.”. Following incorporation, we commenced the business of representing authors to publishers.

 

Upon the resignation of Mary Wolf as an officer of our company on August 28, 2014, we ceased pursuing the business of representing authors to publishers and sought new business opportunities.

 

In July 2017, we decided to operate a new business of providing services for blockchain and cryptocurrency technologies and incorporated a Nevada subsidiary, AppCoin Innovations (USA) Inc. on August 1, 2017.

 

Effective August 17, 2017, we completed a merger with our wholly-owned subsidiary, AppCoin Innovations Inc., a Nevada corporation, which was incorporated solely to effect a change in our name. As a result, we changed our name from “Redstone Literary Agents, Inc.” to “AppCoin Innovations Inc.”.

 

Effective February 14, 2018, we completed a merger with our wholly-owned subsidiary, ICOX Innovations Inc., a Nevada corporation, which was incorporated solely to effect a change in our name. As a result, we have changed our name from “AppCoin Innovations Inc.” to “ICOX Innovations Inc.”.

 

Our principal offices are located at 4101 Redwood Ave., Building F, Los Angeles, CA 90066. Our telephone number is (424) 570-9446.

 

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Recent Developments  

 

On October 18, 2017, we entered into a business services agreement with Business Instincts Group Inc. ( “BIG” ), whereby we retained the services of BIG to provide certain services, including creating, designing and project managing the launching of initial coin offerings for our clients, in consideration for a monthly fee of $35,000 and a signing bonus of $100,000 payable as follows: (i) $50,000 upon closing of up to $750,000 of equity financing and (ii) $50,000 payable on signing of the first client agreement. The agreement continues for a two-year term which will automatically be renewed unless: (i) mutually agreed to by BIG and us, or (ii) written notice of non-renewal is provided by the non-renewing party to the other at least 90 days prior to the end of the term. The agreement may be terminated by either party, without cause, at any time upon the provision of 90 days written notice to the other party. Our chairman, Cameron Chell, is a director, officer and an indirect shareholder of BIG. On June 25, 2018, we entered into an amendment agreement to amend the business services agreement with BIG. Pursuant to the amendment agreement, BIG and our company agreed to increase the base fee for BIG’s provision of strategic leadership, analysis, project management and administrative management to $105,000 per month from $35,000 per month, effective as of June 1, 2018. We also agreed to pay BIG a bonus in the amount of $280,000 payable on or before June 30, 2018. All other terms of the business services agreement are unaffected and continue in full force and effect.

 

On November 20, 2017, we entered into a loan agreement with WENN Digital Inc. ( “WENN” ) whereby we provided to WENN a loan in the principal amount of $100,000, which was to be loaned to Ryde GmbH (“ Ryde ”) by WENN. The principal amount of the loan bears interest at an annual rate of 7% and matures on November 20, 2018. As partial consideration for us agreeing to provide the loan to WENN, WENN agreed to issue to us such number of shares such that we will own 7.5% of the issued and outstanding common stock of WENN after the issuance of WENN’s common stock to founding shareholders of WENN. On January 3, 2018, WENN fully repaid us the principal amount of the loan with accrued interest, being $100,843.83.

 

On December 29, 2017, we entered into a business services agreement with WENN, on March 19, 2018, we entered into the amendment no. 1 to business services agreement dated as of March 15, 2018 with WENN, and, on July 9, 2018, we entered into the amendment no. 2 to business services agreement dated as of July 9, 2018 with WENN. Pursuant to the business services agreement, we agreed to provide WENN with the services in connection with WENN’s development of an image rights management and protection platform (the “Platform” ) using blockchain technology, including (i) the business development and technical services, (ii) the business launch services and (iii) the post-business launch support services.

 

WENN was created by combining two substantial, existing businesses, Ryde and The WENN Media Group Limited (“ WENN Media ”). To our knowledge, Ryde and WENN Media have deep big data, blockchain development, copyright legal experience, proven AI-enabled image recognition and a post-licensing platform. We understand that WENN plans to build a sustainable community on the blockchain of the world’s photographers, offering them, among other things: (i) an efficient and cost-effective means to manage, protect and monetize their creative work; (ii) fast and free copyright protection registration; (iii) efficient and fully transparent accounting reporting; (iv) instant payments; and (v) innovative new revenue streams. The stockholders of WENN currently include us, Blockchain Merchant Group, Inc., Business Instincts Group Inc., Ryde, and WENN Media and, upon the closing of its acquisitions of Ryde and WENN Media, are expected to include certain shareholders of those entities.

 

We do not intend to find or make referrals to, or otherwise solicit, or assist in any way in the solicitation of, investors for investment in WENN’s coin offerings, act as a placement agent for the sale of WENN’s coins, or otherwise engage in any activity that would require us to register under Section 15(b) of the Securities Exchange Act of 1934, or similar provisions under state law.

 

The business services agreement with WENN provides that the fees for the services provided in connection with the development and launch of the Platform (the business development and technical services and business launch services) were deemed earned on the date of execution of the business services agreement. We have waived WENN’s requirement to pay the $250,000 fixed fee in connection with the business development and technical services as a concession. We have recognized the business development and technical services fee of $500,000 during the year ended December 31, 2017, which WENN paid in January 2018 upon the completion of its first round of pre-ICO fundraising.

 

The fees for the post-business launch support services (the “Monthly Services” ) are $35,000 per month and they will be due at the beginning of each month in which the Monthly Services are performed. With respect to the Monthly Services, we have agreed to provide the Monthly Services for one year commencing on the date of the Platform Launch (as defined below), after which the business services agreement and the provision of the Monthly Services will automatically renew for a one year period and can be terminated by either our company or WENN with 30 days’ written notice. “Platform Launch” means the publicized product launch of the Platform to the general public, including the ability of the general public to use Tokens as the primary means of exchange for transactions on the Platform.

 

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In addition, the business services agreement with WENN provides that the work fee in the amount of $4,175,000 is deemed earned on March 15, 2018 and the work fee is subject to a Renegotiation Obligation (as defined below). The business services agreement with WENN also provides that the additional fee of rights to receive an aggregate of 20,000,000 Platform tokens or coins (the “Tokens” ) pursuant to a Simple Agreement for Future Tokens is also deemed earned on the date of execution of the business services agreement and the additional fee is subject to a Renegotiation Obligation. However, for financial reporting purposes, the work fee and additional fee are deemed earned on the date of the launch of the Platform. If WENN does not raise more than $40 million in connection with its offer and sale for cash of (i) one or more Simple Agreements for Future Tokens ( “SAFTs” ), which SAFTs will entitle the holders thereof to receive Tokens under certain circumstances, and/or, (ii) Tokens, in the event that WENN determines to offer and sell Tokens in lieu of or in addition to SAFTs in connection with its fundraising efforts (collectively, the “WENN Offering” ), prior to May 31, 2018, we will be required to return the work fees and additional fee to WENN and WENN and our company will be required to negotiate in good faith the amount of each of such fee (such requirement to negotiate is referred to herein as the “Renegotiation Obligation” ).

 

The business services agreement will continue for a period of one year unless earlier terminated by either our company or WENN.

 

Either we or WENN may terminate the business services agreement upon the provision of 30 days’ written notice to the other party. If we provide such notice, WENN may immediately terminate the business services agreement and we will be entitled to no further compensation except for any fees earned prior to the date of the termination. If WENN provides such notice, we may immediately terminate the business services agreement and will be entitled to no further compensation, except for the following lump sum payments: (i) any fees earned to the effective date of termination; and (ii) a lump sum payment of $105,000.

 

For the purpose of determining our fees earned to the date of the termination in the event that either party terminates the business services agreement, all fees for services in connection with the development and launch of the Platform (the business development and technical services and business launch services) and the additional fee of rights to receive an aggregate of 20,000,000 Tokens are deemed earned on the date of execution of the business services agreement and the work fee is deemed earned as of March 15, 2018. However, the work fees and additional fee are subject to the Renegotiation Obligation. As such, our work fee and additional fee are not determinable or deemed collectible for the financial reporting purposes until the WENN Offering is completed or, if applicable, those fees are renegotiated pursuant to the Renegotiation Obligation.

 

Our chairman and director, Cameron Chell, is a director, officer and an indirect shareholder of Business Instincts Group Inc. which owns 10% of the common stock of WENN and he is also a director, officer and indirect shareholder of Blockchain Merchant Group, Inc. which owns 2.5% of the common stock of WENN and we own 7.5% of the common stock of WENN. Mr. Chell is also a director, chairman and secretary of WENN. Our president, Bruce Elliott, is a former chief marketing officer of WENN.

 

Our first client, WENN, has entered into a licensing partnership agreement with Eastman Kodak Company, which announced the launch of the KODAKOne blockchain platform and KODAKCoin ICO. We are providing the services relating to the KODAKOne blockchain platform and the KODAKCoin ICO pursuant to a business services agreement dated December 29, 2017, as amended as of March 15, 2018 and July 9 , 2018 with WENN.

 

On July 9, 2018, we entered into a loan agreement with WENN whereby we provided to WENN a loan in the principal amount of $750,000. The principal amount of the loan bears interest at the rate of 2% per annum, provided, however, any amounts not paid when due will immediately commence accruing interest at the default rate of 10% per annum. The principal amount of the loan, any accrued and unpaid interest thereon, and any other amounts owning under the loan matures on the earlier of (i) March 9, 2019 and (ii) the closing by WENN of a minimum of $3,000,000 in financings, in the aggregate, whether through the sale of KodakCoins, equity or otherwise. WENN can prepay all outstanding amounts on 10 days’ notice to our company. As a condition for entering into the loan agreement, Ryde provided a corporate guaranty dated July 9, 2018 to our company, pursuant to which Ryde unconditionally guaranteed and promised to pay our company on demand all amounts that become due from WENN under the loan agreement with WENN and any other amounts that we may in the future loan or advance to WENN. Also, as a condition for entering into the loan agreement, WENN entered into the amendment no. 2, dated as of July 9, 2018, to the business services agreement dated December 29, 2017, as amended as of March 15, 2018, with our company. Pursuant to the amendment no. 2, our company and WENN agreed that each party will be responsible for its respective expenses and agreed not to charge any out of pocket expenses to the other party unless expressly approved by the other party in advance in writing.

 

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Description of Business

 

Overview

 

Our new business is a services and development business that provides a turnkey set of services for companies to develop and integrate blockchain and cryptocurrency technologies into their business operations.

 

A blockchain is a distributed ledger technology which has the potential to bring significant efficiencies to many applications in a diversity of fields ranging from global supply chains to financial services and beyond. One of the key promises of blockchains is reduced transaction and networking costs by removing the need for traditional third party intermediaries, such as banks, lawyers, escrow agents, etc. Blockchain is considered a foundational technology.

 

A cryptocurrency is a digital asset – often referred to as a coin or token – that is used as a medium of exchange using cryptography and decentralized control via a blockchain to secure the transaction and to control the creation of additional units of the currency.

 

We anticipate that we will enable companies to focus on their core competencies while providing the necessary resources and expertise to execute a strategy that will enable companies to integrate new blockchain plus cryptocurrency technologies into their business operations. Our plan is to be compensated on a fee-for-services model. We may also accept tokens, coins or equity in payment for our services, to the extent permitted under applicable law.

 

Our services include strategic planning, project planning and program management, structure development and administration, business plan modelling, customer development, including customer discovery and scoping as well as product commercialization and support, technology development and support, whitepaper preparation, due diligence reporting, governance planning and management. Our services are provided by a combination of our management, Business Instincts Group Inc. and other external consultants. Most of the services provided by Business Instincts Group Inc. relate to the technical process and execution portion of our services.

 

Business Objectives and Milestones

 

We plan to continue to provide the services in connection with the development and launch of the Platform (with a targeted launch prior to May 31, 2018) pursuant to the business services agreement dated December 29, 2017, as amended as of March 15, 2018 and July 9 , 2018 with WENN. We spent approximately $667,000 and expect to spend additional $200,000 to $300,000 in connection with the development and launch of the Platform and post-launch support.

 

For the next 12 months, we plan to enter into one or two additional business services agreements with other clients on terms similar to the business services agreement dated December 29, 2017, as amended as of March 15, 2017 and July 9, 2018 with WENN. We intend to spend between $500,000 and $1,000,000 on various expenses to assist client companies to develop and integrate blockchain and cryptocurrency technologies into their business operations.

 

Our estimated operating expenses for the next 12 months are $2,015,000 and are comprised of blockchain platform launch related expenses such as project management and consulting, legal fees, support agents and monitoring expenses, and blockchain and software expenses, all of which are included in the amounts between $500,000 and $1,000,000 we intend to spend on various expenses to assist client companies to develop and integrate blockchain and cryptocurrency technologies into their business operations.

 

Our estimated general and administrative expenses for the next 12 months are $3,350,000 and are comprised of: $2,250,000 for consulting fees, of which approximately $1,260,000 is allocated to Business Instincts Group Inc., $192,000 is allocated to our president, Bruce Elliott, $120,000 is allocated to our chief financial officer, Michael Blum, $120,000 is allocated to our lead director, James P. Geiskopf, $120,000 is allocated for accounting services, $60,000 is allocated for financial services, $200,000 is allocated to our board of directors and our advisory board, $110,000 is allocated to our marketing and development consultants, and $68,000 is allocated to our public relations and marketing consultants; $250,000 for legal and professional fees (including auditing fees); $180,000 for marketing and advertising expenses; $102,000 for trade shows; $250,000 for travel expenses; $198,000 for office rent and $120,000 for miscellaneous and office expenses.

 

Blockchain Technology

 

Blockchain is a continuously growing list of records called blocks, which are linked and secured using cryptography. Each block contains typically a hash pointer as a link to a previous block, a timestamp and transaction data. By design, blockchains are inherently resistant to modification of the data. Functionally, a blockchain can serve as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority.

 

Blockchains are secure by design and are an example of a distributed computing system and decentralization can be achieved with a blockchain. This makes blockchains potentially suitable for the recording of events, medical records and other records management activities, such as identity management, documenting provenance, digital asset registration and transaction processing.

 

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Initial Coin Offerings and Cryptocurrency

 

Initial coin offerings are an important new business tool that facilitates the distribution of a cryptocurrency enabling companies to develop communities in support of their business plans or projects. The community can financially participate in the initial coin offering without the company issuing equity because the community is participating in cryptocurrency via an initial coin offering. By having a structured stake in the company or project, the investors are incentivized to increase the project’s overall value thereby driving the value of the cryptocurrency issued in the initial coin offering. A cryptocurrency is a digital asset – often referred to as a coin or token – that is used as a medium of exchange using cryptography and decentralized control via a blockchain to secure the transaction and to control the creation of additional units of the currency.

 

We may receive fees from initial coin offering proceeds, in a combination of cash and tokens, coins or equity, to the extent permitted under applicable law. We intend to hold cryptocurrencies on our balance sheet and to sell them from time to time via regulated trading exchanges, to the extent permitted under applicable law. We are not involved in the issuance of cryptocurrencies or mining or other related technical cryptocurrency production.

 

Principal Services

 

We plan to generate revenue through the following services:

 

  1. Business Development and Technical Services

 

  Business modeling and scoping and development;
     
  Advisory services surrounding token models, and token incentivisation;
     
  Advisory services surrounding cryptoeconomics creating networks, and utility of tokens;
     
  Assistance & sourcing of technical guidance surrounding creation of working model from conceptual framework; and
     
  Assistance & sourcing of guidance surrounding creation of company application for token usage, storage and transferring.

 

  2. Blockchain and Technology Program Management

 

  Product vision and road-mapping;
     
  Program development and project management;
     
  Product development and testing.

 

  3. Customer Development

 

  Customer discovery and scoping (not including any distribution or marketing related services, or assistance regarding the offer or sale of any tokens or coins); and
     
  Product commercialization and support.

 

  4. Business Launch Services

 

  Public relations & business development plans and strategies maximizing physical and digital outreach (not including any distribution or marketing related services, or assistance regarding the offer or sale of any tokens or coins);
     
  Initial community development & management strategy;
     
  Establish digital/social media presence (not including any distribution or marketing related services, or assistance regarding the offer or sale of any tokens or coins);
     
  Whitepaper preparation and continued iterative reviews;
     
  Due diligence report;
     
  White labeled investor web wallet;

 

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  Website infographics and design and
     
  Smart contract creation, sourcing, conceptualization and high-level specifications;
     
  Provide sourcing, guidance and assistance where required to engineering team surrounding the development of token wallet; and
     
  Specifications of platform website, and database backend built to collect user information.

 

  5. Post-Business Launch Support Services

 

  Public relations to support (not including any distribution or marketing related services, or assistance regarding the offer or sale of any tokens or coins);
     
  Community development and management; and
     
  General support.

 

We do not intend to find or make referrals to, or otherwise solicit, or assist in any way in the solicitation of, investors for investment in our clients’ coin offerings, act as a placement agent for the sale of our clients’ coins, or otherwise engage in any activity that would require us to register under Section 15(b) of the Securities Exchange Act of 1934, or similar provisions under state law.

 

Sales and Marketing

 

We intend to implement our sales and marketing plan to attract new clients to our blockchain consulting business as follows:

 

  Maintain an online presence through our website and social media channels by utilizing video, written content and social implementations to create awareness;
     
  Sponsorship of cryptocurrency, blockchain and/or ICO related events;
     
  Speaking engagements at industry conferences;
     
  Direct sales channel management programs including both inbound and outbound programs and client referrals; and
     
  Public relations campaigns.

 

Dependence on Few Customers

 

As of July 17 , 2018, we have one client which has engaged us to build out its business model, technology strategy, market entry strategy and capital structure, which includes a blockchain platform launch. However, we have several potential customers in our sales pipeline.

 

49
 

 

Competition

 

We are in a novel business of providing services for companies to develop and integrate blockchain and cryptocurrency technologies into their business operations. We compete with the following competitors:

 

  The Argon Group

 

The Argon Group (“ Argon ”) is an investment bank with a focus on digital finance and cryptocurrency and token-based capital markets. Argon provides financial advisory, placement, and technology services to companies seeking to raise equity, debt, and non-dilutive capital. Argon develops technical placement solutions, including digital tokens powered by advanced smart contracts, which Argon operates through a digital asset placement platform called TokenHub.com.

 

  CoinLaunch

 

CoinLaunch recently announced the first end-to-end initial coin offering platform that allows anyone to build, deploy and monetize compliant ICOs through a web-based service. The platform focuses on three groups of cryptocurrency users: ICO creators, funders and promoters. The company provides a Coin Creator that enables users to create their own Ethereum-based ICO. CoinLaunch’s integrated cryptocurrency funding system enables backers to fund various campaigns using a built-in crypto-payment gateway. It also includes an affiliate and referral system that tracks and manages all aspects of the promotion of ICO campaigns. The platform facilitates the payment of referrals using a CoinLaunch Token, which then can be used to purchase ICOs offered on the platform or redeemed for other cryptocurrencies. The platform includes an integrated compliance system that allows for any vetted ICOs to comply with various local regulations, including know-your-client and anti-money laundering regulations.

 

  CoinList

 

CoinList uses screens and selects blockchain companies. In August 2017, CoinList facilitated the token sale for blockchain-based data storage network Filecoin. CoinList also offers as part of its service a white-labeled compliance infrastructure stack. Purpose-built for token sales, ComplyAPI provides companies with SEC Rule 506 investor accreditation and know-your-client and anti-money laundering compliance due diligence through a simple integration and API.

 

  ConsenSys

 

ConsenSys is a venture production studio building decentralized applications and various developer and end-user tools for blockchain ecosystems, primarily focused on Ethereum. The ConsenSys “hub” coordinates, incubates, accelerates and spawns “spoke” ventures through development, resource sharing, acquisitions, investments and the formation of joint ventures. These spokes benefit from foundational components built by ConsenSys that enable new services and business models to be built on the blockchain. In addition to the development of internal projects and consulting work, ConsenSys is engaged in the identification, development and acquisition of talent and projects on an ongoing basis.

 

  SaftLaunch

 

SaftLaunch.com offers a service for companies seeking to issue an ICO or raise funds through a SAFT agreement, including a proprietary know-your-client and anti-money laundering compliance solution that positions it to co-invest into early stage projects in the pre-ICO phase.

 

  Science

 

Science is launching a bitcoin-related incubation program and claims to be the first ICO incubator to enter the market.

 

  Token Funder

 

Token Funder has created a “smart token asset management platform” or STAMP to facilitate blockchain based securities being crowdfunded. STAMP intends to, among other things, provide token and coin management and governance services for issuers and, subject to any regulatory approvals and/or exemptive relief required, provide for certain transferability of tokens and coins to ensure that a particular token or coin can achieve the access or use function for which it has been principally created.

 

50
 

 

  TokenMarket

 

TokenMarket is a full service ICO provider. Its service offerings include:

 

  o ICO Launchpad, a service for organizing a “crowdsale” with a high quality blockchain industry network, expertise and tools with tradeable digital tokens;
     
  o A token and cryptocurrency database to aid investment decisions with extensive insight whereby its clients can follow ICO calendar and individual assets to be alerted about market opportunities ahead of time, and
     
  o Storage and management of a client’s digital assets in a TokenMarket wallet, which is secured with two-factor authentication.

 

  Polymath

 

Polymath simplifies the legal process of creating and selling security tokens. It makes a new token standard, the ST20, and enforces government compliance. Only a “list of authorized investors and their Ethereum wallet addresses” can hold ST20 tokens. In order to launch a legally compliant token, Polymath platform brings together issuers, legal delegates, smart contract developers, know-your-client verification, and a decentralized exchange. All transactions on the Polymath platform take place using the native POLY token.

 

Many of our current and potential competitors may have greater brand recognition, longer operating histories, larger customer bases and significantly greater financial, marketing and other resources than we do. Accordingly, these competitors may be able to spend greater amounts on product development, marketing and distribution. This advantage could enable our competitors to acquire larger market share and develop and offer more competitive products and services. Such competition could adversely impact our ability to attain the financing necessary for us to develop our business plan. In the face of competition, we may not be successful in sufficient market share to make our business profitable.

 

Intellectual Property and Technology

 

We do not currently own any intellectual property. We intend to aggressively assert our rights under trade secret, patents, trademark and copyright laws to protect any intellectual property that we create, including product design, product research and concepts and recognized trademarks. These rights may be protected through the acquisition of patents and trademark registrations, the maintenance of trade secrets, the development of trade dress, and, where appropriate, litigation against those who are, in our opinion, infringing these rights.

 

We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. In addition, while we are not aware that our services or proprietary rights infringe the proprietary rights of third parties, we may receive notices from third parties asserting that we have infringed their patents, trademarks, copyrights or other intellectual property rights. Any such claims could be time-consuming, result in costly litigation, cause service stoppages or lead us to enter into royalty or licensing agreements rather than disputing the merits of such claims. An adverse outcome in litigation or similar proceedings could subject us to significant liabilities to third parties, require expenditure of significant resources to develop non-infringing technology, require disputed rights to be licensed from others, or require us to cease operating our business, any of which could have a material adverse effect on our business, operating results and financial condition.

 

As we have just begun our new business, we have devoted no substantial efforts to research and development within the last two fiscal years.

 

51
 

 

Government Regulation

 

Current and future legislation and rulemaking and other regulatory developments, including interpretations released by a regulatory authority, may impact the manner in which bitcoins or other cryptocurrency is viewed or treated for classification and clearing purposes. In particular, bitcoins and other cryptocurrency may not be excluded from the definition of “security” by regulatory rulemaking or interpretation requiring registration of all transactions, unless an exemption is available, including transacting in bitcoin or cryptocurrency amongst owners, and require registration of trading platforms as “exchanges” such as Coinsquare. We cannot be certain as to how future regulatory developments will impact the treatment of bitcoins and other cryptocurrencies under the law. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain of our operations or be subjected to fines, penalties and other governmental action. Any such action may adversely affect an investment in us. Such circumstances would have a material adverse effect on our ability to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on our business, prospects or operations and potentially the value of any cryptocurrencies we hold or expect to acquire for our own account and harm investors.

 

We intend to comply with any applicable anti-money laundering or know your customer rules relating to tokens imposed by the SEC and Canadian securities regulators.

 

Investment Company Act of 1940 Considerations

 

We intend to conduct our operations so that we do not fall within, or are excluded from the definition of an “investment company” under the Investment Company Act of 1940.

 

Under Section 3(a)(1)(A) of the Investment Company Act of 1940, a company is deemed to be an “investment company” if it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities. We believe that we will not be considered an investment company under Section 3(a)(1)(A) of the Investment Company Act of 1940 because we will not engage primarily or hold ourselves out as being engaged primarily in the business of investing, reinvesting or trading in securities. Rather, our new business is a services and development business that provides a turnkey set of services for companies to develop and integrate blockchain and cryptocurrency technologies into their business operations.

 

Under Section 3(a)(1)(C) of the Investment Company Act of 1940, a company is deemed to be an “investment company” if it is engaged, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire “investment securities” having a value exceeding 40% of the value of our company’s total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis, which we refer to as the “40% test.” We intend to monitor our holdings and conduct operations so that on an unconsolidated basis we will comply with the 40% test. Nevertheless, because we may accept tokens, coins or equity in payment for our services, to the extent permitted under applicable law, we may acquire “investment securities” having a value exceeding 40% of the value of our company’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. In that case, we intend to rely on a safe harbor exemption from the Investment Company Act of 1940 for so-called “transient investment companies.”

 

Consistent with the “transient investment company” safe harbor, we will have to reduce our holdings of “investment securities to not more than 40% of our total assets as soon as is reasonably possible and in any event within one year from the earlier of (i) the date on which we own securities and/or cash having a value exceeding 50% of the value of our company’s total assets on either a consolidated or unconsolidated basis or (ii) the date on which we own or propose to acquire “investment securities” having a value exceeding 40% of the value of our company’s total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. This reduction could be attempted in a number of ways, including the disposition of securities and the acquisition of other assets that would not constitute investment securities for purposes of the Investment Company Act of 1940. If we are required to sell securities, we may sell them sooner than we otherwise would, the sales may be at depressed prices, and we may never realize anticipated benefits from, or may incur losses on, those investments. We may not be able to sell some investments due to contractual or legal restrictions or the inability to locate a suitable buyer. We may also incur tax liabilities when we sell our assets. If we decide to try to acquire additional assets that would not constitute investment securities, we may not be able to identify and acquire suitable assets. If these steps do not achieve a sufficient reduction in our holdings of investment securities within the prescribed period, we will be forced to liquidate some of our securities holdings and invest the proceeds in U.S. government securities and cash items, with a potential loss.

 

52
 

 

Because we can rely on the “transient investment company” safe harbor only once during any three-year period, we may not accept tokens, coins or equity in payment for our services during the period that this safe harbor is not available.

 

If we become obligated to register our company as an investment company, we would have to comply with a variety of substantive requirements under the Investment Company Act of 1940 imposing, among other things:

 

  limitations on capital structure;
     
  restrictions on specified investments;
     
  prohibitions on transactions with affiliates; and
     
  compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly change our operations.

 

If we were required to register our company as an investment company but failed to do so, we would be prohibited from engaging in our business, and criminal and civil actions could be brought against us. In addition, our contracts would be unenforceable unless a court required enforcement, and a court could appoint a receiver to take control of us and liquidate our business, all of which would have a material adverse effect on us.

 

Employees

 

As at July 17 , 2018, we have two executive officers, Bruce Elliott, who is our president, and Michael Blum, who is our chief financial officer, secretary, and treasurer, and no employees. Our management oversees all responsibilities in the areas of corporate administration, business development, and research. We also employ consultants on an as-needed-basis to provide specific expertise in areas of product design and development and other business functions including marketing and accounting. We intend to expand our current management to retain skilled directors, officers, and employees with experience relevant to our business focus.

 

Description of Property

 

We do not own any property. Our principal offices are located at 4101 Redwood Ave, Building F. Los Angeles, California 90066. Effective May 1, 2018, we entered into a facility services agreement with Business Instincts Group Inc., a company of which Cameron Chell is a director, officer and indirect shareholder, whereby we agreed to pay Business Instincts Group Inc. a basic monthly rent of $16,500 for the complete occupancy term commencing May 1, 2018 until February 28, 2020 to use our office premises for general office purposes. We believe that our office premises are suitable and adequate for our present needs.

 

Legal Proceedings

 

We know of no material pending legal proceedings to which our company or subsidiary is a party or of which any of our properties, or the properties of our subsidiary, is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.

 

We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or subsidiary or has a material interest adverse to our company or subsidiary.

 

Market Price of and Dividends on Our Common Equity

and Related Stockholder Matters

 

Market Information

 

There is currently no established public trading market for our common stock. Our common stock is not traded on any exchange. There is a limited public market for our common stock. Our common stock has been quoted on the OTC Pink operated by the OTC Markets Group under the trading symbol “ICOX” since November 28, 2017. From August 17, 2017 to November 27, 2017, our common stock was quoted on the OTC Pink under the trading symbol “APCN”. Prior to that, our common stock was quoted on the OTC Pink under the trading symbol “RDLA”. There have not been any trades for our common stock on the OTC Pink operated by the OTC Markets Group.

 

53
 

 

Trading in stocks quoted on the OTC Pink is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated or have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.

 

Set forth below are the range of high and low bid quotations for the periods indicated as reported by the OTC Pink. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.

 

Quarter Ended   High Bid     Low Bid  
March 31, 2018   $ 29.70 *   $ 23.75 *
December 31, 2017   $ 2.60 *   $ 1.25 *
September 30, 2017   $ 1.25 *   $ 0.05 *
June 30, 2017     Nil       Nil  
March 31, 2017     Nil       Nil  
December 31, 2016     Nil       Nil  
September 30, 2016     Nil       Nil  
June 30, 2016     Nil       Nil  
March 31, 2016     Nil       Nil  

 

*The above quotations represent prices between dealers on OTC Link ATS and do not include retail markup, markdown or commission. They do not represent actual transactions.

 

Outstanding Options, Warrants or Convertible Securities

 

As of July 17 , 2018, we had 3,350,000 stock options and no warrants outstanding. As of July 17 , 2018, we had (i) convertible notes in the aggregate principal amount of $175,325 outstanding, which bear interest at the rate of 18% per annum and are convertible into shares of our common stock at a conversion price of $0.03 per share, and (ii) convertible notes in the aggregate principal amount of $325,000 outstanding, which bear interest at the rate of 10% per annum and are convertible into shares of our common stock at a conversion price of $0.10 per share.

 

Rule 144

 

None of our issued and outstanding common stock is eligible for sale pursuant to Rule 144 under the Securities Act of 1933 , as amended.

 

Public Offering

 

Other than the shares of our common stock being offered under this prospectus, there are no shares of common stock or other securities of our company that are being, or have been publicly proposed to be, publicly offered by us, the offering of which could have a material effect on the market price of our common stock or other securities.

 

Number of Holders

 

As of July 17, 2018, the 20,874,524 issued and outstanding shares of our common stock were held by a total of 111 stockholders of record.

 

Dividends

 

We have not declared any dividends since incorporation and do not anticipate that we will do so in the foreseeable future. Our intention is to retain future earnings, if any, for use in our operations and the expansion of our business.

 

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

 

1. We would not be able to pay our debts as they become due in the usual course of business; or
   
2. Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.

 

54
 

 

Financial Statements

 

Financial Statements For the Years Ended December 31, 2017 and 2016 Page
   
Report of Independent Registered Public Accounting firm F-2
   
Consolidated Balance Sheets F-4
   
Consolidated Statements of Operations F-5
   
Consolidated Statements of Cash Flows F-6
   
Consolidated Statements of Changes in Stockholders’ Deficit F-7
   
Notes to Consolidated Financial Statements F-8

 

Unaudited Financial Statements For the Three Months Ended March 31, 2018 and 2017  
   
Condensed Consolidated Balance Sheet F-23
   
Condensed Consolidated Statement of Operations F-24
   
Condensed Consolidated Statements of Cash Flows F-25
   
Notes to Unaudited Condensed Consolidated Financial Statements F-26

 

F- 1

 

 

  

 

F- 2

 

 

 

F- 3

 

 

ICOX Innovations Inc.

(formerly AppCoin Innovations Inc.)

Consolidated Balance Sheets

 

    December 31, 2017     December 31, 2016  
Assets                
                 
Current Assets                
Cash and cash equivalents   $ 214,993     $ 56,050  
Accounts receivable, related party     500,000       -  
Prepaid expenses     30,000       -  
Prepaid expenses, related party     35,000       -  
Deferred service costs     21       -  
Related party loans receivable and related accrued interest     100,752       -  
Total Current Assets     880,766       56,050  
                 
Investment, related party     37       -  
Total Assets   $ 880,803     $ 56,050  
                 
Liabilities and Stockholders’ Deficit                
                 
Current Liabilities                
Accounts payable and accrued expenses   $ 131,303     $ 49,013  
Accounts payable and accrued expenses, related party     51,616       -  
Total Current Liabilities     182,919       49,013  
                 
Convertible notes payable     500,325       145,325  
Accrued interest on convertible notes     52,949       17,945  
Total Liabilities     736,193       212,283  
                 
Commitments and Contingencies     -       -  
                 
Stockholders’ Equity (Deficit)                
Common stock, $0.001 par value, 75,000,000 shares authorized; 11,600,000 and 6,000,000 shares issued and outstanding as at December 31, 2017 and 2016, respectively     11,600       6,000  
Additional paid-in-capital     826,018       63,717  
Accumulated deficit     (693,008 )     (225,950 )
Total Stockholders’ Equity (Deficit)     144,610       (156,233 )
                 
Total Liabilities and Stockholders’ Equity (Deficit)   $ 880,803     $ 56,050  

 

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

 

F- 4

 

 

ICOX Innovations Inc.

(formerly AppCoin Innovations Inc.)

Consolidated Statement of Operations

 

    Year Ended
December 31, 2017
    Year Ended
December 31, 2016
 
             
Revenues                
Service revenue   $ 500,000     $ -  
Total revenues     500,000       -  
                 
Operating expenses                
General and administrative expense     452,923       74,183  
Consulting fees, related party     280,000       -  
Service costs     199,920       -  
Total operating expenses     932,843       74,183  
                 
Net loss from operations     (432,843 )     (74,183 )
                 
Other income (expense)                
Interest income, related party     789       -  
Note interest expense     (35,004 )     (14,013 )
Total other income (expense)     (34,215 )     (14,013 )
                 
Provision for taxes     -       -  
                 
Net loss   $ (467,058 )   $ (88,196 )
                 
Loss per common share – Basic and diluted   $ (0.07 )   $ (0.01 )
                 
Weighted average number of common shares outstanding, basic and diluted     6,934,795       6,000,000  

 

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

 

F- 5

 

 

ICOX Innovations Inc.

(formerly AppCoin Innovations Inc.)

Consolidated Statements of Cash Flows

 

    Year Ended
December 31, 2017
    Year Ended
December 31, 2016
 
Operating activities                
Net loss for the year   $ (467,058 )   $ (88,196 )
Adjustments to reconcile net loss to net cash used in operating activities                
Stock-based compensation     188,934       -  
Stock-based compensation, related party     22,500       -  
Changes in operating assets and liabilities                
Accounts receivable, related party     (500,000 )     -  
Prepaid expense     (30,000 )     -  
Prepaid expense, related party     (35,000 )     -  
Accrued interest receivable, related party     (789 )     -  
Deferred service costs     (21 )     -  
Accrued interest payable     35,004       15,513  
Accounts payable and accrued expenses     82,290       44,863  
Accounts payable and accrued expenses, related party     51,616       -  
Net cash (used in) operating activities     (652,524 )     (27,820 )
                 
Investing activities                
Loan issued to related party     (99,963 )     -  
Investment in related party     (37 )     -  
Net cash (used in) investing activities     (100,000 )     -  
                 
Financing activities                
Proceeds from issuance of convertible notes payable     355,000       70,000  
Proceeds from share issuance     560,000       -  
Share issue costs     (3,533 )        
Net cash provided by financing activities     911,467       70,000  
                 
Net changes in cash and equivalents     158,943       42,180  
                 
Cash and equivalents at beginning of the year     56,050       13,870  
                 
Cash and equivalents at end of the year   $ 214,993     $ 56,050  
                 
SUPPLEMENTAL CASH FLOW INFORMATION                
Cash paid in interest   $ -     $ -  
Cash paid for income taxes   $ -     $ -  
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH OPERATING ACTIVITIES                
Stock-based compensation   $ 188,934     $ -  
Stock-based compensation, related party   $ 22,500     $ -  

 

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

 

F- 6

 

 

ICOX Innovations Inc.

(formerly AppCoin Innovations Inc.)

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

 

    Common Stock     Additional           Total   
    Number
of Shares
    Amount  

Paid-in

Capital

    Accumulated Deficit     Stockholders’ Equity (Deficit)  
Balance, December 31, 2015     6,000,000     $ 6,000     $ 63,717     $ (137,754 )   $ (68,037 )
Net loss for the year     -       -       -       (88,196 )     (88,196 )
Balance, December 31, 2016     6,000,000       6,000       63,717       (225,950 )     (156,233 )
Share issuance, net of offering costs of $3,533     5,600,000       5,600       550,867       -       556,467  
Stock-based compensation     -       -       188,934       -       188,934  
Stock-based compensation, related party     -       -       22,500       -       22,500  
Net loss for the year     -       -       -       (467,058 )     (467,058 )
Balance, December 31, 2017     11,600,000     $ 11,600     $ 826,018     $ (693,008 )   $ 144,610  

 

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

 

F- 7

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

1. NATURE AND CONTINUANCE OF OPERATIONS

 

ICOX Innovations Inc. (formerly AppCoin Innovations Inc., formerly RedStone Literary Agents, Inc.) (the “Company”) was incorporated under the laws of State of Nevada, U.S. on July 20, 2010, with an authorized capital of 75,000,000 common shares, having a par value of $0.001 per share. During the period ended December 31, 2010, the Company commenced operations by issuing shares and developing its publishing service business, focused on representing authors to publishers.

 

On August 1, 2017, the Company incorporated a Nevada subsidiary, AppCoin Innovations (USA) Inc., which will be used to operate the Company’s new business of providing blockchain consulting services.

 

On August 17, 2017, the Company changed its name from “RedStone Literary Agents, Inc.” to “AppCoin Innovations Inc.”

 

On February 14, 2018, the Company changed its name from “AppCoin Innovations Inc.” to “ICOX Innovations Inc.”

 

The Company’s new business model provides a turnkey set of services for companies to develop and integrate blockchain and cryptocurrency technologies into their business operations. The Company will enable its customers to focus on their core competencies while providing the necessary resources and expertise to execute a strategy that will enable companies to integrate new blockchain plus cryptocurrency technologies into their business operations. The Company will be compensated on a fee-for-services model. The Company may also accept tokens or coins in payment for its services, to the extent permitted under applicable law.

 

The Company’s services will include strategic planning, project planning, structure development and administration, business plan modelling, technology development support, whitepaper preparation, due diligence reporting, governance planning and management.

 

Going Concern

 

These consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $693,008 as of December 31, 2017 and further losses are anticipated in the pursuit of the Company’s new service business opportunity, raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or the private placement of common stock.

 

In order to address the above factors, subsequent to year end, the Company completed private placements of an aggregate of 9,113,659 subscription receipts at a price of $0.60 per subscription receipt for aggregate gross proceeds of $5,468,195.40.

 

The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

F- 8

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles (“ GAAP ”) in the United States of America.

 

Basis of Consolidation

 

The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany transactions and balances have been eliminated.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and these differences could be material.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include short-term, highly liquid investments, such as certificates of deposit or money market funds that are readily convertible to known amounts of cash and have original maturities of three months or less. All cash balances are held by major banking institutions.

 

The carrying amounts of cash and cash equivalents, prepaid expenses, short-term loans receivable, trade payables and convertible notes payable approximate their fair value due to the short-term maturity of such instruments.

 

Contingent Liabilities:

 

The Company accounts for its contingent liabilities in accordance with ASC No. 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

 

With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. As of December 31, 2017 and 2016, the Company was not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

 

Income Taxes

 

The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

F- 9

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

FASB Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”), clarifies the accounting for uncertainty in income taxes recognized in the financial statements. ASC 740 provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We have determined that the Company does not have uncertain tax positions on its tax returns for the years 2017 and prior. Based on evaluation of the 2017 transactions and events, the Company does not have any material uncertain tax positions that require measurement.

 

Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. We had no accrual for interest or penalties on our consolidated balance sheets at December 31, 2017 or 2016, and have not recognized interest and/or penalties in the consolidated statement of operations for the years ended December 31, 2017 or 2016.

 

We are subject to taxation in the U.S. and the state of California. All of our tax years are subject to examination by the U.S. and California tax authorities due to the carry-forward of unutilized net operating losses.

 

Collectability of Accounts Receivable

 

In considering the collectability of accounts receivable, the Company takes into account the legal obligation for payment by the customer, as well as the financial capacity of the customer to fund its obligation to the Company.

 

Earnings per Share

 

The Company computes earnings (loss) per share in accordance with ASC 105, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net loss available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Common shares from the conversion of debt (10,730,310 shares) (Note 3) and exercise of stock options (733,331 shares) (Note 7) have been excluded as their effect is anti-dilutive.

 

Stock-Based Compensation

 

The Company has adopted FASB guidance on stock-based compensation. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, are recognized in the income statement based on their fair values. The fair value of the options is calculated based upon the Black Scholes valuation model. (Note 7)

 

The Company has issued stock options to employees and non-employees. Stock options granted to non-employees for services or performance not yet rendered would be expensed over the service period or until the goals had been reached. The fair value calculation is recalculated at the end of every reporting period until the goal had been reached, when the expense has been wholly recognized. The stock options granted to non-employees during the year ended December 31, 2017 were for services already rendered in lieu of cash compensation and, as such, the service period has already passed and the entirety of the expense was recognized in the year.

 

F- 10

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

Digital Currency Valuation

 

Digital currencies consist of cryptocurrency denominated assets and are included in current assets. Digital currencies are carried at their fair market value determined by an average spot rate of the most liquid digital currency exchanges. On an interim basis, we recognize decreases in the value of the assets caused by market declines. Subsequent increases in the value of these assets through market price recoveries during the same fiscal year are recognized in the later interim period, but may not exceed the total previously recognized decreases in value during the same year. Such unrealized gains or losses resulting from changes the value of the digital currency are recorded in Other Income, net in the consolidated statements of operations. Gains and losses realized upon sale of digital currencies are also recorded in Other Income, net in the consolidated statement of operations.

 

Fair market value is determined by taking the average spot rate from the most liquid digital currency exchanges. Digital currencies are measured using level one fair values, determined by taking the rate from market currency exchanges. Digital currency prices are affected by various forces including global supply and demand, interest rates, exchange rates, inflation or deflation and the global political and economic conditions. The Company may not be able to liquidate its inventory of digital currency at its desired price if required. A decline in the market prices for digital currencies could negatively impact the Company’s future operations. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position.

 

The Company did not hold any digital currency at December 31, 2017 and December 31, 2016.

 

Revenue Recognition

 

Revenue is recognized in accordance with FASB ASC Topic 606, Revenue Recognition. The Company recognizes revenue when persuasive evidence of an arrangement exists, the related services are rendered or delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. The Company has early adopted this policy.

 

The Company primarily generates revenues from professional services consulting agreements. These arrangements are generally entered into on a contingent fee basis. There is no prepayment or retainer required prior to performing services and the entire fees is earned on a contingent basis. The Company also provides monthly post-business launch support services. The recurring monthly post-business launch support services are recognized as revenue each month that the subscription is maintained.

 

The Company generally enters into arrangements for which revenues are contingent upon achieving a pre-determined deliverable or future outcome. Any contingent revenue for these arrangements is not recognized until the contingency is resolved and collectability is reasonably assured.

 

Differences between the timing of billings and the recognition of revenue are recognized as either unbilled revenue (a component of accounts receivable) or deferred revenue on the consolidated balance sheet. Revenues recognized for services performed but not yet billed to clients are recorded as unbilled revenue.

 

Reimbursable expenses, including those relating to travel, other out-of-pocket expenses and any third-party costs, are included as a component of revenues. Typically, an equivalent amount of reimbursable expenses are included in total direct client service costs. Taxes collected from customers and remitted to governmental authorities are presented in the statement of operations on a net basis.

 

F- 11

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

Service costs

 

The Company’s policy is to defer direct service costs that relate to the earning of contingent fee revenue. These deferred costs are expensed when the contingent fee revenue is recognized or when the earning the contingent fee revenue is in doubt.

 

Reclassification

 

Certain reclassifications have been made to the 2016 financial statements in order for them to conform to the 2017 presentation. Such reclassifications have no impact on the Company’s financial position or results or operations.

 

Recently Adopted Accounting Pronouncements

 

Statement of Cash Flows (ASU 2016-15)

 

This update provides specific guidance to clarify how entities should classify certain cash receipts and cash payments on the statement of cash flows. The update also clarifies the application of the predominance principle when cash receipts and cash payments have aspects of more than one class of cash flows. We will be required to adopt this standard effective January 1, 2018. We do not expect the adoption of this update to have a material effect on our financial statements.

 

Financial Instruments – Recognition and Measurement (ASU 2016-01)

 

This update retains the current accounting for classifying and measuring investments in debt securities and loans, but requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation. We will be required to adopt this standard effective January 1, 2018. We do not expect the adoption of this update to have a material effect on our financial statements.

 

3. ACCOUNTS RECEIVABLE

 

As at December 31, 2017, the Company had outstanding accounts receivable of $500,000 (2016 - $0). The entire amount was received subsequent to year end.

 

4. NOTES PAYABLE

 

On September 14, 2015, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ First Note ”) in the principal amount of $73,825 to one subscriber. The First Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the First Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at December 31, 2017, the First Note had a balance outstanding of $104,334 (2016 - $91,734), comprised of a principal amount of $73,825 and accrued interest of $30,509 (2016 - $17,909). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

F- 12

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

4. NOTES PAYABLE (CONT’D)

 

On December 31, 2016, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Second Note ”) in the principal amount of $50,000 to one subscriber. The Second Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Second Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at December 31, 2017, the Second Note had a balance outstanding of $59,025 (2016 - $50,025), comprised of a principal amount of $50,000 and accrued interest of $9,025 (2016 - $25). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

On December 31, 2016, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Third Note ”) in the principal amount of $21,500 to one subscriber. The Third Note included repayment of the principal amount of $20,000 for an unsecured note issued on June 6, 2016 plus a $1,500 restructuring fee. The Third Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Third Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at December 31, 2017, the Third Note had a balance outstanding of $25,380 (2016 - $21,511), comprised of a principal amount of $21,500 and accrued interest of $3,880 (2016 - $11). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

On March 2, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Fourth Note ”) in the principal amount of $20,000 to one subscriber. The Fourth Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Fourth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at December 31, 2017, the Fourth Note had a balance outstanding of $22,998 (2016 - $0), comprised of a principal amount of $20,000 and accrued interest of $2,998 (2016 - $0). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

On June 8, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Fifth Note ”) in the principal amount of $10,000 to one subscriber. The Fifth Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Fifth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at December 31, 2017, the Fifth Note had a balance outstanding of $11,016 (2016 - $0), comprised of a principal amount of $10,000 and accrued interest of $1,016 (2016 - $0). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

On September 7, 2017, the Company received a $250,000 loan from a less than 5% shareholder. The loan is unsecured, repayable on demand and is non-interest bearing. On October 30, 2017, this loan was used to subscribe to an unsecured convertible debenture (the “ Sixth Note ”) in the principal amount of $250,000 to one subscriber. The Sixth Note, and accrued interest, will mature three (3) years from the date of issuance and will bear interest at the rate of 10% interest per annum, compounded annually. The principal amount of the Sixth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.10 per share. As at December 31, 2017, the Sixth Note had a balance outstanding of $254,247 (2016 - $0), comprised of a principal amount of $250,000 and accrued interest of $4,247 (2016 - $0). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

F- 13

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

4. NOTES PAYABLE (CONT’D)

 

On October 30, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Seventh Note ”) in the principal amount of $75,000 to one subscriber. The Seventh Note, and accrued interest, will mature three (3) years from the date of issuance and will bear interest at the rate of 10% interest per annum, compounded annually. The principal amount of the Seventh Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.10 per share. As at December 31, 2017, the Seventh Note had a balance outstanding of $76,274 (2016 - $0), comprised of a principal amount of $75,000 and accrued interest of $1,274 (2016 - $0). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

Based upon the balances as of December 31, 2017, the convertible notes and the related interest will come due in the following years:

 

    Principal     Interest     Total  
2018   $ -     $ -     $ -  
2019     -       -       -  
2020     398,825       36,030       434,855  
2021     71,500       12,905       84,405  
2022     30,000       4,014       34,014  
Total   $ 500,325     $ 52,949     $ 553,274  

 

5. NOTES RECEIVABLE – RELATED PARTY

 

On November 20, 2017, the Company made a $99,963 loan to WENN Digital Inc., a customer of the Company. This loan is unsecured, will mature one (1) year from the date of issuance and will bear interest at the rate of 7% interest per annum. As of December 31, 2017, interest of $789 has been accrued. The Company also received a 7.5% stake in the WENN Digital Inc. for making the loan.

 

6. RELATED PARTY TRANSACTIONS

 

In support of the Company’s efforts and cash requirements, it may rely on advances from stockholders until such time as the Company can support its operations through revenue generation or attain adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by stockholders. Amounts represent advances or amounts paid in satisfaction of liabilities.

 

The Company’s office premises were provided to it at no cost by one of its directors. The Company’s director did not take any fees for serving as director during the year ended December 31, 2017.

 

In October 2017, the Company signed an agreement with a company in which the Company’s Chairman is a director, officer, and 30.5% shareholder, to provide strategic management services. The agreement is for a two-year term that will automatically be renewed unless: (i) mutually agreed to by BIG and us, or (ii) written notice of non-renewal is provided by the non-renewing party to the other at least 90 days prior to the end of the term. This agreement committed the Company to pay $35,000 a month and a signing bonus of $100,000 payable as follows: (i) $50,000 upon closing of up to $750,000 of equity financing and (ii) $50,000 payable on signing of the first client agreement. As of December 31, 2017, the Company had trade and other payables owing to this related party of $51,616.

 

F- 14

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

6. RELATED PARTY TRANSACTIONS (CONT’D)

 

Future minimum payments per the agreement are:

 

2018   $ 470,000  
2019     350,000  
Total   $ 820,000  

 

On December 29, 2017, the Company signed a master service agreement with WENN Digital Inc. (“WENN”), a company in which there is a common director. The agreement was amended on March 15, 2018, pursuant to which the Company changed the scope of services to provide WENN with the services in connection with WENN’s development of an image rights management and protection platform (the “Platform”) using blockchain technology, including (i) the business development and technical services, (ii) the business launch services and (iii) the post-business launch support services.

 

The business services agreement with WENN provides that the fees for the services provided in connection with the development and launch of the Platform (the business development and technical services and business launch services) were deemed earned on the date of execution of the business services agreement. The Company has waived WENN’s requirement to pay the $250,000 fixed fee in connection with the business development and technical services as a concession. The Company has recognized the business development and technical services fee of $500,000 during the year ended December 31, 2017, which WENN paid in January 2018 upon the completion of its first round of pre-ICO fundraising.

 

The fees for the post-business launch support services (the “Monthly Services” ) are $35,000 per month and they will be due at the beginning of each month in which the Monthly Services are performed. With respect to the Monthly Services, the Company has agreed to provide the Monthly Services for one year commencing on the date of the Platform Launch (as defined below), after which the business services agreement and the provision of the Monthly Services will automatically renew for a one year period and can be terminated by either our company or WENN with 30 days’ written notice. “Platform Launch” means the publicized product launch of the Platform to the general public, including the ability of the general public to use Tokens as the primary means of exchange for transactions on the Platform.

 

In addition, the business services agreement with WENN provides that the work fee in the amount of $4,175,000 is deemed earned on March 15, 2018 and the work fee is subject to a Renegotiation Obligation (as defined below). The business services agreement with WENN also provides that the additional fee of rights to receive an aggregate of 20,000,000 Platform tokens or coins (the “Tokens” ) pursuant to a Simple Agreement for Future Tokens is also deemed earned on the date of execution of the business services agreement and the additional fee is subject to a Renegotiation Obligation. However, for financial reporting purposes, the work fee and additional fee are deemed earned on the date of the launch of the Platform. If WENN does not raise more than $40 million in connection with its offer and sale for cash of (i) one or more Simple Agreements for Future Tokens ( “SAFTs” ), which SAFTs will entitle the holders thereof to receive Tokens under certain circumstances, and/or, (ii) Tokens, in the event that WENN determines to offer and sell Tokens in lieu of or in addition to SAFTs in connection with its fundraising efforts (collectively, the “WENN Offering” ), prior to May 31, 2018, the Company will be required to return the work fees and additional fee to WENN and WENN and our company will be required to negotiate in good faith the amount of each of such fee (such requirement to negotiate is referred to herein as the “Renegotiation Obligation” ).

 

F- 15

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

6. RELATED PARTY TRANSACTIONS (CONT’D)

 

The Company has agreed that WENN will not be responsible for any out-of-pocket expenses incurred by our company in connection with our performance of the services. In addition, the Company has agreed to pay, and otherwise be financially responsible for (including through the reimbursement of disbursements made by WENN and its affiliates), (i) all legal costs and expenses incurred by WENN, our company and any of their affiliates in connection with the WENN Offering; (ii) all business and travel expenses incurred by WENN, our company and any of their affiliates in connection the WENN Offering; and (iii) all fees and expenses incurred by WENN in connection with its conversion of cryptocurrencies into US dollars in connection with the WENN Offering, including bank, exchange and other similar fees and expenses. WENN will have the right to deduct any such amounts from the fees otherwise payable by it to our company and apply such deducted amounts to the payments to our company.

 

The business services agreement will continue for a period of one year unless earlier terminated by either our company or WENN.

 

Either the Company or WENN may terminate the business services agreement upon the provision of 30 days’ written notice to the other party. If the Company provides such notice, WENN may immediately terminate the business services agreement and the Company will be entitled to no further compensation except for any fees earned prior to the date of the termination. If WENN provides such notice, the Company may immediately terminate the business services agreement and will be entitled to no further compensation, except for the following lump sum payments: (i) any fees earned to the effective date of termination; and (ii) a lump sum payment of $105,000.

 

For the purpose of determining our fees earned to the date of the termination in the event that either party terminates the business services agreement, all fees for services in connection with the development and launch of the Platform (the business development and technical services and business launch services) and the additional fee of rights to receive an aggregate of 20,000,000 Tokens are deemed earned on the date of execution of the business services agreement and the work fee is deemed earned as of March 15, 2018. However, the work fees and additional fee are subject to the Renegotiation Obligation. As such, our work fee and additional fee are not determinable or deemed collectible for the financial reporting purposes until the WENN Offering is completed or, if applicable, those fees are renegotiated pursuant to the Renegotiation Obligation.

 

The Company’s chairman and one of its directors, Cameron Chell, is a director, officer and an indirect shareholder of Business Instincts Group Inc. which owns 10% of the common stock of WENN and he is also a director, officer and indirect shareholder of Blockchain Merchant Group, Inc. which owns 2.5% of the common stock of WENN and the Company owns 7.5% of the common stock of WENN. Mr. Chell is also a director, chairman, and officer of WENN. Mr. Elliott is a former officer of WENN.

 

7. SHARE CAPITAL

 

The Company’s common stock is issued at a $0.001 par value. 75,000,000 shares have been authorized. As at December 31, 2017, 11,600,000 shares were issued and outstanding (2016 – 6,000,000).

 

On October 30, 2017, the Company entered into a private placement subscription agreement with 35 subscribers, pursuant to which it issued an aggregate of 5,600,000 shares of common stock of the Company at a price of $0.10 per share for aggregate gross proceeds of $560,000.

 

F- 16

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

8. STOCK-BASED COMPENSATION

 

The Company has adopted the 2017 Equity Incentive Plan (“the Plan”) under which non-transferable options to purchase common shares of the Company may be granted to directors, officers, employees, or consultants of the Company. The terms of the Plan provide that the Board of Directors have the right to grant options to acquire common shares of the Company at not less than the closing market price of the shares on the day preceding the grant at terms of up to ten years. No amounts are paid or payable by the recipient on receipt of the options. The maximum number of options available for grant is 3,000,000. On January 22, 2018, the maximum number of options available for grant was increased to 3,900,000. As of December 31, 2017, there are 2,900,000 stock options issued (2016 – nil) and 100,000 stock options unissued (2016 – nil).

 

On October 15, 2017, the Company granted a total of 1,400,000 stock options to its directors and officers. The stock options are exercisable at the exercise price of $0.10 per share for a period of ten years from the date of grant. The stock options are exercisable as follows:

 

  (i) 1/3 upon the date of grant;
  (ii) 1/3 on the first anniversary date; and
  (iii) 1/3 on the second anniversary date.

 

On October 15, 2017, the Company granted a total of 1,325,000 stock options to its consultants. These stock options were granted to consultants who have provided their services for cash compensation below cost, with the stock options providing additional compensation in lieu of cash. The stock options are exercisable at the exercise price of $0.10 per share for a period of ten years from the date of grant. Of the stock options granted, 800,000 are exercisable as follows:

 

  (i) 1/3 upon the date of grant;
  (ii) 1/3 on the first anniversary date; and
  (iii) 1/3 on the second anniversary date.

 

The remaining 525,000 stock options are exercisable as follows:

 

  (i) 1/3 on the first anniversary date;
  (ii) 1/3 on the second anniversary date; and
  (iii) 1/3 on the third anniversary date.

 

On November 10, 2017, the Company granted a total of 175,000 stock options to its consultants. The stock options are exercisable at the exercise price of $0.10 per share for a period of ten years from the date of grant. The stock options are exercisable as follows:

 

  (i) 1/3 on the first anniversary date;
  (ii) 1/3 on the second anniversary date; and
  (iii) 1/3 on the third anniversary date.

 

F- 17

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

8. STOCK-BASED COMPENSATION (CONT’D)

 

Stock options granted are valued at the fair value calculation based off the Black-Scholes valuation model. The weighted average assumptions used in the calculation are as follows:

 

    For the years ended December 31,  
    2017     2016  
Share price   $ 0.10       N/A  
Exercise price   $ 0.10       N/A  
Time to maturity (years)     10       N/A  
Risk-free interest rate     2.28%-2.40 %     N/A  
Expected volatility     191.12%-191.75 %     N/A  
Dividend per share   $ 0.00       N/A  
Forfeiture rate     Nil       N/A  

 

    Number of Options     Weighted Average Grant-Date Fair Value ($)     Weighted Average Exercise Price ($)     Weighted Average Remaining Life (Yrs)  
Options outstanding, December 31, 2015     -       -       -       -  
Granted     -       -       -       -  
Exercised     -       -       -       -  
Forfeited     -       -       -       -  
Options outstanding, December 31, 2016     -       -       -       -  
Granted     2,900,000       0.10       0.10       9.8  
Exercised     -       -       -       -  
Forfeited     -       -       -       -  
Options outstanding, December 31, 2017     2,900,000       0.10       0.10       9.8  
Options exercisable, December 31, 2017     733,331       0.10       0.10       9.8  

 

9. INCOME TAXES

 

For the fiscal years 2017 and 2016, there was no provision for income taxes and deferred tax assets have been entirely offset by valuation allowances.

 

As of December 31, 2017 and 2016, the Company had net operating loss carry forwards of approximately $693,008 and $225,850, respectively. The carry forwards expire through the year 2037. The Company’s net operating loss carry forwards may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code.

 

F- 18

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

9. INCOME TAXES (CONT’D)

 

The Tax Cuts and Jobs Act was enacted on December 22, 2017 which reduced the U.S. corporate statutory tax rate from 35% to 21% beginning on January 1, 2018. The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 21% to loss before taxes (2016 – 21%)), as follows:

 

    For the years ended
December 31,
 
    2017     2016  
Net operating loss before taxes     (467,058 )     (88,196 )
Federal income tax rate     21 %     21 %
Tax expense (benefit) at the statutory rate     (98,082 )     (18,521 )
Non-deductible items                
Tax effect of stock-based compensation (non-qualifying options)     44,401       -  
Change in valuation allowance     53,681       18,521  
Total     -       -  

 

The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities. The tax effect of significant components of the Company’s deferred tax assets at December 31, 2017 and 2016, respectively, are as follows:

 

    2017     2016  
Deferred tax asset:                
Net operating loss carry forwards     101,110       47,429  
Total gross deferred tax assets     101,110       47,429  
Less: Deferred tax asset valuation allowance     (101,110 )     (47,429 )
Total net deferred tax assets     -       -  

 

In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

 

The returns filed from the year 2014 going-forward are subject to examination by the IRS.

 

F- 19

 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

10. FINANCIAL INSTRUMENTS

 

Fair value is an exit price representing the amount that would be received to sell an asset or aid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

 

A three-tier fair value hierarchy is established as a base for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

 

  Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
  Level 2: Observable inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
  Level 3: unobservable inputs reflecting our own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participants assumptions that are reasonably available.
    Investment in related party

 

    As of December 31,  
    2017     2016  
Investment in related party     37       -  

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

 

11. SUBSEQUENT EVENTS

 

On January 3, 2018, WENN Digital Inc. repaid the outstanding $100,000 loan plus accrued interest of $950.

 

As Lead Director, Mr. Geiskopf will be receiving $120,000 in annual compensation.

 

On January 22, 2018, we amended our 2017 Equity Incentive Plan to increase the number of shares of our common stock available for the grant of awards under the plan from 3,000,000 shares to 3,900,000 shares.

 

On February 9, 2018, we appointed Edmund C. Moy as a director of the Company. We granted 100,000 stock options to Mr. Moy at an exercise price of $0.60 per share. Mr. Moy will be receiving $50,000 in annual compensation.

 

On February 14, 2018, we changed our name from “AppCoin Innovations Inc.” to “ICOX Innovations Inc.”. The name change became effective with the OTC Pink operated by the OTC Markets Group at opening for trading on February 14, 2018 under the stock symbol “ICOX”.

 

On February 16, 2018, we appointed Steve Beauregard as Member of the Advisory Board of the Company. We granted 25,000 stock options at an exercise price of $0.60 per share. Mr. Beauregard will be receiving $25,000 in annual compensation.

 

On February 16, 2018, we appointed Russell Stidolph as Member of the Advisory Board of the Company. We granted 50,000 stock options at an exercise price of $0.60 per share.

 

F- 20
 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

11. SUBSEQUENT EVENTS (CONT’D)

 

On March 13, 2018, we entered into a loan agreement with Michael Blum whereby Mr. Blum advanced $100,000 to us. The principal amount of $100,000 is repayable on demand (but no longer than a term of six month) and bears simple interest at a rate of 12% per annum, which is payable upon repayment of the principal amount of $100,000. We are entitled to prepay the whole or any portion of the principal amount of $100,000, plus accrued interest on the portion of the principal amount of $100,000 being prepaid, at any time. The loan agreement provides that we must, within five days of the release of funds to us from our private placement of subscription receipts that closed in March 2018, repay the principal amount of $100,000 plus accrued interest in full. The loan agreement also provides that if we obtain any indebtedness on terms that are superior to the terms set forth in the loan agreement, then the terms under the loan agreement will be deemed to be amended, as of March 13, 2018, to match such superior terms in a manner and on terms as nearly equivalent as practicable to such superior terms.

 

On March 12 and 19, 2018, we completed private placements of an aggregate of 9,113,659 subscription receipts at a price of $0.60 per subscription receipt for aggregate gross proceeds of $5,468,195.40. In the event of the occurrence of the escrow release condition (as defined below), each subscription receipt will automatically convert into one share of our common stock, for no additional consideration. The subscription amounts will be held by an escrow agent until the escrow release condition. The escrow release condition is the receipt by our company of conditional approval for the listing of the shares of our common stock on a Canadian stock exchange. In the event that the escrow release condition is satisfied prior to 5:00 p.m. (Vancouver time) on May 31, 2018, we will deliver a notice to the escrow agent confirming the escrow release condition has been satisfied. Upon receipt of the notice, the escrow agent will, as soon as practicable thereafter, release the subscription amounts to our company and each subscription receipt will automatically convert into one share of our common stock without payment of any additional consideration. If the escrow release condition is not satisfied by 5:00 p.m. (Vancouver time) on May 31, 2018 or if we deliver a written default notice to the escrow agent that the escrow release condition will not be satisfied by that time, the subscription receipts will expire and be of no further force and effect, effective as of the earlier of (i) 5:00 p.m. (Vancouver time) on May 31, 2018 and (ii) the date of the receipt of the default notice, and the subscribers will be entitled to receive from the escrow agent a refund of the subscription amounts held in escrow, without interest and less applicable expenses. In connection with the closing of the private placements, we paid cash finder’s fees in the aggregate amount of $29,399.97 and we agreed to issue 160,865 shares of our common stock at a deemed price of $0.60 per share as the finder’s fee, which will be issued only if the subscription receipts are converted into shares of our common stock.

 

In connection with this private placement, the Company agreed with each subscriber who purchased these Subscription Receipts to prepare and file a registration statement with respect to 50% of the Shares issuable upon conversion of the Subscription Receipts with the United States Securities and Exchange Commission within 90 days following the closing of the private placement and agreed to use commercially reasonable efforts to have the registration statement declared effective by the United States Securities and Exchange Commission as soon as possible after filing.

 

None of the securities issued in the private placement have been registered under the United States Securities Act of 1933, as amended (the “1933 Act”), and none of them may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act.

 

F- 21
 

 

ICOX Innovations Inc.
(formerly AppCoin Innovations Inc.)
Notes to Consolidated Financial Statements
December 31, 2017 and 2016

 

11. SUBSEQUENT EVENTS (CONT’D)

 

On March 27, 2018, we entered into a loan agreement with Greg Burnett whereby Mr. Burnett advanced $100,000 to us. The principal amount of $100,000 is repayable on demand (but no longer than a term of six month) and bears simple interest at a rate of 12% per annum, which is payable upon repayment of the principal amount of $100,000. We are entitled to prepay the whole or any portion of the principal amount of $100,000, plus accrued interest on the portion of the principal amount of $100,000 being prepaid, at any time. The loan agreement provides that we must, within five days of the release of funds to us from our private placement of subscription receipts that closed in March 2018, repay the principal amount of $100,000 plus accrued interest in full. The loan agreement also provides that if we obtain any indebtedness on terms that are superior to the terms set forth in the loan agreement, then the terms under the loan agreement will be deemed to be amended, as of March 27, 2018, to match such superior terms in a manner and on terms as nearly equivalent as practicable to such superior terms.

 

F- 22
 

 

ICOX Innovations Inc.

Condensed Consolidated Balance Sheets

 

    March 31, 2018     December 31, 2017  
    (unaudited)        
Assets                
                 
Current Assets                
Cash and cash equivalents   $ 28,448     $ 214,993  
Accounts receivable, related party     -       500,000  
Prepaid expenses     84,166       30,000  
Prepaid expenses, related party     35,000       35,000  
Deferred service costs     61,228       21  
Deferred offering costs     121,558       -  
Related party loans receivable and related accrued interest     -       100,752  
Subscription receipts in escrow     5,468,195       -  
Total Current Assets     5,798,595       880,766  
                 
Investment, related party     37       37  
Total Assets   $ 5,798,632     $ 880,803  
                 
Liabilities and Stockholders’ Deficit                
                 
Current Liabilities                
Accounts payable and accrued expenses   $ 363,504     $ 131,303  
Accounts payable and accrued expenses, related party     30,531       51,616  
Loans payable, related party     200,000       -  
Accrued interest on loans payable, related party     723       -  
Total Current Liabilities     594,758       182,919  
                 
Convertible notes payable     500,325       500,325  
Accrued interest on convertible notes     68,744       52,949  
Total Liabilities     1,163,827       736,193  
                 
Commitments and Contingencies     -       -  
                 
Mezzanine Equity                
Subscription receipts     5,468,195       -  
Total Mezzanine Equity     5,468,195       -  
                 
Stockholders’ Equity (Deficit)                
Common stock, $0.001 par value, 75,000,000 shares authorized; 11,600,000 shares issued and outstanding as at March 31, 2018 and December 31, 2017, respectively     11,600       11,600  
Additional paid-in-capital     870,536       826,018  
Accumulated deficit     (1,715,526 )     (693,008 )
Total Stockholders’ Equity (Deficit)     (833,390 )     144,610  
                 
Total Liabilities and Stockholders’ Equity (Deficit)   $ 5,798,632     $ 880,803  

 

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

 

F- 23
 

 

ICOX Innovations Inc.

Condensed Consolidated Statement of Operations

(Unaudited)

 

    Three Months Ended
March 31, 2018
    Three Months Ended
March 31, 2017
 
             
Revenues                
Service revenue   $ -     $ -  
Total revenues     -       -  
                 
Operating expenses                
General and administrative expense     514,117       29,241  
Consulting fees, related party     105,000       -  
Service costs     387,080       -  
Total operating expenses     1,006,197       29,241  
                 
Net loss from operations     (1,006,197 )     (29,241 )
                 
Other income (expense)                
Interest income, related party     198       -  
Note interest expense     (16,519 )     (7,315 )
Total other income (expense)     (16,321 )     (7,315 )
                 
Provision for taxes     -       -  
                 
Net loss   $ (1,022,518 )   $ (36,556 )
                 
Loss per common share – Basic and diluted   $ (0.09 )   $ (0.01 )
                 
Weighted average number of common shares outstanding, basic and diluted     11,600,000       6,000,000  

 

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

 

F- 24
 

 

ICOX Innovations Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

    Three Months Ended
March 31, 2018
    Three Months Ended
March 31, 2017
 
Operating activities                
Net loss for the period   $ (1,022,518 )   $ (36,556 )
Adjustments to reconcile net loss to net cash used in operating activities                
Stock-based compensation     3,229       -  
Stock-based compensation, related party     41,289       -  
Changes in operating assets and liabilities                
Accounts receivable, related party     500,000       -  
Prepaid expense     (54,166 )     -  
Deferred service costs     (61,207 )     -  
Deferred offering costs     (121,558 )     -  
Accrued interest receivable, related party     752       -  
Accounts payable and accrued expenses     232,201       -  
Accounts payable and accrued expenses, related party     (21,085 )     7,315  
Accrued interest on loans payable, related party     723       (43,893 )
Accrued interest on notes payable     15,795       -  
Net cash (used in) operating activities     (486,545 )     (73,134 )
                 
Investing activities                
Repayment of loan issued to related party     100,000       -  
Net cash provided by investing activities     100,000       -  
                 
Financing activities                
Proceeds from issuance of loans payable, related party     200,000       -  
Proceeds from issuance of convertible notes payable     -       20,000  
Net cash provided by financing activities     200,000       20,000  
                 
Net changes in cash and equivalents     (186,545 )     (53,134 )
                 
Cash and equivalents at beginning of the period     214,993       56,050  
                 
Cash and equivalents at end of the period   $ 28,448     $ 2,916  
                 
SUPPLEMENTAL CASH FLOW INFORMATION                
Cash paid in interest   $ -     $ -  
Cash paid for income taxes   $ -     $ -  
                 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES                
Stock-based compensation   $ 3,229     $ -  
Stock-based compensation, related party   $ 41,289     $ -  
Subscription receipts - escrow   $ 5,468,195          

 

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

 

F- 25
 

 

ICOX Innovations Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2018 and for the three months ended March 31, 2018 and 2017

 

1. NATURE AND CONTINUANCE OF OPERATIONS

 

ICOX Innovations Inc. (formerly AppCoin Innovations Inc., formerly RedStone Literary Agents, Inc.) (the “Company”) was incorporated under the laws of State of Nevada on July 20, 2010, with an authorized capital of 75,000,000 common shares, having a par value of $0.001 per share. During the period ended December 31, 2010, the Company commenced operations by issuing shares and developing its publishing service business, focused on representing authors to publishers.

 

On February 14, 2018, the Company changed its name from “AppCoin Innovations Inc.” to “ICOX Innovations Inc.”

 

The Company’s new business model provides a turnkey set of services for companies to develop and integrate blockchain and cryptocurrency technologies into their business operations. The Company will enable its customers to focus on their core competencies while providing the necessary resources and expertise to execute a strategy that will enable companies to integrate new blockchain plus cryptocurrency technologies into their business operations. The Company will be compensated on a fee-for-services model. The Company may also accept tokens or coins in payment for its services, to the extent permitted under applicable law.

 

The Company’s services will include strategic planning, project planning, structure development and administration, business plan modeling, technology development support, whitepaper preparation, due diligence reporting, governance planning and management.

 

Going Concern

 

These consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $1,715,526 as of March 31, 2018 and further losses are anticipated in the pursuit of the Company’s new service business opportunity, raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from directors and/or the private placement of common stock.

 

In order to address the above factors, subsequent to year end, the Company completed private placements of an aggregate of 9,113,659 subscription receipts at a price of $0.60 per subscription receipt for aggregate gross proceeds of $5,468,195.

 

The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

F- 26
 

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The interim condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles (“ GAAP ”) in the United States of America.

 

Basis of Consolidation

 

The interim condensed consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany transactions and balances have been eliminated.

 

Unaudited Interim Financial Information

 

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2017 and notes thereto contained in the information as part of the Company’s Annual Report on Form 10-K, which was filed with the SEC on April 2, 2018.

 

Use of Estimates

 

The preparation of interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and these differences could be material.

 

Deferred Offering Costs

 

Costs that the Company incurred in relation to the private placement that has not yet closed has been recorded as deferred offering costs on the Condensed Balance Sheet. Once the private placement is closed then these deferred offering costs will be charged to equity as share issue costs. If the private placement does not close, then these costs will be written off during that period.

 

Mezzanine Equity

 

Subscription receipts that have been received by the Company in relation to the private placement that has not yet closed has been recorded as Mezzanine Equity on the Condensed Balance Sheet. These funds are being recorded separately from shareholders’ equity.

 

Reclassification

 

Certain reclassifications have been made to the 2017 financial statements in order for them to conform to the 2018 presentation. Such reclassifications have no impact on the Company’s financial position or results or operations.

 

F- 27
 

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

 

Recently Adopted Accounting Pronouncements

 

Statement of Cash Flows (ASU 2016-15)

 

This update provides specific guidance to clarify how entities should classify certain cash receipts and cash payments on the statement of cash flows. The update also clarifies the application of the predominance principle when cash receipts and cash payments have aspects of more than one class of cash flows. The Company adopted this standard effective January 1, 2018. The adoption of this update had no material effect on our financial statements.

 

Financial Instruments – Recognition and Measurement (ASU 2016-01)

 

This update retains the current accounting for classifying and measuring investments in debt securities and loans, but requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation. The Company adopted this standard effective January 1, 2018. The adoption of this update had no material effect on our financial statements.

 

3. NOTES PAYABLE

 

On September 14, 2015, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ First Note ”) in the principal amount of $73,825 to one subscriber. The First Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the First Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at March 31, 2018, the First Note had a balance outstanding of $107,611 (December 31, 2017 - $104,334), comprised of a principal amount of $73,825 and accrued interest of $33,786 (December 31, 2017 - $30,509). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

On December 31, 2016, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Second Note ”) in the principal amount of $50,000 to one subscriber. The Second Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Second Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at March 31, 2018, the Second Note had a balance outstanding of $61,243 (December 31, 2017 - $59,025), comprised of a principal amount of $50,000 and accrued interest of $11,243 (December 31, 2017 - $9,025). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

On December 31, 2016, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Third Note ”) in the principal amount of $21,500 to one subscriber. The Third Note included repayment of the principal amount of $20,000 for an unsecured note issued on June 6, 2016 plus a $1,500 restructuring fee. The Third Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Third Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at March 31, 2018, the Third Note had a balance outstanding of $26,335 (December 31, 2017 - $25,380), comprised of a principal amount of $21,500 and accrued interest of $4,835 (December 31, 2017 - $3,880). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

F- 28
 

 

3. NOTES PAYABLE (CONT’D)

 

On March 2, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Fourth Note ”) in the principal amount of $20,000 to one subscriber. The Fourth Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Fourth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at March 31, 2018, the Fourth Note had a balance outstanding of $23,886 (December 31, 2017 - $22,998), comprised of a principal amount of $20,000 and accrued interest of $3,886 (December 31, 2017 - $2,998). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

On June 8, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Fifth Note ”) in the principal amount of $10,000 to one subscriber. The Fifth Note, and accrued interest, will mature five (5) years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount of the Fifth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.03 per share. As at March 31, 2018, the Fifth Note had a balance outstanding of $11,460 (December 31, 2017 - $11,016), comprised of a principal amount of $10,000 and accrued interest of $1,460 (December 31, 2017 - $1,016). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

On September 7, 2017, the Company received a $250,000 loan from a less than 5% shareholder. The loan is unsecured, repayable on demand and is non-interest bearing. On October 30, 2017, this loan was used to subscribe to an unsecured convertible debenture (the “ Sixth Note ”) in the principal amount of $250,000 to one subscriber. The Sixth Note, and accrued interest, will mature three (3) years from the date of issuance and will bear interest at the rate of 10% interest per annum, compounded annually. The principal amount of the Sixth Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.10 per share. As at March 31, 2018, the Sixth Note had a balance outstanding of $260,411 (December 31, 2017 - $254,247), comprised of a principal amount of $250,000 and accrued interest of $10,411 (December 31, 2017 - $4,247). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

On October 30, 2017, the Company entered into a private placement subscription agreement and issued an unsecured convertible note (the “ Seventh Note ”) in the principal amount of $75,000 to one subscriber. The Seventh Note, and accrued interest, will mature three (3) years from the date of issuance and will bear interest at the rate of 10% interest per annum, compounded annually. The principal amount of the Seventh Note, plus any interest accrued thereon, may be converted into shares of common stock of the Company at a conversion price of $0.10 per share. As at March 31, 2018, the Seventh Note had a balance outstanding of $78,123 (December 31, 2017 - $76,274), comprised of a principal amount of $75,000 and accrued interest of $3,123 (December 31, 2017 - $1,274). The Company has determined that no beneficial conversion feature exists due to the share value on the date of issuance.

 

Based upon the balances as of March 31, 2018, the convertible notes and the related interest will come due in the following years:

 

    Principal     Interest     Total  
2018   $ -     $ -     $ -  
2019     -       -       -  
2020     398,825       47,320       446,145  
2021     71,500       16,078       87,578  
2022     30,000       5,346       35,346  
Total   $ 500,325     $ 68,744     $ 569,069  

 

F- 29
 

 

4. LOANS PAYABLE – RELATED PARTY

 

On March 13, 2018, we entered into a loan agreement with Michael Blum, our Chief Financial Officer, whereby Mr. Blum advanced $100,000 to us. The principal amount of $100,000 is repayable on demand (but no longer than a term of six month) and bears simple interest at a rate of 12% per annum, which is payable upon repayment of the principal amount of $100,000. We are entitled to repay the whole or any portion of the principal amount of $100,000, plus accrued interest on the portion of the principal amount of $100,000 being repaid, at any time. The loan agreement provides that we must, within five days of the release of funds to us from our private placement of subscription receipts that closed in March 2018, repay the principal amount of $100,000 plus accrued interest in full. The loan agreement also provides that if we obtain any indebtedness on terms that are superior to the terms set forth in the loan agreement, then the terms under the loan agreement will be deemed to be amended, as of March 13, 2018, to match such superior terms in a manner and on terms as nearly equivalent as practicable to such superior terms. As at March 31, 2018, interest accrued is $592.

 

On March 27, 2018, we entered into a loan agreement with Greg Burnett, a member of our Advisory Board, whereby Mr. Burnett advanced $100,000 to us. The principal amount of $100,000 is repayable on demand (but no longer than a term of six month) and bears simple interest at a rate of 12% per annum, which is payable upon repayment of the principal amount of $100,000. We are entitled to repay the whole or any portion of the principal amount of $100,000, plus accrued interest on the portion of the principal amount of $100,000 being repaid, at any time. The loan agreement provides that we must, within five days of the release of funds to us from our private placement of subscription receipts that closed in March 2018, repay the principal amount of $100,000 plus accrued interest in full. The loan agreement also provides that if we obtain any indebtedness on terms that are superior to the terms set forth in the loan agreement, then the terms under the loan agreement will be deemed to be amended, as of March 27, 2018, to match such superior terms in a manner and on terms as nearly equivalent as practicable to such superior terms. As at March 31, 2018, interest accrued is $131.

 

Based upon the balances as of March 31, 2018, the loans payable and the related interest will come due in the following years:

 

    Principal     Interest     Total  
2018   $ 200,000     $ 723     $ 200,723  
Total   $ 200,000     $ 723     $ 200,723  

 

5. RELATED PARTY TRANSACTIONS

 

In support of the Company’s efforts and cash requirements, it may rely on advances from stockholders until such time as the Company can support its operations through revenue generation or attain adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by stockholders. Amounts represent advances or amounts paid in satisfaction of liabilities.

 

The Company’s office premises were provided to it at no cost by one of its directors. This director did not take any fees for serving as director during the period ended March 31, 2018.

 

In October 2017, the Company signed an agreement with a company in which the Company’s Chairman is a director, officer, and 30.5% shareholder, to provide strategic management services. The agreement is for a two-year term that will automatically be renewed unless: (i) mutually agreed to by BIG and us, or (ii) written notice of non-renewal is provided by the non-renewing party to the other at least 90 days prior to the end of the term. This agreement committed the Company to pay $35,000 a month and a signing bonus of $100,000 payable as follows: (i) $50,000 upon closing of up to $750,000 of equity financing and (ii) $50,000 payable on signing of the first client agreement. As of March 31, 2018, the Company had trade and other payables owing to this related party of $30,531.

 

F- 30
 

 

5. RELATED PARTY TRANSACTIONS (CONT’D)

 

Future minimum payments per the agreement are:

 

2018   $ 315,000  
2019     350,000  
Total   $ 665,000  

 

On December 29, 2017, the Company signed a master service agreement with WENN Digital Inc. (“WENN”), a company in which there is a common director. The agreement was amended on March 15, 2018, pursuant to which the Company changed the scope of services to provide WENN with the services in connection with WENN’s development of an image rights management and protection platform (the “Platform”) using blockchain technology, including (i) the business development and technical services, (ii) the business launch services and (iii) the post-business launch support services.

 

The business services agreement with WENN provides that the fees for the services provided in connection with the development and launch of the Platform (the business development and technical services and business launch services) were deemed earned on the date of execution of the business services agreement. The Company has waived WENN’s requirement to pay the $250,000 fixed fee in connection with the business development and technical services as a concession. The Company has recognized the business development and technical service fee of $500,000 during the year end December 31, 2017, paid in January by WENN upon the completion of its first round of pre-ICO fundraising.

 

The fees for the post-business launch support services (the “Monthly Services” ) are $35,000 per month and they will be due at the beginning of each month in which the Monthly Services are performed. With respect to the Monthly Services, the Company has agreed to provide the Monthly Services for one year commencing on the date of the Platform Launch (as defined below), after which the business services agreement and the provision of the Monthly Services will automatically renew for a one year period and can be terminated by either our company or WENN with 30 days’ written notice. “Platform Launch” means the publicized product launch of the Platform to the general public, including the ability of the general public to use Tokens as the primary means of exchange for transactions on the Platform.

 

In addition, the business services agreement with WENN provides that the work fee in the amount of $4,175,000 is deemed earned on March 15, 2018 and the work fee is subject to a Renegotiation Obligation (as defined below). The business services agreement with WENN also provides that the additional fee of rights to receive an aggregate of 20,000,000 Platform tokens or coins (the “Tokens” ) pursuant to a Simple Agreement for Future Tokens is also deemed earned on the date of execution of the business services agreement and the additional fee is subject to a Renegotiation Obligation. However, for financial reporting purposes, the work fee and additional fee are deemed earned on the date of the launch of the Platform. If WENN does not raise more than $40 million in connection with its offer and sale for cash of (i) one or more Simple Agreements for Future Tokens ( “SAFTs” ), which SAFTs will entitle the holders thereof to receive Tokens under certain circumstances, and/or, (ii) Tokens, in the event that WENN determines to offer and sell Tokens in lieu of or in addition to SAFTs in connection with its fundraising efforts (collectively, the “WENN Offering” ), prior to May 31, 2018, the Company will be required to return the work fees and additional fee to WENN and WENN and our company will be required to negotiate in good faith the amount of each of such fee (such requirement to negotiate is referred to herein as the “Renegotiation Obligation” ).

 

F- 31
 

 

5. RELATED PARTY TRANSACTIONS (CONT’D)

 

The Company has agreed that WENN will not be responsible for any out-of-pocket expenses incurred by our company in connection with our performance of the services. In addition, the Company has agreed to pay, and otherwise be financially responsible for (including through the reimbursement of disbursements made by WENN and its affiliates), (i) all legal costs and expenses incurred by WENN, our company and any of their affiliates in connection with the WENN Offering; (ii) all business and travel expenses incurred by WENN, our company and any of their affiliates in connection the WENN Offering; and (iii) all fees and expenses incurred by WENN in connection with its conversion of cryptocurrencies into US dollars in connection with the WENN Offering, including bank, exchange and other similar fees and expenses. WENN will have the right to deduct any such amounts from the fees otherwise payable by it to our company and apply such deducted amounts to the payments to our company.

 

The business services agreement will continue for a period of one year unless earlier terminated by either our company or WENN.

 

Either the Company or WENN may terminate the business services agreement upon the provision of 30 days’ written notice to the other party. If the Company provides such notice, WENN may immediately terminate the business services agreement and the Company will be entitled to no further compensation except for any fees earned prior to the date of the termination. If WENN provides such notice, the Company may immediately terminate the business services agreement and will be entitled to no further compensation, except for the following lump sum payments: (i) any fees earned to the effective date of termination; and (ii) a lump sum payment of $105,000.

 

For the purpose of determining our fees earned to the date of the termination in the event that either party terminates the business services agreement, all fees for services in connection with the development and launch of the Platform (the business development and technical services and business launch services) and the additional fee of rights to receive an aggregate of 20,000,000 Tokens are deemed earned on the date of execution of the business services agreement and the work fee is deemed earned as of March 15, 2018. However, the work fees and additional fee are subject to the Renegotiation Obligation. As such, our work fee and additional fee are not determinable or deemed collectible for the financial reporting purposes until the WENN Offering is completed or, if applicable, those fees are renegotiated pursuant to the Renegotiation Obligation.

 

The Company’s chairman and one of its directors, Cameron Chell, is a director, officer and an indirect shareholder of Business Instincts Group Inc. which owns 10% of the common stock of WENN and he is also a director, officer and indirect shareholder of Blockchain Merchant Group, Inc. which owns 2.5% of the common stock of WENN and the Company owns 7.5% of the common stock of WENN. Mr. Chell is also a director, chairman, and officer of WENN. Mr. Elliott is a former officer of WENN.

 

F- 32
 

 

6. SHARE CAPITAL

 

The Company’s common stock is issued at a $0.001 par value. 75,000,000 shares have been authorized. As at March 31, 2018, 11,600,000 shares were issued and outstanding (December 31, 2017 – 11,600,000).

 

On March 12 and 19, 2018, we completed private placements of an aggregate of 9,113,659 subscription receipts at a price of $0.60 per subscription receipt for aggregate gross proceeds of $5,468,195. In the event of the occurrence of the escrow release condition (as defined below), each subscription receipt will automatically convert into one share of our common stock, for no additional consideration. The subscription amounts will be held by an escrow agent until the escrow release condition. The escrow release condition is the receipt by our company of conditional approval for the listing of the shares of our common stock on a Canadian stock exchange. In the event that the escrow release condition is satisfied prior to 5:00 p.m. (Vancouver time) on May 31, 2018, we will deliver a notice to the escrow agent confirming the escrow release condition has been satisfied. Upon receipt of the notice, the escrow agent will, as soon as practicable thereafter, release the subscription amounts to our company and each subscription receipt will automatically convert into one share of our common stock without payment of any additional consideration. If the escrow release condition is not satisfied by 5:00 p.m. (Vancouver time) on May 31, 2018 or if we deliver a written default notice to the escrow agent that the escrow release condition will not be satisfied by that time, the subscription receipts will expire and be of no further force and effect, effective as of the earlier of (i) 5:00 p.m. (Vancouver time) on May 31, 2018 and (ii) the date of the receipt of the default notice, and the subscribers will be entitled to receive from the escrow agent a refund of the subscription amounts held in escrow, without interest and less applicable expenses. In connection with the closing of the private placements, we paid cash finder’s fees in the aggregate amount of $29,400 and we agreed to issue 160,865 shares of our common stock at a deemed price of $0.60 per share as the finder’s fee, which will be issued only if the subscription receipts are converted into shares of our common stock.

 

In connection with this private placement, the Company agreed with each subscriber who purchased these Subscription Receipts to prepare and file a registration statement with respect to 50% of the Shares issuable upon conversion of the Subscription Receipts with the United States Securities and Exchange Commission within 90 days following the closing of the private placement and agreed to use commercially reasonable efforts to have the registration statement declared effective by the United States Securities and Exchange Commission as soon as possible after filing.

 

None of the securities issued in the private placement have been registered under the United States Securities Act of 1933, as amended (the “1933 Act”), and none of them may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act.

 

7. STOCK-BASED COMPENSATION

 

The Company has adopted the 2017 Equity Incentive Plan (“the Plan”) under which non-transferable options to purchase common shares of the Company may be granted to directors, officers, employees, or consultants of the Company. The terms of the Plan provide that the Board of Directors have the right to grant options to acquire common shares of the Company at not less than the closing market price of the shares on the day preceding the grant at terms of up to ten years. No amounts are paid or payable by the recipient on receipt of the options. As of December 31, 2017, the maximum number of options available for grant was 3,000,000 shares. On January 22, 2018, the maximum number of options available for grant was increased to 3,900,000 shares. As of March 31, 2018, there are 3,075,000 stock options issued (December 31, 2017 – 2,900,000) and 825,000 stock options unissued (December 31, 2017 – 100,000).

 

F- 33
 

 

7. STOCK-BASED COMPENSATION (CONT’D)

 

On February 9, 2018, the Company granted a total of 100,000 stock options to a director. The stock options are exercisable at the exercise price of $0.60 per share for a period of ten years from the date of grant. The stock options are exercisable as follows:

 

  (i) 1/3 upon the date of grant;
     
  (ii) 1/3 on the first anniversary date; and
     
  (iii) 1/3 on the second anniversary date.

 

On February 16, 2018, the Company granted a total of 75,000 stock options to two consultants. The stock options are exercisable at the exercise price of $0.60 per share for a period of ten years from the date of grant. The stock options are exercisable as follows:

 

  (i) 1/3 on the first anniversary date;
     
  (ii) 1/3 on the second anniversary date; and
     
  (iii) 1/3 on the third anniversary date.

 

Stock options granted are valued at the fair value calculation based off the Black-Scholes valuation model. The weighted average assumptions used in the calculation are as follows:

 

    Three Months Ended March 31,  
    2018     2017  
Share price   $ 0.60       N/A  
Exercise price   $ 0.60       N/A  
Time to maturity (years)     10       N/A  
Risk-free interest rate     2.83%-2.87 %     N/A  
Expected volatility     187.27%-187.29 %     N/A  
Dividend per share   $ 0.00       N/A  
Forfeiture rate     Nil       N/A  

 

    Number of
Options
    Weighted
Average
Grant-Date
Fair Value ($)
    Weighted
Average
Exercise
Price ($)
    Weighted
Average
Remaining
Life (Yrs)
 
Options outstanding, December 31, 2017     2,900,000       0.10       0.10       9.5  
Granted     175,000       0.60       0.60       9.9  
Exercised     -       -       -       -  
Forfeited     -       -       -       -  
Options outstanding, March 31, 2018     3,075,000       0.12       0.13       9.5  
Options exercisable, March 31, 2018     766,664       0.12       0.12       9.5  

 

8. SUBSEQUENT EVENTS

 

On April 13, 2018, we entered into a loan agreement with a subscriber whereby the subscriber advanced $200,000 to us. The principal amount of $200,000 is repayable on demand (but no longer than a term of six month) and bears simple interest at a rate of 12% per annum, which is payable upon repayment of the principal amount of $200,000. We are entitled to repay the whole or any portion of the principal amount of $200,000, plus accrued interest on the portion of the principal amount of $200,000 being repaid, at any time.

 

F- 34
 

 

Management’s Discussion and Analysis of Financial Condition
and Results of Operations

 

Our management’s discussion and analysis provides a narrative about our financial performance and condition that should be read in conjunction with the audited and unaudited consolidated financial statements and related notes thereto included in this prospectus. This discussion contains forward looking statements reflecting our current expectations and estimates and assumptions about events and trends that may affect our future operating results or financial position. Our actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements due to a number of factors, including, but not limited to, those set forth in the sections of this prospectus titled “Risk Factors” beginning at page 5 above and “Forward-Looking Statements” beginning at page 13 above.

 

Overview

 

We were incorporated under the laws of the State of Nevada on July 20, 2010. Following incorporation, we commenced the business of representing authors to publishers. Upon the resignation of Mary Wolf as an officer of our company on August 28, 2014, we ceased pursuing the business of representing authors to publishers and sought new business opportunities.

 

In July 2017, we decided to operate a new business of providing services for blockchain and cryptocurrency technologies.

 

Our new business is a services and development business that provides a turnkey set of services for companies to develop and integrate blockchain and cryptocurrency technologies into their business operations. We anticipate that we will enable companies to focus on their core competencies while providing the necessary resources and expertise to execute a strategy that will enable companies to integrate new blockchain plus cryptocurrency technologies into their business operations. Our plan is to be compensated on a fee-for-services model. We may also accept tokens, coins or equity in payment for our services, to the extent permitted under applicable law.

 

On December 29, 2017, we entered into a business services agreement with WENN, on March 19, 2018, we entered into the amendment no. 1 to business services agreement dated as of March 15, 2018 with WENN, and, on July 9, 2018, we entered into the amendment no. 2 to business services agreement dated as of July 9, 2018 with WENN. Pursuant to the business services agreement, we agreed to provide WENN with the services in connection with WENN’s development of the Platform using blockchain technology, including (i) the business development and technical services, (ii) the business launch services and (iii) the post-business launch support services.

 

WENN has entered into a licensing partnership agreement with Eastman Kodak Company, which announced the launch of the KODAKOne blockchain platform and KODAKCoin ICO. We are providing the services relating to the KODAKOne blockchain platform and the KODAKCoin ICO pursuant to a business services agreement dated December 29, 2017, as amended as of March 15, 2018 and July 9 , 2018 with WENN.

 

Year Ended December 31, 2017 and December 31, 2016

 

Results of Operations

 

Revenue

 

We had revenues of $500,000 for the year ended December 31, 2017 compared to $0 in 2016.

 

The business services agreement dated December 29, 2017, as amended as of March 15, 2018 and July 9, 2018 with WENN provides that the fees for the services provided in connection with the development and launch of the Platform (the business development and technical services and business launch services) were deemed earned on the date of execution of the business services agreement. We have waived WENN’s requirement to pay the $250,000 fixed fee in connection with the business development and technical services as a concession. We have recognized the business development and technical services fee of $500,000 during the year ended December 31, 2017, which WENN paid in January 2018 upon the completion of its first round of pre-ICO fundraising.

 

55
 

 

Operating Expenses

 

We incurred operating expenses of $932,843 and $74,183 for the years ended December 31, 2017 and 2016, respectively, representing an increase of $858,660 between the two periods. These expenses consisted primarily of consulting fees, service costs, professional fees, stock-based compensation, interest and bank charges, and other general and administrative expenses. The increase in operating expenses between the two periods related to an increase in consulting fees from $9,000 in 2016 to $547,542 in 2017 due to our company entering into a consulting agreement with Business Instincts Group and other individuals to provide strategic and project management services, an increase in service costs from $0 in 2016 to $199,920 in 2017 due to services provided to our customer, an increase in professional fees from $58,625 in 2016 to $87,014 in 2017 due to additional legal and accounting costs incurred due to the change in business, an increase in interest and bank charges from $1,500 in 2016 to $1,896 as bank fees has increased to higher level of activities in 2017, and an increase in other general and administrative expenses from $5,058 in 2016 to $96,471 in 2017 as travel costs and advertising expenses have risen as we met with investors, potential clients, and sought to brand our company, and includes the stock-based compensation issued to our directors in 2017.

 

Other Income (Expense)

 

Other income includes $789 interest earned on a loan receivable form a related party compared to $0 for the same period last year. Other expenses include, interest expense on convertible notes payable of $35,004 for the year ended December 31, 2017 compared to $14,013 for the same period last year

 

Net Loss from Operations

 

We incurred net losses from operations of $432,843 and $74,183 for the years ended December 31, 2017 and 2016, respectively, representing a decrease of $358,660, primarily attributable to the factors discussed above under the heading “Operating Expenses”.

 

Liquidity and Capital Resources

 

Working Capital

 

    As at
December 31, 2017
    As at
December 31, 2016
 
Current Assets   $ 880,766     $ 56,050  
Current Liabilities   $ 182,919     $ 49,013  
Working Capital   $ 697,847     $ 7,037  

 

Current Assets

 

Current assets of $880,766 as at December 31, 2017 and $56,050 as at December 31, 2016 were comprised of only cash and cash equivalents, accounts receivable, prepaid expenses, and an outstanding loan receivable. The increase in current assets as at December 31, 2017 was due to our company receiving $325,000 in connection with the purchase of convertible notes, $560,000 for a private placement in exchange for shares and $500,000 in revenue.

 

Current Liabilities

 

Current liabilities as at December 31, 2017 were attributable to $131,303 in accounts payable and accrued expenses and $51,616 in accounts payable, related party compared to $49,013 in accounts payable and accrued expenses as at December 31, 2016.

 

56
 

 

Cash Flow

 

Our cash flows for the year ended December 31, 2017 and December 31, 2016 are as follows:

 

    Year ended December 31, 2017     Year ended December 31, 2016  
Net cash (used in) operating activities   $ (652,524 )   $ (27,820 )
Net cash (used in) investing activities     (100,000 )     -  
Net cash provided by financing activities     911,467       70,000  
Net changes in cash and cash equivalents   $ 158,943     $ 42,180  

 

Operating Activities

 

Net cash used in operating activities was $652,524 for the year ended December 31, 2017, as compared to $27,820 for the year ended December 31, 2016, an increase of $624,704. The increase in net cash used in operating activities was primarily due to the payment of prepaid expenses, the increase in accounts receivable outstanding, and an increase in operating expenses as a result of an increase in the commencement of new business operations.

 

Investing Activities

 

Net cash used in investing activities was $100,000 for the year ended December 31, 2017 was due to the outstanding loan to a related party and the investment in a related party, as compared to $0 for the year ended December 31, 2016.

 

Financing Activities

 

Financing activities provided cash of $911,467 for the year ended December 31, 2017 and $70,000 for the year ended December 31, 2016. On March 2, 2017, we issued an unsecured convertible note in the principal amount of $20,000. On June 8, 2017, we issued an unsecured convertible note in the principal amount of $10,000. On October 30, 2017, we issued two unsecured convertible notes with a combined principal amount of $325,000. On October 30, 2017, we issued an aggregate of 5,600,000 shares of common stock to 35 subscribers for total consideration of $560,000 and paid offering costs of $3,533.

 

Three Months Ended March 31, 2018 and March 31, 2017

 

Results of Operations

 

Revenue

 

We had no revenue for the three months ended March 31, 2018 and 2017.

 

Operating Expenses

 

We incurred general and administrative expenses of $514,117 and $29,241 for the three months ended March 31, 2018 and 2017, respectively, representing an increase of $484,876 between the two periods. These expenses consisted primarily of consulting fees, professional fees, bank charges, and other general and administrative costs. The increase in consulting fees between the two periods from $20,800 in 2017 to $297,188 in 2018 was due to the entering into of a consulting agreement with Business Instincts Group to provide strategic and project management services as well as consulting agreements with our senior and executive staff. Business Instincts Group is a related party as Cameron Chell is a common director of the companies. Professional fees increased from $7,201 in 2017 to $108,198 in 2018 and the increase was primarily due to an increase in legal services related to the evaluation of potential business opportunities and regulatory compliance. The increase in bank charges from $nil in 2017 to $451 in 2018 was due to the increased bank activity. The increase in other general and administrative costs increased from $1,240 in 2017 to $213,282 in 2018 due to increased travel costs, advertising and marketing costs, compliance fees, and stock-based compensation. Service costs increased from $nil in 2017 to $387,080 in 2018 is a result of services rendered for our client in our new business or operations.

 

Consulting fees of $297,188 in the first quarter of 2018 relate in part to $105,000 paid to Business Instincts Group Inc., $36,995 to our directors, $34,000 paid to our president, Bruce Elliott, for management services, $30,000 paid to our chief financial officer, Michael Blum, for management services, $26,846 paid for development services, $24,000 paid for accounting services, $15,000 paid for financial services, $12,500 paid for recruiting services, $9,122 paid to our Advisory Board members, and $3,228 in stock-based compensation.

 

Service fees of $387,080 in 2017 relate to $187,610 for public relation and marketing services, $113,291 for legal services, $50,000 for website fees and logo design, $27,254 for business travel, $5,116 for due diligence, $1,908 to establish a social media presence, and $1,051 for office supplies.

 

Other Income (Expense)

 

Other income includes $198 of interest earned on a loan receivable from a related party compared to $0 for the same period last year. Other expenses include interest expense on convertible notes payable of $16,519 for the three months ended March 31, 2018 compared to $7,315 for the same period last year.

 

Net Loss from Operations

 

We incurred net losses from operations of $1,006,197 and $29,241 for the three months ended March 31, 2018 and 2017, respectively, representing an increase of $976,956, primarily attributable to the factors discussed above under the heading “Operating Expenses”.

 

57
 

 

Liquidity and Capital Resources

 

Working Capital

 

    As at
March 31, 2018
    As at
December 31, 2017
 
Current Assets   $ 5,798,595     $ 880,766  
Current Liabilities   $ 1,163,827     $ 182,919  
Working Capital   $ 5,203,837     $ 697,847  

Current Assets

 

Current assets were $5,798,595 as at March 31, 2018 and $880,766 as at December 31, 2017. The increase in current assets as at March 31, 2018 was due recording the funds held in escrow relating to the private placement, deferred service costs held until certain milestones are reached and deferred offering costs held until the closing of the private placement partially offset by the payment of business expenses.

 

Current Liabilities

 

Current liabilities as at March 31, 2018 were attributable to $394,035 in accounts payable and accrued expenses, and current loans payable of $200,723 compared to $182,919 in accounts payable and accrued expenses as at December 31, 2017.

 

Cash Flow

 

Our cash flows for the three months ended March 31, 2018 and March 31, 2017 are as follows:

 

    Three months ended
March 31, 2018
    Three months ended
March 31, 2017
 
Net cash (used in) operating activities   $ (486,545 )   $ (73,134 )
Net cash provided by investing activities     100,000       -  
Net cash provided by financing activities     200,000       20,000  
Net changes in cash and cash equivalents   $ (186,545 )   $ (53,134 )

 

Operating Activities

 

Net cash used in operating activities was $486,545 for the three-month period ended March 31, 2018, as compared to $73,134 for the three-month period ended March 31, 2018, an increase of $413,411. The increase in net cash used in operating activities was primarily due an increase in operating expenses, deferred service costs, and deferred offering costs partially offset by receipts of accounts receivable, and an increase in the accounts payable outstanding.

 

Investing Activities

 

Investing activities provided cash of $100,000 for the three-month period ended March 31, 2018 as compared to $0 for the three-month period ended March 31, 2017. The cash received was from the repayment of the loan made to WENN Digital Inc.

 

Financing Activities

 

Financing activities provided cash of $200,000 for the three months ended March 31, 2018 and $20,000 for the three months ended March 31, 2017. To help fund our operating activities until our private placement closes, we received a $100,000 loan from Michael Blum, the chief financial officer of our company, and a $100,000 loan from Greg Burnett, a member of our advisory board.

 

Recent Financing Activities

 

On March 12 and 19, 2018, we completed private placements of an aggregate of 9,113,659 subscription receipts at a price of $0.60 per subscription receipt for aggregate gross proceeds of $5,468,195.40. On May 31, 2018, upon the occurrence of the escrow release condition (as defined below), each subscription receipt was automatically converted into one share of our common stock, for no additional consideration. The subscription amounts were held by an escrow agent until the escrow release condition. The escrow release condition was the receipt by our company of conditional approval for the listing of the shares of our common stock on a Canadian stock exchange. On May 29, 2018, the TSX Venture Exchange in Canada conditionally approved the listing of the shares of our common stock subject to our company fulfilling all requirements of the TSX Venture Exchange. Upon the escrow release condition being satisfied prior to 5:00 p.m. (Vancouver time) on May 31, 2018, we delivered a notice to the escrow agent confirming that the escrow release condition had been satisfied. Upon receipt of the notice, the escrow agent released the subscription amounts to our company and each subscription receipt automatically converted into one share of our common stock without payment of any additional consideration. In connection with the closing of the private placements, we paid cash finder’s fees in the aggregate amount of $29,399.97 and we issued 160,865 shares of our common stock at a deemed price of $0.60 per share as the finder’s fee.

 

58
 

 

On April 13, 2018, we entered into a loan agreement with Oceanside Strategies Inc., whereby Oceanside Strategies Inc. advanced $200,000 to us. The principal amount of $200,000 is repayable on demand (but no longer than a term of six month) and bears simple interest at a rate of 12% per annum, which is payable upon repayment of the principal amount of $200,000. We are entitled to prepay the whole or any portion of the principal amount of $200,000, plus accrued interest on the portion of the principal amount of $200,000 being prepaid, at any time. The loan agreement provides that we must, within five days of the release of funds to us from our private placement of subscription receipts that closed in March 2018, repay the principal amount of $200,000 plus accrued interest in full. The loan agreement also provides that if we obtain any indebtedness on terms that are superior to the terms set forth in the loan agreement, then the terms under the loan agreement will be deemed to be amended, as of April 13, 2018, to match such superior terms in a manner and on terms as nearly equivalent as practicable to such superior terms.

 

Cash Requirements

 

We expect that we will require $5.515 million, including our current working capital, to fund our operating expenditures for the next twelve months. Projected working capital requirements for the next twelve months are as follows:

 

Estimated Working Capital Expenditures During the Next Twelve Months

 

Operating expenses   $ 2,015,000  
General and administrative expenses    

3,350,000

 
Estimated costs of the listing on a Canadian stock exchange and related expenses     150,000  
Total   $

5,515,000

 

 

Estimated operating expenses for the next 12 months are comprised of blockchain platform launch related expenses such as project management and consulting, legal fees, support agents and monitoring expenses, and blockchain and software expenses. We intend to spend between $0.5 million and $1 million on various expenses to assist companies to develop and integrate blockchain and cryptocurrency technologies into their business operations.

 

Estimated general and administrative expenses for the next 12 months comprised of: $2,250,000 for consulting fees; $250,000 for legal and professional fees; $180,000 for marketing and advertising expenses; $102,000 for trade shows; $250,000 for travel expenses; $198,000 for office rent; and $120,000 for miscellaneous and office expenses. Professional fees are expected to include fees related to complying with public reporting requirements, maintaining our quotation on the OTC Pink, conducting capital raises and expenses in connection with our new business.

 

Pursuant to a business services agreement dated December 29, 2017, as amended as of March 15, 2018 and July 9, 2018, with our first client, WENN, WENN paid us $500,000 in fees in connection with the services relating to the business launch. See Business – Recent Developments for additional information.

 

We will require additional cash resources, including from the sale of subscription receipts completed in March 2018 to meet our planned capital expenditures and working capital requirements for the next 12 months. We expect to derive such cash through the sale of subscription receipts completed in March 2018 and, if additional cash resources are necessary, through the sale of other equity or debt securities or by obtaining a credit facility. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in debt service obligations, could cause additional dilution to our stockholders, and could require us to agree to financial covenants that could restrict our operations or modify our plans to source a new business opportunity. Financing may not be available in amounts or on terms acceptable to us, if at all. Failure to raise additional funds could cause our company to fail.

 

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Going Concern

 

Our consolidated financial statements are prepared using generally accepted accounting principles 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. We have not yet established a source of revenues sufficient to cover our operating costs and to allow us to continue as a going concern. We have incurred losses since inception resulting in an accumulated deficit of $1,715,526 as at March 31, 2018 (December 31, 2017: $693,008). Our ability to operate as a going concern is dependent on obtaining adequate capital to fund operating losses until we become profitable.

 

In its report on our financial statements for the years ended December 31, 2017 and 2016, our independent registered public accounting firm included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure

 

On January 16, 2018, Pritchett, Siler & Hardy P.C. resigned as the independent registered public accounting firm for our company, following the acquisition of Pritchett, Siler & Hardy P.C. by Haynie & Company, CPA. On January 22, 2018, we engaged Haynie & Company, Salt Lake City, Utah, as our new independent registered public accounting firm. The change of our independent registered public accounting firm from Pritchett, Siler & Hardy P.C. to Haynie & Company was approved by our board of directors.

 

The report of Pritchett, Siler & Hardy P.C. on our financial statements for the fiscal years ended December 31, 2016 and 2015 did not contain an adverse or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that such report on our financial statements contained an explanatory paragraph in respect to the substantial doubt about our ability to continue as a going concern.

 

During the two most recent fiscal years ended December 31, 2017 and 2016 and in the subsequent interim period through the date of resignation, there were (i) no disagreements between our company and Pritchett, Siler & Hardy P.C. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement, if not resolved to the satisfaction of Pritchett, Siler & Hardy P.C., would have caused Pritchett, Siler & Hardy P.C. to make reference thereto in its reports on the consolidated financial statements for such years, and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K, except as disclosed below.

 

In connection of the audit of our financial statements as of and for the year ended December 31, 2016 and 2015 and the review of our financial statements as of and for the subsequent interim period through the date of resignation, Pritchett, Siler & Hardy P.C. advised us that it had identified following deficiencies that existed in the design or operation of our internal control over financial reporting to be material weaknesses: (1) lack of a functioning audit committee; (2) the fact that we only had a single director and officer, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) management dominated by a single individual without adequate compensating controls. We agreed with Pritchett, Siler & Hardy P.C. on these matters.

 

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During our two most recent fiscal years ended December 31, 2017 and 2016 and in the subsequent interim period through the date of resignation, we have not consulted with Haynie & Company regarding either (i) 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 consolidated financial statements, and neither a written report nor oral advice was provided to our company that Haynie & Company concluded was an important factor considered by our company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

 

Directors and Executive Officers

 

Directors and Executive Officers

 

The following individuals serve as our directors and executive officers. All of our directors hold office until the next annual meeting of our stockholders or until their successors have been elected and qualified, or until their death, resignation or removal. Our executive officers are appointed by our board of directors and hold office until their death, resignation or removal from office.

 

Name   Position   Age   Date First Elected
or Appointed
Bruce Elliott   President   54   October 15, 2017
Michael Blum   Chief Financial Officer, Secretary, Treasurer and Director   41   October 9, 2017
Cameron Chell   Chairman and Director   49   August 21, 2017
James P. Geiskopf   Lead Director   58   August 28, 2014
Edmund C. Moy   Director   60   February 9, 2018
James Carter   Director   72   May 17, 2018
Alphonso Jackson   Director   72   June 22, 2018

 

Business Experience

 

The following is a brief account of the education and business experience during at least the past five years of each director and executive officer, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

 

Bruce Elliott

 

On October 15, 2017, Bruce Elliott was appointed as the president of our company. From April 2012 to October 2017, Mr. Elliott served as director of Boston Limited, Isle of Man, a regulated fiduciary and corporate service provider. From January 2013 to October 2017, Mr. Elliott served as director of Boston Ventures Limited, Isle of Man. From December 2017 to February 2018, Mr. Elliott served as the chief marketing officer of WENN.

 

Mr. Elliott is a 25-year eCommerce veteran having held senior leadership roles in privately held and listed companies in online payments, gaming, venture capital and trust and corporate service sectors in North America and Europe. Mr. Elliott is a recognized international conference speaker on entrepreneurship, venture capital and emerging technology trends and has also led venture capital investments into clean tech, gaming, blockchain and fintech companies. Career highlights include Executive Vice President Marketing and Sales of AIM listed Neteller plc, Director of Boston Group Limited and Managing Director of Boston Ventures Limited.

 

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Michael Blum

 

On October 9, 2017, Michael Blum was appointed as the chief financial officer, secretary, treasurer and a director of our company.

 

Mr. Blum started his career in Silicon Valley where he eventually joined PayPal as country manager, Germany and later ran the payments business for eBay in South East Asia and the Pacific. In 2005, he moved into the world of finance, co-founding a hedge fund, Falconhenge Partners which then became part of Magnetar Capital. Since January 2008, Mr. Blum has been a co-founder and the President at Hedgeye Risk Management, a leading online financial media company and he is a director at Hedgeye Cares, the company’s employee driven charity. Since August 2016, he has also served as president of Seven7, LLC, a sports and entertainment focused venture fund. Since July 2013, he has served as managing director at Asia Leisure Capital SA, a hotel and casino management and investment firm. He was previously co-founder and chief financial officer of Firefly Systems Inc. from January 2014 to February 2017. Mr. Blum graduated from Yale University with a Bachelor of Arts in Economics and International studies in 1998.

 

We believe that Mr. Blum is qualified to serve on our board of directors because of his extensive business management and financial expertise derived from his past occupation.

 

Cameron Chell

 

On August 21, 2017, Cameron Chell was appointed as the president and chief executive officer and a director of our company. On October 15, 2017, Mr. Chell resigned as our president and chief executive officer in order to accommodate the appointment of Bruce Elliott as our president. On the same day, Mr. Chell was appointed as the non-executive chairman.

 

Mr. Chell has been the CEO of Business Instincts Group since November 2009. Business Instincts Group is a venture creation accelerator and services firm whose focus is building high-tech startups. The companies that Business Instincts Group has helped build include Draganfly, RaptorRig, ColdBore, UrtheCast, the first commercial video platform on the International Space Station and Slyce, the visual purchasing engine. As well, Mr. Chell has founded several startups including Futurelink, the original cloud computing company. Mr. Chell is currently involved with creating and sourcing new projects, and overseeing corporate development for Business Instincts Group. Business Instincts Group’s venture creation process involves management services that integrate a proprietary strategic planning process (The RIPKIT) into organizations fostering strategic growth, valuation appreciation, liquidity, and management accountability. In this regard Mr Chell’s primary responsibility is to provide project and strategic management facilitation while working with his co-founders, executives, and investors to determine what is most important and specifically how to get it done. Mr. Chell has also been a director and secretary of WENN from December 2017 and chairman of WENN from February 2018.

 

We believe that Mr. Chell is qualified to serve on our board of directors because of his extensive business experience derived from his current and past occupation.

 

James P. Geiskopf

 

Effective August 28, 2014, Mr. Geiskopf was appointed as president, secretary, treasury and director of our company. On August 21, 2017, Mr. Geiskopf resigned as our president. On October 9, 2017, Mr. Geiskopf resigned as our secretary and treasurer. Mr. Geiskopf has been our lead director since August 21, 2017.

 

Mr. Geiskopf currently serves on the board of directors of nFusz, Inc., formerly bBooth, Inc. (since May 7, 2014), a company having shares of common stock registered under the Securities Exchange Act of 1934. He served as a director of Electronic Cigarettes International Group, Ltd. from June 2013 to March 2017. He was the president, secretary, treasurer and a director of Searchbyheadlines.com (now Naked Brand Group Inc.) from December 22, 2011 to July 30, 2012, and the president and director of The Resource Group from 2007 to 2009. From 1986 to 2007, he served as the president and chief executive officer of Budget Rent-a-Car of Fairfield, California. Mr. Geiskopf also served on the board of directors of Suisun Valley Bank from 1986 to 1993 and on the board of directors of Napa Valley Bancorp. from 1991 to 1993.

 

We believe that Mr. Geiskopf is qualified to serve on our board of directors because of his extensive business management and financial expertise derived from his past occupation and his past and current board participation.

 

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Edmund C. Moy

 

On February 9, 2018, we appointed Edmund C. Moy as a director of our company.

 

Mr. Moy has been self-employed since July 2013. He has provided autographs for Numismatic Guarantee Corporation since December 2015 and to Profession Coin Grading Services, a division of Collectors Universe (CLCT: NASDAQ) from November 2013 to November 2015. Mr. Moy has also been an author with Whitman Publishing since December 2013, and was a provider of endorsement to Fortress Gold Group from August 2014 to July 2017 and to Morgan Gold from November 2011 to July 2014. As a consultant since August 2013, he has advised the U.S. Department of Labor and the U.S. Department of Transportation during most of 2017 and worked on projects to develop the first Bitcoin IRA and the first state gold bullion depository in America. He has also been a professional speaker since August 2013. He was the vice president for corporate infrastructure of L&L Energy, Inc. from January 2011 to July 2013 and a director of L&L Energy, Inc. from January 2012 to September 2012. From September 2006 to January 2011, Mr. Moy served as Director of the United States Mint, the world’s largest manufacturer of coins and medals. He was appointed by President George W. Bush and unanimously confirmed by the U.S. Senate.

 

He currently serves on the advisory board or board of directors of several privately-held companies: AID:Tech (a blockchain company that fights global corruption in foreign aid and relief with digital identification), OmniSparx (develops healthy decentralized token ecosystems), and Valaurum (which sells the smallest verifiable unit of gold in the world). He is also a member of the Executive Advisory Board for the School of Business & Economics of Seattle Pacific University, the Board of Regents for Trinity International University, and the National Council for C3 Leaders.

 

Mr. Moy has served on public, private and non-profit boards and advisory boards, including coin.co, Axon Connected, LLC, L&L Energy, Inc. (NASDAQ: LLEN), Xactimed, Emerald Health Network, Christianity Today International, and Tau Kappa Epsilon International Fraternity.

 

We believe that Mr. Moy is qualified to serve on our board of directors because of his extensive business experience derived from his current and past occupation.

 

James Carter

 

On May 17, 2018, we appointed James Carter as a director of our company.

 

Mr. Carter is a Chartered Professional Accountant with over 45 years’ experience in both the private and public business sectors, and was Vice President of MFC Bancorp Ltd., an NYSE listed company focused on merchant banking activities from January 1998 to February 2017. He specialized in conducting corporate evaluations, due diligence reviews, analysis and related negotiations for corporate acquisitions, as well as designing, negotiating, managing and implementing corporate and debt restructurings and risk management programs.

 

He was based in Europe from 1998 to 2005, and has extensive domestic and international experience encompassing both North American and European capital markets with particular expertise gained in emerging markets and the natural resources sector.

 

Mr. Carter currently serves on the board of directors of Aloro Mining Corp. (since April 2, 2018). During his career, he has served as an officer and Director of a number of private and publicly traded companies in various industries in both North America and Europe.

 

We believe that Mr. Carter is qualified to serve on our board of directors because of his extensive business management and financial expertise derived from his past occupation and his past and current board participation.

 

Alphonso Jackson

 

On June 22, 2018, we appointed Alphonso Jackson as a director of our company. Mr. Jackson has been a member of our advisory board since June 7, 2018.

 

Mr. Jackson is the chief executive officer of A.R. Jackson Advisors, LLC since June 2017. Mr. Jackson has decades of experience in housing and community development. His expertise includes development of affordable and market rate housing, handling complex urban development issues and housing finance.

 

Mr. Jackson worked for First Data Corporation as its Senior Advisor from January 2015 to June 2017. Based out of the Washington, DC office, his primary focus was to strengthen First Data Corporation’s relationships with government entities, public policy initiatives, and maximizing business opportunities in the sector. In addition, Mr. Jackson helped expand and support First Data Corporation’s many diversity efforts.

 

From May 2012 to July 2014, Mr. Jackson served as Vice Chairman of Consumer & Community Banking at JP Morgan Chase in New York City. From August 2008 to May 2012, he served as the distinguished university professor and Director of the Center for Public Policy and Leadership at Hampton University in Hampton, Virginia.

 

Mr. Jackson was appointed the 13th Secretary of the US Department of Housing and Urban Development in March 2004. Nominated by President George W. Bush, he was unanimously confirmed by the United States Senate. Mr. Jackson served as the Secretary until April 2008.

 

Mr. Jackson holds a Bachelor of Arts degree in political science and a Master’s in education administration from Truman State University. He also received a Juris Doctor degree from Washington University School of Law in St. Louis, Missouri.

 

We believe that Mr. Jackson is qualified to serve on our board of directors because of his extensive business experience derived from his current and past occupation.

 

Family Relationships

 

There are no family relationships among our directors or officers.

 

Involvement in Certain Legal Proceedings

 

Except as disclosed below, none of our directors or executive officers have been involved in any of the following events during the past ten years:

 

  (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
     
  (b) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
     
  (c) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
     
  (d) being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

 

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  (e) being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
     
  (f) being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Michael Blum was a co-founder of Firefly Systems Inc. (“ Firefly ”) and acted as the chief financial officer of Firefly from January 2014 to February 2017. Firefly was a start-up in the space launch industry. Firefly grew from nothing in January 2014 to a company with 185 employees in the summer of 2016 with NASA as its flagship customer. When a major European investor backed out of a $32 million funding commitment at the last minute due to the Brexit vote, Firefly’s major stockholder was unwilling to pick-up the pieces and Firefly failed to close its last round of funding by early 2017. As a result, on April 3, 2017, Firefly filed a bankruptcy petition under Chapter 7 in the United States Bankruptcy Court for the Western District of Texas.

 

Michael Blum was elected to the board of directors of XCOR Aerospace, Inc. (“ XCOR ”) in late April 2017. XCOR lost its only customer one or two weeks after his election and the board of directors of XCOR asked Mr. Blum to fill the role of acting chief executive officer and Mr. Blum took over as acting chief executive officer on June 27, 2017. Mr. Blum was unable to save XCOR and, on November 8, 2017, XCOR filed a bankruptcy petition under Chapter 7 in the United States Bankruptcy Court for the Eastern District of California.

 

Executive Compensation

 

Summary Compensation

 

The particulars of compensation paid to the following persons:

 

  (a) all individuals serving as our principal executive officer during the year ended December 31, 2017;
     
  (b) each of two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at December 31, 2017; and
     
  (c) up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at December 31, 2017,

 

who we will collectively refer to as the named executive officers, for all services rendered in all capacities to our company for the years ended December 31, 2017 and 2016 are set out in the following summary compensation table:

 

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Summary Compensation Table – Years Ended December 31, 2017 and 2016

 

Name and Principal Position   Year     Salary
($)
    Bonus
($)
    Stock Awards
($)
    Option Awards
($)
    Non-Equity
Incentive Plan Compensation
($)
    Nonqualified Deferred Compensation Earnings
($)
    All Other Compensation
($)
    Total
($)
 
Bruce Elliott     2017       27,500       7,500       -       8,776 (6)      -       -       -       43,776  
President (1)     2016       N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A  
                                                                         
Michael     2017       27,500       25,000       -       17,553 (6)     -       -       -       70,052  
Blum
Chief Financial Officer, Secretary, Treasurer and Director (2)
    2016       N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A  
                                                                         
Cameron     2017       -       -       -       17,553 (6)     -       -       -       17,553 (4)
Chell
Director and Chairman and Former President and Chief Executive Officer (3)
    2016       N/A       N/A       N/A       N/A       N/A       N/A       N/A       N/A  
                                                                         
James P.     2017       -       -       -       17,553 (6)     -       -       -       17,553  

Geiskopf

Lead Director and Former President, Secretary and Treasurer (5)

    2016       -       -       -       -       -       -       -       -  

 

Notes:

 

(1) On October 15, 2017, Mr. Elliott was appointed as the president of our company.
   
(2) On October 9, 2017, Mr. Blum was appointed as the chief financial officer, secretary, treasurer and a director of our company.
   
(3) On August 21, 2017, Mr. Chell was appointed as the president and chief executive officer and a director of our company. On October 15, 2017, Mr. Chell resigned as our president and chief executive officer in order to accommodate the appointment of Bruce Elliott as our president. On the same day, Mr. Chell was appointed as the non-executive chairman.
   
(4) Does not include the fees and stock options received by Business Instincts Group Inc. On October 18, 2017, we entered into a business services agreement with Business Instincts Group Inc., a company of which Mr. Chell is a director, officer and indirect shareholder. The fees and stock options received by Business Instincts Group Inc. are compensation for the services provided by that company as a whole and we did not compensate Mr. Chell separately for these services. See Business – Recent Developments for additional information.
   
(5) Effective August 28, 2014, Mr. Geiskopf was appointed as president, secretary, treasury and director of our company. On August 21, 2017, Mr. Geiskopf resigned as our president. On October 9, 2017, Mr. Geiskopf resigned as our secretary and treasurer.
   
(6) Reflects the grant date fair value computed in accordance with FASB ASC Topic 718. See Note 7 of our annual financial statements for the years ended December 31, 2017 and 2016 for a description of the assumptions made in the valuation of these stock options.

 

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Narrative Disclosure to Summary Compensation Table

 

In connection with the appointment of Bruce Elliott as president, we have entered into an independent consultant agreement dated October 15, 2017 with Bruce Elliott whereby we agreed to pay Mr. Elliott a signing bonus of $7,500, payable within 30 days, and a consulting fee in the amount of $10,000 per month, which was increased to $12,000 per month commencing on February 1, 2018 with the approval of our board of directors. Subject to compliance with all applicable securities laws, we also agreed to grant to Mr. Elliott 200,000 stock options within 60 days at a price of $0.10 per share, which stock options become exercisable as follows: (i) 1/3 upon the date of grant; (ii) 1/3 on the first anniversary date and (iii) 1/3 on the second anniversary date. The agreement continues for twelve months terms which will automatically be renewed unless we provide 90 days prior written notice of our intention to not renew the agreement. The agreement may be terminated by (i) Mr. Elliott by providing at least 90 days advance notice in writing, (ii) us by giving at least 90 days advance notice in writing, or (iii) us without notice in the event that Mr. Elliott: (a) breaches any term of the agreement, (b) neglects the services or any other duty to be performed under the agreement, (c) engages in any conduct which is dishonest, or damages our reputation or standing, (d) is convicted of any criminal act, (e) engages in any act of moral turpitude, (f) files a voluntary petition in bankruptcy, or (g) is adjudicated as bankrupt or insolvent. Mr. Elliott has also agreed for the term of the agreement not to compete with us in the business of providing services for blockchain initial coin offerings. During the term of the agreement and for a period of one year immediately following the termination or expiration of the agreement, Mr. Elliott has agreed not to solicit or induce any customer, prospective customer, supplier, sales personnel, employee or independent contractor involved with us to terminate or breach any employment, contractual or other relationship with us, or to otherwise discontinue or alter such third party’s relationship with us.

 

In connection with the appointment of Michael Blum as chief financial officer, we have entered into an independent consultant agreement dated October 9, 2017 with Michael Blum whereby we agreed to pay Mr. Blum a signing bonus of $25,000, payable within 30 days, and a consulting fee in the amount of $10,000 per month. Subject to compliance with all applicable securities laws, we also agreed to grant to Mr. Blum stock options in an amount to be determined by our board of directors. The agreement continues for twelve months terms which will automatically be renewed unless we provide 30 days prior written notice of our intention to not renew the agreement. The agreement may be terminated by (i) Mr. Blum by providing at least 30 days advance notice in writing, (ii) us by giving at least 30 days advance notice in writing, or (iii) us without notice in the event that Mr. Blum: (a) breaches any term of the agreement, (b) neglects the services or any other duty to be performed under the agreement, (c) engages in any conduct which is dishonest, or damages our reputation or standing, (d) is convicted of any criminal act, (e) engages in any act of moral turpitude, (f) files a voluntary petition in bankruptcy, or (g) is adjudicated as bankrupt or insolvent. Mr. Blum has also agreed for the term of the agreement not to compete with us in the business of providing services for blockchain initial coin offerings. During the term of the agreement and for a period of one year immediately following the termination or expiration of the agreement, Mr. Blum has agreed not to solicit or induce any customer, prospective customer, supplier, sales personnel, employee or independent contractor involved with us to terminate or breach any employment, contractual or other relationship with us, or to otherwise discontinue or alter such third party’s relationship with us.

 

On October 15, 2017, as amended on January 22, 2018, our board of directors adopted and approved the 2017 Equity Incentive Plan. The purpose of the plan is to (a) enable us and any of our affiliates to attract and retain the types of employees, consultants and directors who will contribute to our long range success; (b) provide incentives that align the interests of employees, consultants and directors with those of our stockholders; and (c) promote the success of our business. The plan enables us to grant awards of a maximum of 3,900,000 shares of our stock and awards that may be granted under the plan includes incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards and performance compensation awards.

 

Effective October 15, 2017, we granted a total of 1,400,000 stock options to our directors and officers (200,000 stock options to Bruce Elliott, 400,000 stock options to Michael Blum, 400,000 stock options to Cameron Chell and 400,000 stock options to James P. Geiskopf). The stock options are exercisable at the exercise price of $0.10 per share for a period of ten years from the date of grant. The stock options become exercisable as follows: (i) 1/3 upon the date of grant; (ii) 1/3 on the first anniversary date and (iii) 1/3 on the second anniversary date.

 

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Retirement or Similar Benefit Plans

 

There are no arrangements or plans in which we provide retirement or similar benefits for our directors or executive officers.

 

Resignation, Retirement, Other Termination, or Change in Control Arrangements

 

We have no contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to our directors or executive officers at, following, or in connection with the resignation, retirement or other termination of its directors or executive officers, or a change in control of our company or a change in our directors’ or executive officers’ responsibilities following a change in control.

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table sets forth for each named executive officer certain information concerning the outstanding equity awards as of December 31, 2017:

 

    Option awards     Stock awards  
Name   Number
of
securities
underlying
unexercised
options
(#)
exercisable
    Number
of
securities
underlying
unexercised
options
(#)
unexercisable
    Equity
incentive
plan
awards:
Number
of
securities
underlying
unexercised
unearned
options
(#)
    Option
exercise
price
($)
    Option
expiration
date
  Number
of
shares
or units
of stock
that
have
not
vested
(#)
    Market
value
of
shares
of
units of
stock
that
have
not
vested
($)
    Equity
incentive
plan
awards:
Number
of
unearned
shares,
units or
other
rights
that have
not
vested
(#)
    Equity
incentive
plan
awards:
Market
or
payout
value of
unearned
shares,
units
or other
rights
that
have not
vested
($)
 
Bruce Elliott     66,666 (1)     133,334 (1)     -       0.10     October 15, 2027     -       -       -       -  
Michael Blum     133,333 (1)     266,667 (1)     -       0.10     October 15, 2027     -       -       -       -  
Cameron Chell     133,333 (1)     266,667 (1)     -       0.10     October 15, 2027     -       -       -       -  
James P. Geiskopf     133,333 (1)     266,667 (1)     -       0.10     October 15, 2027     -       -       -       -  

 

Notes:

 

(1) The stock options become exercisable as follows: (i) 1/3 upon the date of grant (October 15, 2017); (ii) 1/3 on the first anniversary date and (iii) 1/3 on the second anniversary date.

 

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Compensation of Directors

 

During the year ended December 31, 2017, we had no directors who were not the named executive officers.

 

Except for James P. Geiskopf, Edmund C. Moy, James Carter and Alphonso Jackson, we have no formal plan for compensating our directors for their services as directors. Our directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. In addition, our directors are entitled to reimbursement for reasonable expenses that they incur in connection with the performance of their duties as directors of our company.

 

On January 22, 2018, we entered into an offer letter with James P. Geiskopf, pursuant to which, among other things, we agreed to pay Mr. Geiskopf $120,000 in annual cash compensation commencing on January 1, 2018.

 

In connection with the appointment of Edmund C. Moy as a director on February 9, 2018, we entered into an offer letter dated February 9, 2018 with Mr. Moy, pursuant to which, among other things, we agreed to pay Mr. Moy $50,000 in annual cash compensation and grant 100,000 stock options. Effective February 9, 2018, we granted to Mr. Moy 100,000 stock options, which are exercisable at an exercise price of $0.60 per share until February 9, 2028. The stock options become exercisable as follows: (i) 1/3 on the grant date, (ii) 1/3 on the first anniversary of the grant date and (iii) 1/3 on the second anniversary of the grant date.

 

In connection with the appointment of James Carter as a director on May 17, 2018, we entered into an offer letter dated May 17, 2018 with Mr. Carter, pursuant to which, among other things, we agreed to pay Mr. Carter $50,000 in annual cash compensation and grant 100,000 stock options. Effective May 17, 2018, we granted to Mr. Carter 100,000 stock options, which are exercisable at an exercise price of $0.60 per share until May 17, 2028. The stock options become exercisable monthly over 36 months as follows: 1/36 of the stock options vesting each month commencing on May 17, 2018.

 

In connection with the appointment of Alphonso Jackson as a director on June 22, 2018, we entered into an offer letter dated June 22, 2018 with Mr. Jackson, pursuant to which, among other things, we agreed to pay Mr. Jackson $50,000 in annual cash compensation and grant 100,000 stock options, which stock options were previously granted on June 7, 2018 in connection with his appointment as a member of our advisory board. The stock options are exercisable at the exercise price of $0.60 per share until June 7, 2028. The stock options become exercisable as follows: (i) 1/3 on the grant date, (ii) 1/3 on the first anniversary of the grant date and (iii) 1/3 on the second anniversary of the grant date.

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth, as of July 17 , 2018, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of any class of our voting securities and by each of our directors, our named executive officers and by our executive officers and directors as a group.

 

Name and Address of Beneficial Owner   Title of Class   Amount and Nature of Beneficial Ownership (1)     Percentage of Class (1)(2)  
Bruce Elliott
6 Kermode Road, Crosby, Isle of Man 1M4 4BZ
  Common Stock     66,666 (3)     *  
Michael Blum
2212 Glenbrook Way, Las Vegas, NV 89117
  Common Stock     383,333 (4)     1.82 %
Cameron Chell
561 Indiana Court, Venice Beach, CA 90291
  Common Stock     2,208,333 (5)     10.47 %
James P. Geiskopf
3250 Oakland Hills Court, Fairfield, CA 94534
  Common Stock     1,633,333 (6)     7.77 %
Edmund C. Moy
4251 Campbell Avenue, Suite 313, Arlington, VA 22206
  Common Stock     33,333 (7)     *  
James Carter
12532 23rd Avenue, Surrey, BC V4A 2C4, Canada
  Common Stock     13,888 (8)     *  
Alphonso Jackson
1411 Key Blvd, Unit 601, Arlington, VA 22209
  Common Stock     33,333 (9)     *  
All executive officers and directors as a group (7 persons)   Common Stock     4,372,219       20.34 %

 

 

Notes

 

* Less than 1%.

 

(1) Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Common stock subject to options or warrants currently exercisable or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.

 

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(2) Percentage of ownership is based on 20,874,524 shares of our common stock issued and outstanding as of July 17 , 2018.

 

(3) Comprised of 66,666 options to purchase shares of our common stock exercisable within 60 days.

 

(4) Includes 133,333 options to purchase shares of our common stock exercisable within 60 days.

 

(5) Comprised of 2,000,000 shares of our common stock held indirectly through Blockchain Fund GP Inc., 133,333 options to purchase shares of our common stock exercisable within 60 days, held by Mr. Chell and 75,000 options to purchase shares of our common stock exercisable within 60 days, held by Business Instincts Group Inc. Mr. Chell is the president, corporate secretary and director of Blockchain Fund GP Inc. and has the sole power to vote or direct the vote, and to dispose or direct the disposition of the shares of our common stock held by Blockchain Fund GP Inc. Mr. Chell is the director, officer and indirect shareholder of Business Instincts Group Inc. and has the sole power to vote or direct the vote, and to dispose or direct the disposition of the shares of our common stock held by Business Instincts Group Inc.

 

(6) Includes 133,333 options to purchase shares of our common stock exercisable within 60 days.

 

(7) Comprised of 33,333 options to purchase shares of our common stock exercisable within 60 days.

 

(8) Comprised of 13,888 options to purchase shares of our common stock exercisable within 60 days.

 

(9) Comprised of 33,333 options to purchase shares of our common stock exercisable within 60 days.

 

Changes in Control

 

We are unaware of any arrangement the operation of which may at a subsequent date result in a change of control of our company.

 

Transactions with Related Persons, Promoters and Certain Control Persons and Corporate Governance

 

Other than as disclosed below, there has been no transaction, since January 1, 2015, or currently proposed transaction, in which we were or are to be a participant and the amount involved exceeds $4,684.27, being the lesser of $120,000 or one percent of the average of its total assets at year end for the last two completed fiscal years, and in which any of the following persons had or will have a direct or indirect material interest:

 

  (i) any director or executive officer of our company;
     
  (ii) any person who beneficially owns, directly or indirectly, shares carrying more than 5% of any class of our voting securities;
     
  (iii) any promoter of our company;
     
  (iv) any person who acquired control of our company when it was a shell company or any person that is part of a group, consisting of two or more persons that agreed to act together for the purpose of acquiring, holding, voting or disposing of our common stock, that acquired control of our company when it was a shell company; and
     
  (v) any member of the immediate family (including spouse, parents, children, siblings and in- laws) of any of the foregoing persons.

 

Mary Wolf, who served as our chief executive officer, president, secretary, chief financial officer, treasurer and a director of our company from our inception to August 28, 2014 and a former stockholder who owned 50% of our outstanding shares of common stock, was the promoter of our company. On July 20, 2010, we issued a total of 3,000,000 shares of our common stock to Ms. Wolf for cash at $0.005 per share for a total of $15,000. As of December 31, 2013, we had a loan outstanding with Ms. Wolf in the amount of $9,527, bearing interest at the rate of 4% per annum. Ms. Wolf advanced us a further $190 during the year ended December 31, 2014, increasing the balance due and payable to her to $9,717. Effective August 28, 2014, Ms. Wolf forgave the balance of $9,717 due and payable to her by us.

 

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On October 30, 2017, we issued 250,000 shares of our common stock to Michael Blum at a price of $0.10 per share for gross proceeds of $25,000.

 

On October 18, 2017, as amended on June 25, 2018 , we entered into a business services agreement with Business Instincts Group Inc., on November 20, 2017, we entered into a loan agreement with WENN Digital Inc., on December 29, 2017, as amended as of March 15, 2018 and July 9, 2018, we entered into a business services agreement with WENN Digital Inc. and on July 9, 2018, we entered into a loan agreement with WENN Digital Inc. Our chairman and director, Cameron Chell, is a director, officer and an indirect shareholder of Business Instincts Group Inc. which owns 10% of the common stock of WENN Digital Inc. and he is also a director, officer and indirect shareholder of Blockchain Merchant Group, Inc. which owns 2.5% of the common stock of WENN Digital Inc. Mr. Chell has also been a director and secretary of WENN Digital Inc. from December 2017 and chairman of WENN Digital Inc. from February 2018. From December 2017 to February 2018, our president, Bruce Elliott, served as the chief marketing officer of WENN Digital Inc. See Business – Recent Developments for additional information.

 

Effective October 15, 2017, we granted 225,000 stock options to Business Instincts Group Inc., a company of which Cameron Chell is a director, officer and indirect shareholder. The stock options are exercisable at the exercise price of $0.10 per share for a period of ten years from the date of grant. The stock options become exercisable as follows: (i) 1/3 upon the date of grant; (ii) 1/3 on the first anniversary date and (iii) 1/3 on the second anniversary date.

 

On March 13, 2018, we entered into a loan agreement with Michael Blum whereby Mr. Blum advanced $100,000 to us. See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Financing Activities for additional information.

 

Effective May 1, 2018, we entered into a facility services agreement with Business Instincts Group Inc., a company of which Cameron Chell is a director, officer and indirect shareholder, whereby we agreed to pay Business Instincts Group Inc. a basic monthly rent of $16,500 for the complete occupancy term commencing May 1, 2018 until February 28, 2020 to use the premises located at 4101 Redwood Ave, Building F. Los Angeles, California 90066 for general office purposes.

 

Compensation for Executive Officers and Directors

 

For information regarding compensation for our executive officers and directors, see “Executive Compensation”.

 

Director Independence

 

We currently act with six directors consisting of Michael Blum, Cameron Chell, James P. Geiskopf, Edmund C. Moy, James Carter and Alphonso Jackson . Our common stock is quoted on the OTC Pink operated by the OTC Markets Group, which does not impose any director independence requirements. Under NASDAQ rule 5605(a)(2), a director is not independent if he or she is also an executive officer or employee of the corporation or was, at any time during the past three years, employed by the corporation. Using this definition of independent director, we have three independent directors , Edmund C. Moy, James Carter and Alphonso Jackson.

 

Where You Can Find More Information

 

We are not required to deliver an annual report to our stockholders unless our directors are elected at a meeting of our stockholders or by written consents of our stockholders. If our directors are not elected in such manner, we are not required to deliver an annual report to our stockholders and will not voluntarily send an annual report.

 

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. Such filings are available to the public over the Internet at the Securities and Exchange Commission’s website at http://www.sec.gov.

 

We have filed with the Securities and Exchange Commission a registration statement on Form S-1 under the Securities Act of 1933 with respect to the securities offered under this prospectus. This prospectus, which forms a part of that registration statement, does not contain all information included in the registration statement. Certain information is omitted and you should refer to the registration statement and its exhibits.

 

You may review a copy of the registration statement at the Securities and Exchange Commission’s public reference room at 100 F Street, N.E. Washington, D.C. 20549 on official business days during the hours of 10 a.m. to 3 p.m. You may obtain information on the operation of the public reference room by calling the Securities and Exchange Commission at 1-800-SEC-0330. You may also read and copy any materials we file with the Securities and Exchange Commission at the Securities and Exchange Commission’s public reference room. Our filings and the registration statement can also be reviewed by accessing the Securities and Exchange Commission’s website at http://www.sec.gov.

 

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5,901,823 Shares

 

ICOX Innovations Inc.

 

 

Common Stock

 

Prospectus

 

_____________, 2018

 

 

 

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Information Not Required in Prospectus

 

Other Expenses of Issuance and Distribution

 

The following table sets forth the costs and expenses payable by us in connection with the issuance and distribution of the securities being registered hereunder. The selling stockholders will bear no expenses associated with this offering except for any broker discounts and commissions or equivalent expenses and expenses of the selling stockholders’ legal counsels applicable to the sale of their shares. All of the amounts shown are estimates, except for the Securities and Exchange Commission registration fees.

 

Securities and Exchange Commission registration fees   $ 440.87  
         
Accounting fees and expenses   $ 50,000  
         
Legal fees and expenses   $ 75,000  
         
Miscellaneous fees and expenses   $ 24,559.13  
         
Total   $ 150,000  

 

Indemnification of Directors and Officers

 

The Nevada Revised Statutes provide that:

 

  a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he or she acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful;
     
  a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him or her in connection with the defense or settlement of the action or suit if he or she acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper; and
     
  to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding, or in defense of any claim, issue or matter therein, the corporation must indemnify him or her against expenses, including attorneys’ fees, actually and reasonably incurred by him or her in connection with the defense.

 

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The Nevada Revised Statutes provide that we may make any discretionary indemnification only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:

 

  by our stockholders;
     
  by our board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;
     
  if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion;
     
  if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion; or
     
  by court order.

 

Our bylaws provide for the mandatory indemnification of any individual made a party to a proceeding because he is or was an officer, director, employee or agent of our company against liability incurred in the proceeding, all pursuant to and consistent with the provisions of NRS 78.751, as amended from time to time. Our bylaws provide that the indemnification permitted by our bylaws is intended to be to the fullest extent permissible under the laws of the State of Nevada, and any amendments thereto. Our bylaws provide that the expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by us as they are incurred and in advance of the final deposition of the action, suit or proceeding, but only after receipt by us of an undertaking by or on behalf of the officer or director on terms set by our board of directors, to repay the expenses advanced if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us.

 

On December 20, 2017, each of our directors and officers, Bruce Elliott, Michael Blum, Cameron Chell and James P. Geiskopf, entered into an indemnification agreement with our company. On February 9, 2018, Edmund C. Moy, a director of our company, entered into an indemnification agreement with our company. On May 17, 2018, James Carter, a director of our company, entered into an indemnification agreement with our company. On June 22, 2018, Alphonso Jackson, a director of our company, entered into an indemnification agreement with our company . Pursuant to the indemnification agreement, we agreed to indemnify each indemnitee, subject to certain exclusions, to the fullest extent permitted by the laws of the State of Nevada, or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against any and all losses if he was or is or becomes a party to or participant in, or is threatened to be made a party to or participant in, any claim by reason of or arising in part out of an Indemnifiable Event (as defined below), including, without limitation, claims brought by or in the right of our company, claims brought by third parties, and claims in which he is solely a witness. The term “Indemnifiable Event” means any event or occurrence, whether occurring before, on or after the date of the indemnification agreement, related to the fact that the indemnitee is or was a director, officer, employee or agent of our company or any subsidiary of our company, or is or was serving at the request of our company as a director, officer, employee, member, manager, trustee or agent of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise or by reason of an action or inaction by him in any such capacity (whether or not serving in such capacity at the time any loss is incurred for which indemnification can be provided under the indemnification agreement. The indemnification agreement provides that the indemnitee has the right to advancement by our company, prior to the final disposition of any claim by final adjudication to which there are no further rights of appeal, of any and all expenses actually and reasonably paid or incurred by the indemnitee in connection with any claim arising out of an Indemnifiable Event. In addition, for the duration of the indemnitee’s service as a director and/or officer of our company, and thereafter for so long as the indemnitee is subject to any pending claim relating to an Indemnifiable Event, we agreed to use commercially reasonable efforts to continue to maintain in effect policies of directors’ and officers’ liability insurance providing coverage that is at least substantially comparable in scope and amount to that provided by our current pol icies of directors’ and officers’ liability insurance.

 

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On January 22, 2018, February 9, 2018, May 17, 2018 and June 22, 2018, we entered into an offer letter with each of James P. Geiskopf, Edmund C. Moy, James Carter and Alphonso Jackson , respectively, pursuant to which we agreed that each of Mr. Geiskopf, Mr. Moy, Mr. Carter and Mr. Jackson will receive indemnification as a director of our company to the maximum extent extended to our directors generally, as set forth in our articles of incorporation and bylaws. We agreed that, if Mr. Geiskopf, Mr. Moy, Mr. Carter or Mr. Jackson is made a party, or is threatened to be made a party, to any action, suite or proceeding, by reason of the fact that he is or was serving at the request of our company as a director, he will be defended, indemnified and held harmless by our company to the fullest extent legally permitted. In addition, we agreed to include him as an insured under our directors and officers insurance policy during his term as a member of our board of directors.

 

Recent Sales of Unregistered Securities

 

On September 14, 2015, we entered into a private placement subscription agreement with, and issued an unsecured convertible note in the principal amount of $73,825 to, one subscriber. Prior to issuance of the note, we were indebted to the subscriber with respect to: (i) a loan in the principal amount of $10,000 made to us by the subscriber pursuant to the terms of a loan agreement dated August 28, 2014, and accrued interest thereon of $1,956, for a total amount outstanding of $11,956, and (ii) a loan in the principal amount of $20,000 made to us by the subscriber pursuant to the terms of a loan agreement dated February 26, 2015, and accrued interest thereon of $1,869, for a total amount outstanding of $21,869, for total indebtedness in the amount of $33,825. The purchase price of the convertible note was paid by (i) settlement of the outstanding debt, and (ii) the payment of an additional $40,000 to us by the subscriber. The convertible note will mature five years from the date of issuance and will bear interest at the rate of 18% interest per annum, compounded annually. The principal amount, plus any interest accrued thereon, may be converted into shares of our common stock at a conversion price of $0.03 per share. We issued the convertible note to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction in which we relied on the exemptions from the registration requirements provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

On December 30, 2016, we entered into a private placement subscription agreement, whereby we issued a convertible note to Oceanside Strategies Inc. in the principal amount of $50,000 and agreed to pay interest on the balance of the principal amount at the rate of 18.0% per annum. The principal amount of the convertible note and the interest is payable in full on December 30, 2021. The principal amount, plus any interest accrued thereon, may be converted into shares of our common stock at a conversion price of $0.03 per share. We issued the convertible to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction in which we relied on the exemptions from the registration requirements provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

On December 30, 2016, we entered into a private placement subscription agreement, whereby we issued a convertible note to Oceanside Strategies Inc. in the principal amount of $21,500 and agreed to pay interest on the balance of the principal amount at the rate of 18.0% per annum. The principal amount of the convertible note and the interest is payable in full on December 31, 2021. The principal amount, plus any interest accrued thereon, may be converted into shares of our common stock at a conversion price of $0.03 per share. The purchase price of the convertible note was paid by settlement of (i) the outstanding debt in the amount of $20,000 and (ii) a restructuring fee in the amount of $1,500 for restructuring the outstanding debt. We issued the convertible to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction in which we relied on the exemptions from the registration requirements provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

On March 2, 2017, we entered into a private placement subscription agreement, whereby we issued a convertible note to Oceanside Strategies Inc. in the principal amount of $20,000 and agreed to pay interest on the balance of the principal amount at the rate of 18.0% per annum. The principal amount of the convertible note and the interest is payable in full on March 2, 2022. The principal amount, plus any interest accrued thereon, may be converted into shares of our common stock at a conversion price of $0.03 per share. We issued the convertible note to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction in which we relied on the exemptions from the registration requirements provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

On June 8, 2017, we entered into a private placement subscription agreement, whereby we issued a convertible note to Oceanside Strategies Inc. in the principal amount of $10,000 and agreed to pay interest on the balance of the principal amount at the rate of 18.0% per annum. The principal amount of the convertible note and the interest is payable in full on June 8, 2022. The principal amount, plus any interest accrued thereon, may be converted into shares of our common stock at a conversion price of $0.03 per share. We issued the convertible note to one non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction in which we relied on the exemptions from the registration requirements provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

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Effective October 15, 2017, we granted a total of 2,725,000 stock options to our directors and executive officers and certain consultants. The stock options are exercisable at the exercise price of $0.10 per share for a period of ten years from the date of grant. 2,200,000 of the stock options become exercisable as follows: (i) 1/3 upon the date of grant; (ii) 1/3 on the first anniversary date and (iii) 1/3 on the second anniversary date. 525,000 of the stock options become exercisable as follows: (i) 1/3 upon the first anniversary of the date of grant; (ii) 1/3 on the second anniversary date and (iii) 1/3 on the third anniversary date. We granted the stock options to three U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) and in issuing securities we relied on the registration exemption provided for in Section 4(a)(2) of the Securities Act of 1933 , as amended. We granted the stock options to six non-U.S . persons and in issuing securities we relied on the registration exemption provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

On October 30, 2017, we entered into private placement subscription agreements, whereby we issued unsecured convertible notes to two subscribers in the aggregate principal amount of $325,000 and agreed to pay interest on the balance of the principal amount at the rate of 10.0% per annum. The principal amount of the convertible notes and the interest is payable in full on October 30, 2020. The principal amount, plus any interest accrued thereon, may be converted into shares of our common stock at a conversion price of $0.10 per share. We issued the convertible notes to two non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction in which we relied on the exemptions from the registration requirements provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

On October 30, 2017, we issued an aggregate of 5,600,000 shares of common stock to 35 subscribers for total consideration of $560,000. Of the 5,600,000 shares of our common stock we issued: (i) 1,150,000 shares pursuant to the exemption from registration under the Securities Act of 1933 , as amended provided by Section 4(a)(2), Section 4(a)(6) and/or Rule 506 of Regulation D promulgated under the Securities Act of 1933 , as amended to 5 investors who were “accredited investors” within the respective meanings ascribed to that term in Regulation D promulgated under the Securities Act of 1933 , as amended; and (ii) 4,450,000 shares to 30 non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

Effective November 10, 2017, we granted a total of 175,000 stock options to certain consultants. The stock options are exercisable at the exercise price of $0.10 per share for a period of ten years from the date of grant. The stock options become exercisable as follows: (i) 1/3 upon the first anniversary of the date of grant; (ii) 1/3 on the second anniversary date and (iii) 1/3 on the third anniversary date. We granted the stock options to three U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) and in issuing securities we relied on the registration exemption provided for in Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

Effective February 9, 2018, we granted 100,000 stock options to Edmund C. Moy, one of our directors. The stock options are exercisable at the exercise price of $0.60 per share until February 9, 2028. The stock options become exercisable as follows: (i) 1/3 on the grant date, (ii) 1/3 on the first anniversary of the grant date and (iii) 1/3 on the second anniversary of the grant date. We granted the stock options to one U.S. Person (as that term is defined in Regulation S of the Securities Act of 1933) and in issuing securities we relied on the registration exemption provided for in Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

Effective February 16, 2018, we granted a total of 75,000 stock options to two consultants . The stock options are exercisable at the exercise price of $0.60 per share for a period of ten years from the date of grant. The stock options become exercisable as follows: (i) 1/3 on the first anniversary of the grant date; (ii) 1/3 on the second anniversary of the grant date and (iii) 1/3 on the third anniversary of the grant date. We granted the stock options to two U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) and in issuing securities we relied on the registration exemption provided for in Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

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On March 12, 2018, we completed a private placement of an aggregate of 5,896,359 subscription receipts at a price of $0.60 per subscription receipt for aggregate gross proceeds of $3,537,815.40. In the event of the occurrence of the escrow release condition (as defined below), each subscription receipt will automatically convert into one share of our common stock, for no additional consideration. The subscription amounts will be held by an escrow agent until the escrow release condition. The escrow release condition is the receipt by our company of conditional approval for the listing of the shares of our common stock on a Canadian stock exchange. In the event that the escrow release condition is satisfied prior to 5:00 p.m. (Vancouver time) on May 31, 2018, we will deliver a notice to the escrow agent confirming the escrow release condition has been satisfied. Upon receipt of the notice, the escrow agent will, as soon as practicable thereafter, release the subscription amounts to our company and each subscription receipt will automatically convert into one share of our common stock without payment of any additional consideration. If the escrow release condition is not satisfied by 5:00 p.m. (Vancouver time) on May 31, 2018 or if we deliver a written default notice to the escrow agent that the escrow release condition will not be satisfied by that time, the subscription receipts will expire and be of no further force and effect, effective as of the earlier of (i) 5:00 p.m. (Vancouver time) on May 31, 2018 and (ii) the date of the receipt of the default notice, and the subscribers will be entitled to receive from the escrow agent a refund of the subscription amounts held in escrow, without interest and less applicable expenses. In connection with the closing of the private placement, we paid cash finder’s fees in the aggregate amount of $29,399.97. In connection with this private placement, we agreed with each subscriber who purchased these subscription receipts to prepare and file a registration statement with respect to 50% of the shares of our common stock issuable upon conversion of the subscription receipts with the Securities and Exchange Commission within 90 days following the closing of the private placement and agreed to use commercially reasonable efforts to have the registration statement declared effective by the Securities and Exchange Commission as soon as possible after filing. Of the 5,896,359 subscription receipts we issued: (i) 358,333 subscription receipts were issued pursuant to the exemption from registration under the Securities Act of 1933 , as amended provided by Section 4(a)(2) and/or Rule 506 of Regulation D promulgated under the Securities Act of 1933 , as amended to 11 investors who were “accredited investors” within the respective meanings ascribed to that term in Regulation D promulgated under the Securities Act of 1933 , as amended; and (ii) 5,538,026 subscription receipts were issued to 105 non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

On March 19, 2018, we completed a private placement of an aggregate of 3,217,300 subscription receipts at a price of $0.60 per subscription receipt for aggregate gross proceeds of $1,930,380. In the event of the occurrence of the escrow release condition (as defined below), each subscription receipt will automatically convert into one share of our common stock, for no additional consideration. The subscription amounts will be held by an escrow agent until the escrow release condition. The escrow release condition is the receipt by our company of conditional approval for the listing of the shares of our common stock on a Canadian stock exchange. In the event that the escrow release condition is satisfied prior to 5:00 p.m. (Vancouver time) on May 31, 2018, we will deliver a notice to the escrow agent confirming the escrow release condition has been satisfied. Upon receipt of the notice, the escrow agent will, as soon as practicable thereafter, release the subscription amounts to our company and each subscription receipt will automatically convert into one share of our common stock without payment of any additional consideration. If the escrow release condition is not satisfied by 5:00 p.m. (Vancouver time) on May 31, 2018 or if we deliver a written default notice to the escrow agent that the escrow release condition will not be satisfied by that time, the subscription receipts will expire and be of no further force and effect, effective as of the earlier of (i) 5:00 p.m. (Vancouver time) on May 31, 2018 and (ii) the date of the receipt of the default notice, and the subscribers will be entitled to receive from the escrow agent a refund of the subscription amounts held in escrow, without interest and less applicable expenses. In connection with the closing of the private placement, we agreed to issue 160,865 shares of our common stock at a deemed price of $0.60 per share as the finder’s fee, which will be issued only if the subscription receipts are converted into shares of our common stock. In connection with this private placement, we agreed with each subscriber who purchased these subscription receipts to prepare and file a registration statement with respect to 50% of the shares of our common stock issuable upon conversion of the subscription receipts with the Securities and Exchange Commission within 90 days following the closing of the private placement and agreed to use commercially reasonable efforts to have the registration statement declared effective by the Securities and Exchange Commission as soon as possible after filing. The subscription receipts were issued to 102 non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933 , as amended) in an offshore transaction relying on Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended. We intend to issue the shares of our common stock as the finder’s fee to one non-U.S. person in an offshore transaction relying on Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

Effective May 17, 2018, we granted 100,000 stock options to James Carter, one of our directors. The stock options are exercisable at the exercise price of $0.60 per share until May 17, 2028. The stock options become exercisable monthly over 36 months as follows: 1/36 of the stock options vesting each month commencing on May 17, 2018. We granted the stock options to one non-U.S. person and in issuing securities we relied on the registration exemption provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

Effective June 7, 2018, we granted 100,000 stock options to Alphonso Jackson, one of our directors, in connection with his appointment as a member of our advisory board. The stock options are exercisable at the exercise price of $0.60 per share until June 7, 2028. The stock options become exercisable as follows: (i) 1/3 on the grant date, (ii) 1/3 on the first anniversary of the grant date and (iii) 1/3 on the second anniversary of the grant date. We granted the stock options to one U.S. Person (as that term is defined in Regulation S of the Securities Act of 1933) and in issuing securities we relied on the registration exemption provided for in Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

Effective June 8, 2018, we granted 75,000 stock options to one consultant. The stock options are exercisable at the exercise price of $0.60 per share for a period of ten years from the date of grant. The stock options become exercisable as follows: (i) 1/3 on the first anniversary of the grant date; (ii) 1/3 on the second anniversary of the grant date and (iii) 1/3 on the third anniversary of the grant date. We granted the stock options to one non-U.S. person and in issuing securities we relied on the registration exemption provided for in Regulation S and/or Section 4(a)(2) of the Securities Act of 1933 , as amended.

 

On May 31, 2018, we issued 9,113,659 shares of our common stock upon conversion of the subscription receipts issued on March 12 and 19, 2018, Accordingly, aggregate gross proceeds of US$5,468,195.40, previously held in escrow, were released to our company. In connection with the conversion of the subscription receipts, on May 31, 2018, we issued 160,865 shares of our common stock at a deemed price of US$0.60 per share as a finder’s fee. Of the 9,113,659 shares of our common stock we issued upon conversion of the subscription receipts: (i) 358,333 shares were issued pursuant to the exemption from registration under the  Securities Act of 1933 , as amended provided by Section 4(a)(2) and/or Rule 506 of Regulation D promulgated under the  Securities Act of 1933 , as amended to 11 investors who were “accredited investors” within the respective meanings ascribed to that term in Regulation D promulgated under the  Securities Act of 1933 , as amended; and (ii) 8,755,326 shares were issued to 207 non-U.S. persons (as that term is defined in Regulation S of the  Securities Act of 1933 , as amended) in offshore transactions relying on Regulation S and/or Section 4(a)(2) of the  Securities Act of 1933 , as amended. We issued the shares of our common stock as the finder’s fee to one non-U.S. person in an offshore transaction relying on Regulation S and/or Section 4(a)(2) of the  Securities Act of 1933 , as amended.

 

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Exhibits

 

Exhibit
Number
  Description
(3)   Articles of Incorporation and Bylaws
3.1   Articles of Incorporation (incorporated by reference from our Current Report on Form S-1, filed on March 30, 2011)
3.2   Bylaws (incorporated by reference from our Current Report on Form S-1, filed on March 30, 2011)
3.3   Articles of Merger (incorporated by reference from our Current Report on Form 8-K filed on August 23, 2017)
3.4   Articles of Merger (incorporated by reference from our Current Report on Form 8-K filed on February 15, 2018)
(5)   Opinion regarding Legality
5.1*   Opinion of Clark Wilson LLP regarding the legality of the securities being registered
(10)   Material Contracts
10.1   Private Placement Subscription Agreement with Oceanside Strategies Inc. dated September 14, 2015 (incorporated by reference from our Current Report on Form 8-K, filed on September 15, 2015)
10.2   18% Unsecured Convertible Note with Oceanside Strategies Inc. dated September 14, 2015 (incorporated by reference from our Current Report on Form 8-K, filed on September 15, 2015)
10.3   Private Placement Subscription Agreement with Oceanside Strategies Inc. dated December 30, 2016 (incorporated by reference from our Current Report on Form 8-K, filed on January 5, 2017)
10.4   18% Unsecured Convertible Note with Oceanside Strategies Inc. dated December 30, 2016 (incorporated by reference from our Current Report on Form 8-K, filed on January 5, 2017)
10.5   Private Placement Subscription Agreement with Oceanside Strategies Inc. dated December 30, 2016 (incorporated by reference from our Current Report on Form 8-K, filed on January 2, 2018)
10.6   18% Unsecured Convertible Note with Oceanside Strategies Inc. dated December 30, 2016 (incorporated by reference from our Current Report on Form 8-K, filed on January 2, 2018)
10.7   Private Placement Subscription Agreement with Oceanside Strategies Inc. dated March 2, 2017 (incorporated by reference from our Current Report on Form 8-K, filed on March 15, 2017)
10.8   18% Unsecured Convertible Note with Oceanside Strategies Inc. dated March 2, 2017 (incorporated by reference from our Current Report on Form 8-K, filed on March 15, 2017)
10.9   Private Placement Subscription Agreement with Oceanside Strategies Inc. dated June 8, 2017 (incorporated by reference from our Current Report on Form 8-K, filed on January 2, 2018)
10.10   18% Unsecured Convertible Note with Oceanside Strategies Inc. dated June 8, 2017 (incorporated by reference from our Current Report on Form 8-K, filed on January 2, 2018)
10.11   Transfer Agreement dated August 21, 2017 with Blockchain Fund GP Inc. (incorporated by reference from our Current Report on Form 8-K filed on August 23, 2017)
10.12   Business Services Agreement with Business Instincts Group Inc. dated October 18, 2017. (incorporated by reference from our Current Report on Form 8-K filed on October 19, 2017)
10.13   Private Placement Subscription Agreement with Oceanside Strategies Inc. dated October 30, 2017 (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.14   10% Unsecured Convertible Note dated October 30, 2017 issued in connection with Private Placement Subscription Agreement with Oceanside Strategies Inc. dated October 30, 2017 (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.15   Private Placement Subscription Agreement with Hospitality Investors Special Situation Group Pvt. Ltd. dated October 30, 2017 (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)

 

77
 

 

10.16   10% Unsecured Convertible Note dated October 30, 2017 issued in connection with Private Placement Subscription Agreement with Hospitality Investors Special Situation Group Pvt. Ltd. dated October 30, 2017 (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.17   Form of Private Placement Subscription Agreement for Common Stock Offering (incorporated by reference from our Current Report on Form 8-K filed on October 31, 2017)
10.18   Loan Agreement dated November 20, 2017 with WENN Digital Inc. (incorporated by reference from our Current Report on Form 8-K filed on November 27, 2017)
10.19   Independent Consultant Agreement dated effective October 9, 2017 with Bruce Elliott (incorporated by reference from our Current Report on Form 8-K, filed on January 2, 2018)
10.20   Independent Consultant Agreement dated effective October 9, 2017 with Michael Blum (incorporated by reference from our Current Report on Form 8-K, filed on January 2, 2018)
10.21   Business Services Agreement dated effective December 29, 2017 with WENN Digital Inc. (incorporated by reference from our Current Report on Form 8-K, filed on January 2, 2018)
10.22   Form of Subscription Agreement (incorporated by reference from our Current Report on Form 8-K, filed on March 14, 2018)
10.23   Amendment No. 1 to Business Services Agreement dated as of March 15, 2018 with WENN Digital Inc. (incorporated by reference from our Current Report on Form 8-K, filed on March 20, 2018)
10.24   Offer Letter dated January 22, 2018 with James P. Geiskopf (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.25   Offer Letter dated February 9, 2018 with Edmund C. Moy (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.26   2017 Equity Incentive Plan (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.27   Stock Option Agreement dated October 15, 2017 with James P. Geiskopf (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.28   Stock Option Agreement dated October 15, 2017 with Cameron Chell (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.29   Stock Option Agreement dated October 15, 2017 with Michael Blum (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.30   Stock Option Agreement dated October 15, 2017 with Bruce Elliott (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.31   Stock Option Agreement dated October 15, 2017 with Business Instincts Group Inc. (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.32   Stock Option Agreement dated February 9, 2018 with Edmund C. Moy (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.33   Indemnification Agreement dated December 20, 2017 with James P. Geiskopf (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.34   Indemnification Agreement dated December 20, 2017 with Cameron Chell (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.35   Indemnification Agreement dated December 20, 2017 with Michael Blum (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.36   Indemnification Agreement dated December 20, 2017 with Bruce Elliott (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)
10.37   Indemnification Agreement dated February 9, 2018 with Edmund C. Moy (incorporated by reference from our Annual Report on Form 10-K filed on April 2, 2017)

 

78
 

 

10.38*   Offer Letter dated May 17, 2018 with James Carter
10.39*   Stock Option Agreement dated May 17, 2018 with James Carter
10.40*   Indemnification Agreement dated May 17, 2018 with James Carter
10.41*   Offer Letter dated June 22, 2018 with Alphonso Jackson
10.42*   Stock Option Agreement dated June 7, 2018 with Alphonso Jackson
10.43*   Indemnification Agreement June 22, 2018 with Alphonso Jackson
10.44   Amendment Agreement dated effective as of June 25, 2018 to Business Services Agreement dated October 18, 2017 with Business Instincts Group Inc. (incorporated by reference from our Current Report on Form 8-K, filed on June 29, 2018)
10.45   Loan Agreement dated July 9, 2018 with WENN Digital Inc. (incorporated by reference from our Current Report on Form 8-K, filed on July 11, 2018)
10.46   Corporate Guaranty dated July 9, 2018 by Ryde GmbH (incorporated by reference from our Current Report on Form 8-K, filed on July 11, 2018)
10.47   Amendment No. 2 to Business Services Agreement dated as of July 9, 2018 with WENN Digital Inc. (incorporated by reference from our Current Report on Form 8-K, filed on July 11, 2018)
(16)   Letter re Change in Certifying Accountant
16.1   Letter from Pritchett, Siler & Hardy P.C. dated January 22, 2018 (incorporated by reference from our Current Report on Form 8-K, filed on January 22, 2018)
(21)   Subsidiaries
21.1   Subsidiaries of ICOX Innovations Inc.
    AppCoin Innovations (USA) Inc., Nevada corporation
(23)   Consents of Experts and Counsel
23.1*   Consent of Haynie & Company
23.2*   Consent of Clark Wilson LLP (included in Exhibit 5.1)
(101)   Interactive Data File
101.INS*   XBRL Instance Document
101.SCH*   XBRL Taxonomy Extension Schema
101.CAL*   XBRL Taxonomy Extension Calculation Linkbase
101.DEF*   XBRL Taxonomy Extension Definition Linkbase
101.LAB*   XBRL Taxonomy Extension Label Linkbase
101.PRE*   XBRL Taxonomy Extension Presentation Linkbase

 

*Filed herewith.

 

Undertakings

 

The undersigned registrant hereby undertakes:

 

1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

 

ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

 

iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

 

2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

 

3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and

 

4. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

 

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Signatures

 

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Los Angeles, State of California, on July 17 , 2018.

 

ICOX Innovations Inc.  
   
By:  
   
/s/ Bruce Elliott  
Bruce Elliott  
President  
(Principal Executive Officer)  

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

/s/ Bruce Elliott  
Bruce Elliott  
President  
(Principal Executive Officer)  

Date: July 17 , 2018

 

 

/s/ Michael Blum  
Michael Blum  
Chief Financial Officer, Secretary, Treasurer and Director  
(Principal Financial Officer and Principal Accounting Officer)  
Date: July 17 , 2018  

 

/s/ Cameron Chell  
Cameron Chell  
Director  
Date: July 17 , 2018  

 

/s/ James P. Geiskopf  
James P. Geiskopf  
Director  
Date: July 17 , 2018  

 

/s/ Edmund C. Moy  
Edmund C. Moy  
Director  
Date: July 17 , 2018  
   
/s/ James Carter  
James Carter    
Director  
Date: July 17, 2018  
   
/s/ Alphonso Jackson  
Alphonso Jackson  
Director  
Date: July 17, 2018

 

 
 

 

 

July 17, 2018

 

ICOX Innovations Inc.

4101 Redwood Ave., Building F

Los Angeles, CA 90066

U.S.A.

 

Dear Sirs:

 

  Re: ICOX Innovations Inc. - Registration Statement
on Form S-1/A
 

 

We have acted as counsel to ICOX Innovations Inc. (the “Company” ), a Nevada corporation, in connection with the filing of a registration statement on Form S-1/A (File No. 333-224161) (the “Registration Statement” ) under the Securities Act of 1933 , as amended, with respect to the resale of (i) up to 1,020,000 shares of common stock of the Company that are issued and outstanding (the “Issued Shares” ), (ii) up to 325,000 shares of common stock of the Company that may be issued upon conversion of convertible notes (the “Convertible Note Shares” ) and (iii) up to 4,556,823 shares of common stock of the Company issued upon conversion of subscription receipts (the “Subscription Receipt Shares” ), as further described in the Registration Statement.

 

    In connection with this opinion, we have examined the following documents:
     
  (a) the articles of incorporation of the Company, as amended;
     
  (b) the bylaws of the Company, as amended;
     
  (c) the resolutions adopted by the board of directors of the Company pertaining to the Issued Shares, the Convertible Note Shares and the Subscription Receipt Shares;
     
  (d) the Registration Statement; and
     
  (f) the prospectus constituting a part of the Registration Statement.

 

In addition, we have examined such other documents as we have deemed necessary or appropriate as a basis for the opinions hereinafter expressed.

 

We have assumed that the signatures on all documents examined by us are genuine, that all documents submitted to us as originals are authentic and that all documents submitted to us as copies or as facsimiles of copies or originals, conform with the originals, which assumptions we have not independently verified.

 

 

 
- 2 -

 

Based upon the foregoing and the examination of such legal authorities as we have deemed relevant, and subject to the qualifications and further assumptions set forth below, we are of the opinion that:

 

  the Issued Shares have been duly and validly authorized and issued as fully paid and non-assessable shares of common stock in the capital of the Company;
     
  the Convertible Note Shares have been duly and validly authorized, and will, if and when issued in accordance with the terms of the convertible notes, be issued as fully paid and non-assessable shares of common stock in the capital of the Company; and
     
  the Subscription Receipt Shares have been duly and validly authorized and issued as fully paid and non-assessable shares of common stock in the capital of the Company.

 

This opinion letter is opining upon and is limited to the current federal laws of the United States and the laws of the State of Nevada, including the statutory provisions, all applicable provisions of the Nevada constitution and reported judicial decisions interpreting those laws, as such laws presently exist and to the facts as they presently exist. We express no opinion with respect to the effect or applicability of the laws of any other jurisdiction. We assume no obligation to revise or supplement this opinion letter should the laws of such jurisdiction be changed after the date hereof by legislative action, judicial decision or otherwise.

 

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933 or the General Rules and Regulations of the Securities and Exchange Commission.

 

  Yours truly,
   
  CLARK WILSON LLP
   
  /s/ Clark Wilson LLP

 

     

 

 

 

ICOx Innovations, Inc.

4101 Redwood Avenue

Building F

Los Angeles, Ca 90066

 

May 17, 2018

 

James Carter

12532 23 rd Avenue

Surrey, BC V4A 2C4

 

Re: Board of Directors Offer Letter

 

Dear James,

 

I am very pleased to welcome you as a Member of the Board of Directors of ICOx Innovations, Inc. We are excited about your contributions to what we believe is one of the most differentiated companies with some of the highest potential in the Cryptocurrency Industry.

 

Please find below the terms relating to your service as a member of the Board.

 

Term . You will serve as a member of the Board until the annual meeting for the year in which your term expires or until your successor has been elected and qualified, subject however, to your prior death, resignation, retirement, disqualification or removal from office.

 

Compensation . As a member of the Board you will receive $50,000 in annual cash compensation and 100,000 stock options.

 

Expenses . The Company agrees to reimburse all travel and other reasonable documented expenses relating to your attendance at meetings of the Board. In addition, the Company agrees to reimburse you for reasonable expenses that you incur in connection with the performance of your duties as a director of the Company.

 

Taxes . All payments under this Agreement shall be in US dollars and subject to withholding of such amounts, if any, relating to tax or other deductions as the Corporation may reasonably determine and should withhold pursuant to any applicable law or regulation. The Director shall be responsible to pay for all federal, state, provincial and local taxes assessed on any income received from the Company under this Agreement, which are over and above the amounts that may be deducted and remitted on the Director’s behalf by the Corporation.

 

D&O Insurance . During your term as a member of the Board, the Company shall include you as an insured under the Company’s directors and officer’s insurance policy.

 

 

 

 

Confidentiality . You agree to retain all non-public information obtained from ICOx as confidential and agree not to release or discuss any of such information unless you have obtained the prior consent of ICOx or are otherwise forced, compelled, or required to disclose this information by operation of law or applicable government authority.

 

Any business opportunities related to the business of the Corporation which become known to the Director will be fully disclosed and made available and no action to divert from the Corporation any opportunity which is within the scope of its business will be made.

 

The Director shall not disparage the Corporation or any of its affiliates, directors, officers, employees or other representatives in any manner and shall in all respects avoid any negative criticism of the Corporation.

 

Indemnification . You will receive indemnification as a Director of the Company to the maximum extent extended to directors of the Company generally, as set forth in the Company’s Certificate of Incorporation and bylaws. The Corporation agrees that, if the Director is made a party, or is threatened to be made a party, to any action, suit or proceeding, by reason of the fact that he is or was serving at the request of the Corporation as a Director, the Director shall be defended, indemnified and held harmless by the Corporation to the fullest extent legally permitted.

 

Assignment . This agreement may not be assigned.

 

Severability . If any provision contained herein is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate and distinct.

 

Binding Effect . This agreement shall ensure to the benefit of and be binding upon the parties hereto and their respective personal or legal representatives, heirs, executors, administrators, successors and assigns. Upon the termination of this agreement, the Director’s respective rights and obligations of the parties shall survive such termination or expiration to the extent necessary to carry out the intended preservation of such rights and obligations.

 

Governing Law . This agreement shall be construed in accordance with the laws of the State of California, without giving effect to the principles of conflicts of law thereof.

 

 

 

 

Entire Agreement; Amendment; Waiver, Counterparts . This Agreement expresses the entire understanding with respect to the subject matter hereof and supersedes and terminates any prior oral or written agreements with respect to the subject matter hereof. Any term of this Agreement may be amended and observance of any term of this Agreement may be waived only with the written consent of the parties hereto. Waiver of any term or condition of this Agreement by any party shall not be construed as a waiver of any subsequent breach or failure of the same term or condition or waiver of any other term or condition of this Agreement. The failure of any party at any time to require performance by any other party or any provision of this Agreement shall not affect the right of any such party to require future performance of such provision or any other provision of agreement. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement, and may be executed using facsimiles of signatures, and a facsimile of a signature shall be deemed to be the same, and equally enforceable, as an original of such signature.

 

This Agreement sets forth the complete terms of your service on the Board. If the foregoing terms are agreeable, please indicate your acceptance by signing in the space provided below and returning this Agreement to the Company.

 

Sincerely,  
     
Signature: /s/ Michael Blum  
Name: Michael Blum  
Title: Chief Financial Officer, Secretary, Treasurer and Director  
Date:    
     
Accepted and Agreed:  
     
Signature: /s/James Carter  
Name: James Carter  
Date: May 26, 2018  

 

 

 

 

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

 

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

Unless permitted under securities legislation, the holder of this security must not trade the security before the date that is 4 months and a day after THE later of (i) MAY 17, 2018, and (ii) the date the issuer became a reporting issuer in any province or territory.

 

STOCK OPTION AGREEMENT

 

This AGREEMENT is entered into as of the May 17, 2018 (the “Date of Grant” ).

 

BETWEEN:

 

ICOX INNOVATIONS INC. , a company incorporated pursuant to the laws of the State of Nevada, with an office at 4101 Redwood Avenue, Building F, Los Angeles, CA 90066

 

(the “Company” )

 

AND:

 

JAMES CARTER , a businessman with an address at 12532 23rd Avenue, Surrey, BC V4A 2C4

 

(the “Optionee” )

 

WHEREAS:

 

A. The Company’s board of directors (the “Board” ) has approved and adopted a 2017 Equity Incentive Plan (the “Plan” ), whereby the Board is authorized to grant stock options to purchase shares of common stock of the Company to the directors, officers, employees, and consultants of the Company or any Parent or Subsidiary of the Company (as defined herein);

 

B. The Optionee is a director, officer, employee or consultant of the Company, the Parent or a Subsidiary; and

 

C. The Company wishes to grant stock options to purchase a total of 100,000 Optioned Shares (as defined herein) to the Optionee, as follows:

 

      Incentive Stock Options (as defined herein)
  X   Non-Qualified Stock Options (as defined herein)

 

     
  2  

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions

 

1.1 In this Agreement, the following terms shall have the following meanings:

 

  (a) 1933 Act ” means the Securities Act of 1933, as amended;
     
  (b) Board ” means the board of directors of the Company;
     
  (c) Canadian Accredited Investor Questionnaire ” means a questionnaire substantially in the form of the Canadian Accredited Investor Questionnaire attached to this Agreement as Schedule B;
     
  (d) Code ” means the Internal Revenue Code of 1986;
     
  (e) Common Stock ” means the shares of common stock of the Company;
     
  (f) Exercise Price ” means $0.60 per share;
     
  (g) Expiry Date ” means May 17, 2028;
     
  (h) Incentive Stock Options ” means any Options that meet all the requirements under section 422 of the Code;
     
  (i) Non-Qualified Stock Options ” means any Options that do not qualify as Incentive Stock Options and, thus, do not meet the requirements under section 422 of the Code;
     
  (j) Notice of Exercise ” means a notice in writing addressed to the Company at its address first recited hereto (or such other address of which the Company may from time to time notify the Optionee in writing), substantially in the form attached as Schedule B hereto, which notice shall specify therein the number of Optioned Shares in respect of which the Options are being exercised;
     
  (k) Options ” means the right and option to purchase, from time to time, all, or any part of the Optioned Shares granted to the Optionee by the Company pursuant to Section 2.1 of this Agreement;
     
  (l) Optioned Shares ” means the shares of Common Stock that are issued pursuant to the exercise of the Options;
     
  (m) Parent ” means a company or other entity that owns at least fifty percent (50%) of the outstanding voting stock or voting power of the Company;
     
  (n) Plan ” has the meaning ascribed thereto in Recital A of this Agreement;
     
  (o) Securities ” means, collectively, the Options and the Optioned Shares;
     
  (p) Subsidiary ” means a company or other entity, at least fifty percent (50%) of the outstanding voting stock or voting power of which is beneficially owned, directly or indirectly, by the Company; and
     
  (q) Vested Options ” means the Options that have vested in accordance with Section 2.2 of this Agreement.

 

     
  3  

 

1.2 Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Plan.

 

2. The Options

 

2.1 The Company hereby grants to the Optionee, on the terms and conditions set out in this Agreement and in the Plan, Options to purchase a total of 100,000 Optioned Shares at the Exercise Price.

 

2.2 The Options will vest in accordance with Schedule A to this Agreement. The Options may be exercised immediately after vesting.

 

2.3 The Options shall, at 5:00 p.m. (Pacific time) on the Expiry Date, expire and be of no further force or effect whatsoever.

 

2.4 The Company shall not be obligated to cause the issuance, transfer or delivery of a certificate or certificates representing Optioned Shares to the Optionee, until provision has been made by the Optionee, to the satisfaction of the Company, for the payment of the aggregate Exercise Price for all Optioned Shares for which the Options shall have been exercised, and for satisfaction of any tax withholding obligations associated with such exercise.

 

2.5 Subject to the provisions of this Agreement and the Plan and subject to compliance with any applicable securities laws, the Options shall be exercisable, in full or in part, at any time after vesting, until termination. If less than all of the Optioned Shares included in the vested portion of any Options are purchased, the remainder may be purchased at any subsequent time prior to the Expiry Date. Only whole shares may be issued pursuant to the exercise of any Options, and to the extent that any Option covers less than one (1) share, it is not exercisable.

 

2.6 Each exercise of the Options shall be by means of delivery of a Notice of Exercise (which may be in the form attached hereto as Schedule C) to the Chief Financial Officer of the Company at its principal executive office, specifying the number of Optioned Shares to be purchased and accompanied by payment in cash or by certified check or cashier’s check in the amount of the full Exercise Price for the Common Stock to be purchased. In addition to payment in cash or by certified check or cashier’s check and if agreed to in advance by the Company, the Optionee or transferee of the Options may pay for all or any portion of the aggregate Exercise Price by complying with any other payment mechanism approved by the Board at the time of exercise.

 

2.7 Reference is made to the Plan for particulars of the rights and obligations of the Optionee and the Company in respect of:

 

  (a) the terms and conditions on which the Options are granted except to the extent set forth herein; and,
     
  (b) a consolidation or subdivision of the Company’s share capital or a corporate reorganization;

 

all to the same effect as if the provisions of the Plan were set out in this Agreement and to all of which the Optionee assents. A copy of the Plan is available to the Optionee at no charge, at the Company’s principal executive office. Any provision of this Agreement that is inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. The Company may modify, extend or renew this Agreement or the Options represented hereby or accept the surrender thereof (to the extent not previously exercised) and authorize the granting of a new option in substitution therefore (to the extent not previously exercised), subject at all times to the Plan, the applicable rules of any applicable regulatory authority or stock exchange, and any applicable laws. Notwithstanding the foregoing provisions of this Section 2.7, the Company shall not have the right to make any modification which would materially alter the terms of the Options to the Optionee’s detriment or materially impair any rights of the Optionee hereunder without the consent of the Optionee.

 

     
  4  

 

2.8 By accepting the Options, the Optionee represents and agrees that none of the Optioned Shares purchased upon exercise of the Options will be distributed in violation of applicable federal and state laws and regulations. The Optionee further represents and agrees to provide the Company with any other document reasonably requested by the Company or the Company’s Counsel.

 

3. Documents Required from Optionee

 

3.1 The Optionee must complete, sign and return to the Company:

 

  (a) a copy of this Agreement;
     
  (b) a copy of the Acknowledgements, and Representations and Warranties of the Optionee attached hereto as Schedule F;
     
  (c) if the Optionee is resident in Canada, a Canadian Questionnaire in the form attached hereto as Schedule C; and
     
  (d) if the Optionee is resident in the United States and if an exemption from the registration requirements imposed by the 1933 Act is necessary for entry into this Agreement, one of the two questionnaires in the forms attached hereto as Schedule D and Schedule E, whichever applies.

 

3.2 The Optionee shall complete, sign and return to the Company as soon as possible, on request by the Company, any documents, questionnaires, notices and undertakings as may be required by regulatory authorities, and applicable law.

 

4. Subject to Plan

 

The terms of the Options will be subject to the Plan, as may from time to time be amended, and any inconsistencies between this Agreement and the Plan, as the same may be from time to time amended, shall be governed by the provisions of the Plan. A copy of the Plan will be delivered to the Optionee, and will be available for inspection at the principal offices of the Company.

 

5. Acknowledgement and Waiver

 

The Optionee hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Optionee might be entitled in connection with the distribution of any of the Securities.

 

6. Professional Advice

 

The acceptance of the Options and the sale of Common Stock issued pursuant to the exercise of Options may have consequences under federal, state and provincial tax and securities laws which may vary depending upon the individual circumstances of the Optionee. Accordingly, the Optionee acknowledges that he or she has been advised to consult his or her personal legal and tax advisor in connection with this Agreement and his or her dealings with respect to Options. Without limiting other matters to be considered with the assistance of the Optionee’s professional advisors, the Optionee should consider: (a) the merits and risks of an investment in the underlying Optioned Shares; and (b) any resale restrictions that might apply under applicable securities laws.

 

     
  5  

 

7. Legending of Subject Securities

 

7.1 The Optionee hereby acknowledges that that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, the certificates representing any of the Optioned Shares may bear a legend in substantially the following form:

 

If the Optionee is not resident in the United States:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

 

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

Unless permitted under securities legislation, the holder of this security must not trade the security before the date that is 4 months and a day after THE later of (i) [ insert the distribution date ], and (ii) the date the issuer became a reporting issuer in any province or territory.

 

If the Option is resident in the United States:

 

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

Unless permitted under securities legislation, the holder of this security must not trade the security before the date that is 4 months and a day after THE later of (i) [ insert the distribution date ], and (ii) the date the issuer became a reporting issuer in any province or territory.

 

7.2 The Optionee hereby acknowledges and agrees to the Company making a notation on its records or giving instructions to the registrar and transfer agent of the Company in order to implement the restrictions on transfer set forth and described in this Agreement.

 

     
  6  

 

8. Resale restrictions

 

8.1 This Agreement and the Options represented hereby are not transferable. Optioned Shares received upon exercise of any Options will be subject to resale restrictions contained in the securities legislation applicable to the Company and the Optionee. The Optionee acknowledges and agrees that the Optionee is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions.

 

8.2 The Optionee acknowledges that any resale of any of the Optioned Shares will be subject to resale restrictions contained in the securities legislation applicable to the Optionee or proposed transferee. The Optionee acknowledges that none of the Optioned Shares have been registered under the 1933 Act or the securities laws of any state of the United States. The Optioned Shares may not be offered or sold in the United States unless registered in accordance with federal securities laws and all other applicable securities laws or exemptions from such registration requirements are available. The Optionee acknowledges that the Optioned Shares are subject to resale restrictions in Canada and may not be traded in Canada except as permitted by the applicable provincial securities laws and the rules made thereunder.

 

9. No Employment Relationship

 

The grant of an Option shall in no way constitute any form of agreement or understanding binding on the Company or any related company, express or implied, that the Company or any related company will employ or contract with an Optionee, for any length of time, nor shall it interfere in any way with the Company’s or, where applicable, a related company’s right to terminate Optionee’s employment at any time, which right is hereby reserved.

 

10. Governing Law

 

This Agreement is governed by the laws of the State of Nevada and the federal laws of the United States of America as applicable therein. The Optionee irrevocably attorns to the jurisdiction of the courts of the State of Arizona.

 

11. Costs

 

The Optionee acknowledges and agrees that all costs and expenses incurred by the Optionee (including any fees and disbursements of any special counsel retained by the Optionee) relating to the acquisition of the Securities shall be borne by the Optionee.

 

12. Survival

 

This Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the shares underlying the Options by the Optionee pursuant hereto.

 

13. Assignment

 

This Agreement is not transferable or assignable.

 

14. Currency

 

Unless explicitly stated otherwise, all funds in this Agreement are stated in United States dollars.

 

15. Severability

 

The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.

 

     
  7  

 

16. Counterparts and Electronic Means

 

This Agreement may be executed in several counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument. Delivery of an executed copy of this Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Agreement as of the date first above written.

 

17. Entire Agreement

 

This Agreement is the only agreement between the Optionee and the Company with respect to the Options, and this Agreement and the Plan, once approved, supersede all prior and contemporaneous oral and written statements and representations and contain the entire agreement between the parties with respect to the Options.

 

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the date first above written.

 

ICOX INNOVATIONS INC.    
       
Per: /s/ Michael Blum    
  Authorized Signatory    

 

WITNESSED BY: )  
  )  
  )  
  )  
  )  
Name ) /s/ James Carter
  ) JAMES CARTER
  )  
Address )  
  )  
  )  
  )  
  )  
Occupation )  

 

     
  A- 1  

 

SCHEDULE A

 

VESTING SCHEDULE

 

The stock options vest monthly over 36 months, with 1/36 of the stock options vesting each month commencing on May 17, 2018.

 

     
  B- 1  

 

SCHEDULE B

 

NOTICE OF EXERCISE

 

TO: ICOX Innovations Inc.
  4101 Redwood Avenue
  Building F
  Los Angeles, CA 90066

 

This Notice of Exercise shall constitute a proper Notice of Exercise pursuant to section 2.6 of the Stock Option Agreement dated February 9, 2018 (the “ Agreement ”), between ICOX Innovations Inc. (the “Company” ) and the undersigned. The undersigned hereby elects to exercise the Optionee’s options to purchase ____________________ shares of the common stock of the Company at a price of $0.60 per share on the terms and conditions set forth in the Agreement.

 

Payment of aggregate consideration of $____________in cash or by certified check or cashier’s check accompanies this notice.

 

The Optionee hereby represents and warrants to the Company that all representations and warranties set out in the Agreement (and the applicable schedules hereto) are true as of the date of the exercise of the Options under the Agreement. The Optionee hereby further represents and warrants to the Company that the shares are being purchased only for investment and without intention to sell or distribute such shares.

 

The Optionee hereby directs the Company to issue, register and deliver the certificates representing the shares as follows:

 

Registration Information:   Delivery Instructions:
     
Name to appear on certificates   Name
     
Address   Address
     
City, State, and Zip Code    
     
    Telephone Number

 

DATED at _____________________________, the _______ day of______________, _______.

 

    X
    Signature
     
    (Name and, if applicable, Office)
     
    (Address)
     
    (City, State, and Zip Code)
     
    Fax Number or E-mail Address
     
    Social Security/Tax I.D. No.

 

     
  C- 1  

 

SCHEDULE C

 

CANADIAN QUESTIONNAIRE

 

TO: ICOX INNOVATIONS INC. (the “ Company ”)

 

RE: Stock options (the “ Options ”) of the Company

 

Capitalized terms used in this Canadian Questionnaire (this “ Questionnaire ”) and not specifically defined have the meaning ascribed to them in the Stock Option Agreement between the undersigned (the “ Optionee ”) and the Company to which this Schedule C is attached.

 

All dollar amounts referred to in this Questionnaire and Appendices A, B and C are in lawful money of Canada, unless otherwise indicated.

 

In connection with the grant to the Optionee of the Options, the Optionee hereby represents, warrants and certifies to the Company that the Optionee:

 

  (i) is acquiring the Options as principal (or deemed principal under the terms of National Instrument 45-106 – Prospectus Exemptions adopted by the Canadian Securities Administrators (“ NI 45-106 ”));

 

  (ii) (A) is resident in or is subject to the laws of one of the following (check one):

 

  [  ] Alberta [  ] New Brunswick [  ] Prince Edward Island
       
  [  ] British Columbia [  ] Nova Scotia [  ] Quebec
       
  [  ] Manitoba [  ] Ontario [  ] Saskatchewan
       
  [  ] Newfoundland and Labrador   [  ] Yukon
       
  [  ] Northwest Territories    

 

or

 

    (B) [  ] is resident in a country other than Canada or the United States; and

 

  (iii) has not been provided with any offering memorandum in connection with the acquisition of the Options.

 

In connection with the grant of the Options, the Optionee hereby represents, warrants, covenants and certifies that the Optionee meets one or more of the following criteria:

 

A. OPTIONEE QUALIFYING UNDER THE EMPLOYEE, DIRECTOR, OFFICER AND CONSULTANT EXEMPTION

 

In connection with the grant of the Options, the Optionee hereby represents, warrants, covenants and certifies that the Optionee meets one or more of the following criteria:

 

  [  ] (i) is an employee, officer or director of the Company; or
       
  [  ] (ii) is a consultant of the Company who provides services to the Company or a related entity of the Company and spends or will spend a significant amount of time and attention on the business and affairs of the Company or a related entity of the Company; and has voluntarily agreed to the grant of the Options.

 

     
  C- 2  

 

B. OPTIONEES QUALIFYING UNDER THE ACCREDITED INVESTOR EXEMPTION

 

In connection with the grant of the Options, the Optionee hereby represents, warrants, covenants and certifies that the Optionee meets one or more of the following criteria:

 

(a) _______ the Optionee is an “accredited investor” within the meaning of NI 45-106, by virtue of satisfying the indicated criterion below (YOU MUST INITIAL OR PLACE A CHECK-MARK ON THE APPROPRIATE LINE(S)) ( see certain guidance with respect to accredited investors that starts on page C-5 below )

 

  [  ] (i) except in Ontario, a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer,
       
  [  ] (ii) an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (i),
       
  [  ] (iii) an individual formerly registered under the securities legislation of a jurisdiction of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador),
       
  [  ] (iv) an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1,000,000 (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “A” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-9 ),
       
  [  ] (v) an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000,
       
  [  ] (vi) an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “A” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-9 ), or
       
  [  ] (vii) an individual who, either alone or with a spouse, has net assets of at least $5,000,000 (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “A” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-9 ).

 

(b) if the Optionee is an “accredited investor” within the meaning of NI 45-106 by virtue of satisfying the indicated criterion as set out in paragraphs (iv), (vi) or (vii) above, the Optionee has provided the Company with the signed risk acknowledgment form set out in Appendix “A” to this Questionnaire;

 

C. OPTIONEES QUALIFYING UNDER THE FAMILY, FRIENDS AND BUSINESS ASSOCIATES EXEMPTION

 

In connection with the grant of the Options, the Optionee hereby represents, warrants, covenants and certifies that the Optionee meets one or more of the following criteria:

 

(a) the Optionee is ( YOU MUST PLACE A CHECK-MARK ON THE APPROPRIATE LINE AND PROVIDE THE REQUESTED INFORMATION, AS APPLICABLE ):

 

     
  C- 3  

 

  [  ] (i) a director, executive officer or control person of the Company, or of an affiliate of the Company,
       
  [  ] (ii) _______ a close personal friend ( see guidance on making this determination that starts on page C-6 below ) of ___________________________________ ( print name of person ), who is a director, executive officer, founder or control person of the Company, or of an affiliate of the Company, and has been for __________________________ years based on                                      the                                          following factors: ________________________________________________________________
       
       
       
       
      ( explain the nature of the close personal friendship ),
       
  [  ] (iii) a close business associate ( see guidance on making this determination that starts on page C-6 below ) of ______________________________________ ( print name of person ), who is a director, executive officer, founder or control person of the Company, or of an affiliate of the Company, and has been for __________________________ years based on the following factors: __________________________
       
       
       
       
      ___________ ( explain the nature of the close business association ),

 

(b) if the Optionee is resident in the Province of Ontario or is subject to the securities laws of the Province of Ontario, the Optionee has provided the Company with a signed risk acknowledgement form in the form attached as Appendix “B” to this Questionnaire (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “B” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-11) , or
   
(c) if the Optionee is resident in the Province of Saskatchewan or is subject to the securities laws of the Province of Saskatchewan, and the Optionee is relying on the indicated criterion as set out in subsections C(a)(ii) or C(a)(iii) if the distribution is based in whole or in part on a close personal friendship or a close business association, the Optionee has provided the Company with a signed risk acknowledgement form in the form attached as Appendix “C” to this Questionnaire (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “C” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-14 ); or

 

For the purposes of this Questionnaire and the appendices attached hereto:

 

  (a) an issuer is “ affiliated ” with another issuer if

 

  (i) one of them is the subsidiary of the other, or
     
  (ii) each of them is controlled by the same person;

 

  (b) control person ” means

 

  (i) a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, or
     
  (ii) each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of an issuer, the person or combination of persons is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer;

 

     
  C- 4  

 

  (c) director ” means

 

(i) a member of the board of directors of a company or an individual who performs similar functions for a company, and

 

(ii) with respect to a person that is not a company, an individual who performs functions similar to those of a director of a company;

 

  (d) executive officer ” means, for an issuer, an individual who is

 

(i) a chair, vice-chair or president,

 

(ii) a vice-president in charge of a principal business unit, division or function including sales, finance or production, or

 

(iii) performing a policy-making function in respect of the issuer;

 

  (e) financial assets ” means

 

(i) cash,

 

(ii) securities, or

 

(iii) a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;

 

  (f) foreign jurisdiction ” means a country other than Canada or a political subdivision of a country other than Canada;

 

(j) individual ” means a natural person, but does not include

 

(i) a partnership, unincorporated association, unincorporated syndicate, unincorporated organization or trust, or

 

(ii) a natural person in the person’s capacity as a trustee, executor, administrator or personal or other legal representative;

 

(k) jurisdiction ” or “jurisdiction of Canada” means a province or territory of Canada except when used in the term foreign jurisdiction;

 

  (l) person ” includes

 

(i) an individual;

 

(ii) a corporation;

 

(iii) a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not; and

 

(iv) an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative;

 

  (m) related liabilities ” means

 

(i) liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

 

(ii) liabilities that are secured by financial assets; and

 

     
  C- 5  

 

  (n) spouse ” means, an individual who,

 

(i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual,

 

(ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or

 

(iii) in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta).

 

Guidance On Accredited Investor Exemptions for Individuals

 

An individual accredited investor is an individual:

 

(a) who, either alone or with a spouse, beneficially owns financial assets (please see the guidance below regarding what financial assets are) having an aggregate realizable value that. before taxes but net of any related liabilities (please see the guidance below regarding what related liabilities are), exceeds $1,000,000;

 

(b) whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;

 

(c) who, either alone or with a spouse, has net assets (please see the guidance below regarding calculating net assets) of at least $5,000,000; and

 

(d) who beneficially owns financial assets (please see the guidance below regarding what financial assets are) having an aggregate realizable value that, before taxes but net of any related liabilities (please see the guidance below regarding what related liabilities are), exceeds $5,000,000.

 

The monetary thresholds above are intended to create bright-line standards. Optionees who do not satisfy these monetary thresholds do not qualify as accredited investors.

 

Spouses

 

Sections (a), (b) and (c) above are designed to treat spouses as a single investing unit, so that either spouse qualifies as an accredited investor if the combined financial assets of both spouses exceed $1,000,000, the combined net income of both spouses exceeds $300,000, or the combined net assets of both spouses exceed $5,000,000. Section (d) above does not treat spouses as a single investing unit.

 

If the combined net income of both spouses does not exceed $300,000, but the net income of one of the spouses exceeds $200,000, only the spouse whose net income exceeds $200,000 qualifies as an accredited investor.

 

Financial Assets and Related Liabilities

 

For the purposes of Sections (a) and (d) above, “ financial assets ” means: (1) cash, (2) securities, or (3) a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation. These financial assets are generally liquid or relatively easy to liquidate. The value of a optionee’s personal residence is not included in a calculation of financial assets.

 

The calculation of financial assets must exclude “ related liabilities ”, meaning: (1) liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or (2) liabilities that are secured by financial assets.

 

     
  C- 6  

 

As a general matter, it should not be difficult to determine whether financial assets are beneficially owned by an individual, an individual’s spouse, or both, in any particular instance. However, in the case where financial assets are held in a trust or in another type of investment vehicle for the benefit of an individual, there may be questions as to whether the individual beneficially owns the financial assets. The following factors are indicative of beneficial ownership of financial assets:

 

  physical or constructive possession of evidence of ownership of the financial asset;
     
  entitlement to receipt of any income generated by the financial asset;
     
  risk of loss of the value of the financial asset; and
     
  the ability to dispose of the financial asset or otherwise deal with it as the individual sees fit.

 

For example, securities held in a self-directed RRSP for the sole benefit of an individual are beneficially owned by that individual.

 

In general, financial assets in a spousal RRSP can be included for the purposes of the $1,000,000 financial asset test in Section (a) above because Section (a) takes into account financial assets owned beneficially by a spouse. However, financial assets in a spousal RRSP cannot be included for purposes of the $5,000,000 financial asset test in Section (d) above.

 

Financial assets held in a group RRSP under which the individual does not have the ability to acquire the financial assets and deal with them directly do not meet the beneficial ownership requirements in either Sections (a) or (d) above.

 

Guidance on Close Personal Friend and Close Business Associate Determination

 

A “ close personal friend ” of a director, executive officer, founder or control person of an issuer is an individual who knows the director, executive officer, founder or control person well enough and has known them for a sufficient period of time to be in a position to assess their capabilities and trustworthiness and to obtain information from them with respect to the investment.

 

The following factors are relevant to this determination:

 

(a) the length of time the individual has known the director, executive officer, founder or control person,

 

(b) the nature of the relationship between the individual and the director, executive officer, founder or control person including such matters as the frequency of contacts between them and the level of trust and reliance in the other circumstances, and

 

(c) the number of “close personal friends” of the director, executive officer, founder or control person to whom securities have been distributed in reliance on the private issuer exemption or the family, friends and business associates exemption.

 

An individual is not a close personal friend solely because the individual is:

 

(a) a relative,

 

(b) a member of the same club, organization, association or religious group,

 

(c) a co-worker, colleague or associate at the same workplace,

 

(d) a client, customer, former client or former customer,

 

(e) a mere acquaintance, or

 

(f) connected through some form of social media, such as Facebook, Twitter or LinkedIn.

 

     
  C- 7  

 

The relationship between the individual and the director, executive officer, founder or control person must be direct. For example, the exemption is not available to a close personal friend of a close personal friend of a director of the issuer. Further, a relationship that is primarily founded on participation in an internet forum is not considered to be that of a close personal friend.

 

A “ close business associate ” is an individual who has had sufficient prior business dealings with a director, executive officer, founder or control person of the issuer to be in a position to assess their capabilities and trustworthiness and to obtain information from them with respect to the investment.

 

The following factors are relevant to this determination:

 

(a) the length of time the individual has known the director, executive officer, founder or control person,

 

(b) the nature of any specific business relationships between the individual and the director, executive officer, founder or control person, including, for each relationship, when it began, the frequency of contact between them and when it terminated if it is not ongoing, and the level of trust and reliance in the other circumstances,

 

(c) the nature and number of any business dealings between the individual and the director, executive officer, founder or control person, the length of the period during which they occurred, and the nature and date of the most recent business dealing, and

 

(d) the number of “close business associates” of the director, executive officer, founder or control person to whom securities have been distributed in reliance on the private issuer exemption or the family, friends and business associates exemption.

 

An individual is not a close business associate solely because the individual is:

 

(a) a member of the same club, organization, association or religious group,

 

(b) a co-worker, colleague or associate at the same workplace,

 

(c) a client, customer, former client or former customer,

 

(d) a mere acquaintance, or

 

(e) connected through some form of social media, such as Facebook, Twitter or LinkedIn.

 

The relationship between the individual and the director, executive officer, founder or control person must be direct. For example, the exemptions are not available for a close business associate of a close business associate of a director of the issuer. Further, a relationship that is primarily founded on participation in an internet forum is not considered to be that of a close business associate.

 

The Optionee acknowledges and agrees that, in addition to resale restrictions imposed under U.S. securities laws, there are additional restrictions on the Optionee’s ability to resell the Securities under Canadian securities laws and National Instrument 45-102 as adopted by the Canadian Securities Administrators;

 

The Optionee agrees that the above representations and warranties will be true and correct both as of the execution of this Questionnaire acknowledges that they will survive the completion of the issue of the Option.

 

     
  C- 8  

 

The Optionee acknowledges that the foregoing representations and warranties are made by the Optionee with the intent that they be relied upon in determining the suitability of the Optionee to acquire the Options and that this Questionnaire is incorporated into and forms part of the Agreement and the undersigned undertakes to immediately notify the Company of any change in any statement or other information relating to the Optionee set forth herein which takes place prior to the closing time of the grant of the Options.

 

The Optionee undertakes to immediately notify the Company of any change in any statement or other information relating to the Optionee set forth in the Agreement or in this Questionnaire which takes place prior to the issuance of the Options.

 

By completing this Questionnaire, the Optionee authorizes the indirect collection of this information by each applicable regulatory authority or regulator and acknowledges that such information is made available to the public under applicable laws.

 

DATED as of ________ day of _________________, 20____.

 

     
    Print Name of Optionee
     
     
    Signature

 

     
  C- 9  

 

APPENDIX “A”
TO CANADIAN QUESTIONNAIRE

 

Form 45-106F9

WARNING!

 

This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment.

 

SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
1. About your investment
Type of securities: Stock Options Issuer: ICOX INNOVATIONS INC. (the “ Issuer ”)
Purchased from: The Issuer.
SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER
2. Risk acknowledgement
This investment is risky. Initial that you understand that: Your
initials
Risk of loss – You could lose your entire investment of US$             . [Instruction: Insert the total dollar amount of the investment.]  
Liquidity risk – You may not be able to sell your investment quickly – or at all.  
Lack of information – You may receive little or no information about your investment.  
Lack of advice – You will not receive advice from the salesperson about whether this investment is suitable for you unless the salesperson is registered. The salesperson is the person who meets with, or provides information to, you about making this investment. To check whether the salesperson is registered, go to www.aretheyregistered.ca .  
3. Accredited investor status
You must meet at least one of the following criteria to be able to make this investment. Initial the statement that applies to you. (You may initial more than one statement.) The person identified in section 6 is responsible for ensuring that you meet the definition of accredited investor. That person, or the salesperson identified in section 5, can help you if you have questions about whether you meet these criteria.

Your
initials

 

Your net income before taxes was more than $200,000 in each of the 2 most recent calendar years, and you expect it to be more than $200,000 in the current calendar year. (You can find your net income before taxes on your personal income tax return.)  
Your net income before taxes combined with your spouse’s was more than $300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year.  
Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the cash and securities.  
Either alone or with your spouse, you have net assets worth more than $5 million. (Your net assets are your total assets (including real estate) minus your total debt.)  

 

     
  C- 10  

 

4. Your name and signature
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form.
First and last name (please print):
Signature: Date:
SECTION 5 TO BE COMPLETED BY THE SALESPERSON
5. Salesperson information
[Instruction: The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.]
First and last name of salesperson (please print):
Telephone: Email:
Name of firm (if registered):
SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
6. For more information about this investment
ICOX INNOVATIONS INC.
4101 Redwood Avenue, Building F
Los Angeles, CA 90066
Attn: Michael Blum
Telephone: 213.675.5300
Email: Michael.blum@icoxinnovations.com
 
For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www.securities-administrators.ca .

 

Form instructions:

 

1. This form does not mandate the use of a specific font size or style but the font must be legible
   
2. The information in sections 1, 5 and 6 must be completed before the purchaser completes and signs the form.
   
3. The purchaser must sign this form. Each of the purchaser and the issuer or selling security holder must receive a copy of this form signed by the purchaser. The issuer or selling security holder is required to keep a copy of this form for 8 years after the distribution.

 

     
  C- 11  

 

APPENDIX “B” TO CANADIAN QUESTIONNAIRE
Form 45-106F12

 

RISK ACKNOWLEDGEMENT FORM FOR FAMILY, FRIEND AND
BUSINESS ASSOCIATE INVESTORS

 

WARNING!

 

This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment.

 

SECTION 1 TO BE COMPLETED BY THE ISSUER
1. About your investment
Type of securities: Stock Options Issuer: ICOX Innovations Inc. (the “ Issuer ”)

SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER
2. Risk acknowledgement
This investment is risky. Initial that you understand that: Your initials
Risk of loss – You could lose your entire investment of US$______________.
[Instruction: Insert the total dollar amount of the investment.]
 
Liquidity risk – You may not be able to sell your investment quickly – or at all.  
Lack of information – You may receive little or no information about your investment. The information you receive may be limited to the information provided to you by the family member, friend or close business associate specified in section 3 of this form.  
3. Family, friend or business associate status
You must meet one of the following criteria to be able to make this investment. Initial the statement that applies to you: Your initials
A) You are:  
  1) [check all applicable boxes]  
         
    [  ] a director of the issuer or an affiliate of the issuer  
         
    [  ] an executive officer of the issuer or an affiliate of the issuer  
         
    [  ] a control person of the issuer or an affiliate of the issuer  
         
    [  ] a founder of the issuer  
         
OR        
         
  2) [check all applicable boxes]  
         
    [  ] a person of which a majority of the voting securities are beneficially owned by, or a majority of the directors are, (i) individuals listed in (1) above and/or (ii) family members, close personal friends or close business associates of individuals listed in (1) above  
         
    [  ] a trust or estate of which all of the beneficiaries or a majority of the trustees or executors are (i) individuals listed in (1) above and/or (ii) family members, close personal friends or close business associates of individuals listed in (1) above  

 

     
  C- 12  

 

B) You are a family member of _____________________________________ [Instruction: Insert the name

of the person who is your relative either directly or through his or her spouse] , who holds the following position at the issuer or an affiliate of the issuer:____________________________________________.

 

You are the __________________ of that person or that person’s spouse.

 

[Instruction: To qualify for this investment, you must be (a) the spouse of the person listed above or (b) the parent, grandparent, brother, sister, child or grandchild of that person or that person’s spouse.]

 

C) You are a close personal friend of ___________________________ [Instruction: Insert the name of your close personal friend] , who holds the following position at the issuer or an affiliate of the issuer: ________________________________.

 

You have known that person for ________ years.

 

D) You are a close business associate of _______________________________________ [Instruction: Insert the name of your close business associate] , who holds the following position at the issuer or an affiliate of the issuer: ________________________.

 

You have known that person for ________ years.

 
4. Your name and signature
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form. You also confirm that you are eligible to make this investment because you are a family member, close personal friend or close business associate of the person identified in section 5 of this form.  
 First and last name (please print):
Signature: Date:
SECTIONS 5 TO BE COMPLETED BY PERSON WHO CLAIMS THE CLOSE PERSONAL RELATIONSHIP, IF APPLICABLE
5. Contact person at the issuer or an affiliate of the issuer

[Instruction: To be completed by the director, executive officer, control person or founder with whom the purchaser has a close personal relationship indicated under sections 3B, C or D of this form.]

 

By signing this form, you confirm that you have, or your spouse has, the following relationship with the purchaser: [check the box that applies]

 

[  ] family relationship as set out in section 3B of this form

 

[  ] close personal friendship as set out in section 3C of this form

 

[  ] close business associate relationship as set out in section 3D of this form

First and last name of contact person (please print):
Position with the issuer or affiliate of the issuer (director, executive officer, control person or founder):
Telephone: Email:
Signature: Date:

 

     
  C- 13  

 

SECTIONS 6 TO BE COMPLETED BY THE ISSUER
6. For more information about this investment

 

ICOX INNOVATIONS INC.
4101 Redwood Avenue, Building F

Los Angeles, CA 90066
Attn: Michael Blum
Telephone: 213.675.5300
Email: Michael.blum@icoxinnovations.com  

 

For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www.securities-administrators.ca.

 

Signature of executive officer of the issuer (other than the purchaser): Date:

 

Form instructions:

 

1. This form does not mandate the use of a specific font size or style but the font must be legible.

 

2. The information in sections 1, 5 and 6 must be completed before the purchaser completes and signs the form .

 

3. The purchaser, an executive officer who is not the purchaser and, if applicable, the person who claims the close personal relationship to the purchaser must sign this form. Each of the purchaser, contact person at the issuer and the issuer must receive a copy of this form signed by the purchaser. The issuer is required to keep a copy of this form for 8 years after the distribution.

 

4. The detailed relationships required to purchase securities under this exemption are set out in section 2.5 of National Instrument 45-106 Prospectus and Registration Exemptions. For guidance on the meaning of “close personal friend” and “close business associate”, please refer to sections 2.7 and 2.8, respectively, of Companion Policy 45-106CP Prospectus and Registration Exemptions.

 

     
  C- 14  

 

APPENDIX “C” TO CANADIAN QUESTIONNAIRE

 

Form 45-106F5

 

RISK ACKNOWLEDGEMENT
SASKATCHEWAN CLOSE PERSONAL FRIENDS AND CLOSE BUSINESS ASSOCIATES

 

 

You are buying Exempt Market Securities. They are called exempt market securities because two parts of securities law do not apply to them. If an issuer wants to sell exempt market securities to you:

 

the issuer does not have to give you a prospectus (a document that describes the investment in detail and gives you some legal protections), and

 

the securities do not have to be sold by an investment dealer registered with a securities regulatory authority or regulator.

 

There are restrictions on your ability to resell exempt market securities . Exempt market securities are more risky than other securities.

 

You may not receive any written information about the issuer or its business. If you have any questions about the issuer or its business, ask for written clarification before you purchase the securities. You should consult your own professional advisers before investing in the securities.

 

The securities you are buying are not listed . The securities you are buying are not listed on any stock exchange, and they may never be listed. There may be no market for these securities. You may never be able to sell these securities.

 

For more information on the exempt market, refer to the Saskatchewan Financial Services Commission’s website at http://www.sfsc.gov.sk.ca .

 

[Instruction: The purchaser must sign 2 copies of this form. The purchaser and the issuer must each receive a signed copy.]

 

     
  D- 1  

 

SCHEDULE D

 

UNITED STATES ACCREDITED INVESTOR QUESTIONNAIRE

 

Capitalized terms used in this United States Accredited Investor Questionnaire (this “ Questionnaire ”) and not specifically defined have the meaning ascribed to them in the Stock Option Agreement between the undersigned (the “ Optionee ”) and ICOX Innovations Inc. (the “ Company ”) to which this Schedule D is attached.

 

All dollar amounts referred to in this Questionnaire are in lawful money of the United States, unless otherwise indicated.

 

The Optionee covenants, represents and warrants to the Company that he or she satisfies one or more of the categories of “Accredited Investors”, as defined by Regulation D promulgated under the Securities Act of 1933 (the “Securities Act” ), as indicated below: (Please initial in the space provide those categories, if any, of an “Accredited Investor” which the Optionee satisfies)

 

  ______  Category 1 An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of $5,000,000;
       
  ______ Category 2 A natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of this Category 2, “net worth” means the excess of total assets at fair market value (including personal and real property, but excluding the estimated fair market value of a person’s primary home) over total liabilities. Total liabilities excludes any mortgage on the primary home in an amount of up to the home’s estimated fair market value as long as the mortgage was incurred more than 60 days before the Securities are acquired, but includes (i) any mortgage amount in excess of the home’s fair market value and (ii) any mortgage amount that was borrowed during the 60-day period before the date of the acquisition of Securities for the purpose of investing in the Securities;
       
  ______ Category 3 A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
       
  ______ Category 4 A “bank” as defined under Section (3)(a)(2) of the Securities Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors;

 

     
  D- 2  

 

  ______  Category 5 A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States);
       
  ______ Category 6 A director or executive officer of the Company;
       
  ______ Category 7 A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act;
       
  ______ Category 8 An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories;

 

Note that the Optionee claiming to satisfy one of the above categories of Accredited Investor may be required to supply the Company with a balance sheet, prior years’ federal income tax returns or other appropriate documentation to verify and substantiate the Optionee’s status as an Accredited Investor.

 

If the Optionee is an entity which initialled the last category in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity:

 

All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, the Optionee agrees that, if necessary, this Questionnaire may be presented to such parties as the Company deems appropriate to establish the availability, under the Securities Act or applicable state securities law, of exemption from registration in connection with the issuance of the Securities hereunder.

 

By completing this Questionnaire, the Optionee authorizes the indirect collection of this information by each applicable regulatory authority or regulator and acknowledges that such information is made available to the public under applicable laws.

 

DATED as of _______ day of _________________, 20____.

 

     
    Print Name of Optionee
     
     
    Signature
     
     
    Social Security/Tax I.D. No.

 

     
  E- 1  

 

SCHEDULE E

 

UNITED STATES NON-ACREDITED INVESTOR QUESTIONNAIRE

 

Capitalized terms used in this United States Non-Accredited Investor Questionnaire (this “ Questionnaire ”) and not specifically defined have the meaning ascribed to them in the Stock Option Agreement between the undersigned (the “ Optionee ”) and ICOX Innovations Inc. (the “ Company ”) to which this Schedule E is attached.

 

All dollar amounts referred to in this Questionnaire are in lawful money of the United States, unless otherwise indicated.

 

The purpose of this Questionnaire is to assure the Company that the Optionee will meet the standards imposed by the Securities Act of 1933 (the “Securities Act” ) and the appropriate exemptions of applicable state securities laws. The Company will rely on the information contained in this Questionnaire for the purposes of such determination. The Option and the Optioned Shares (together, the “Securities” ) will not be registered under the Securities Act and has been issued in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. This Questionnaire is not an offer of any securities of the Company in any state other than those specifically authorized by the Company.

 

Please attach additional pages if necessary to answer any question fully.

 

REPRESENTATIONS OF OPTIONEE

 

This item is presented in alternative form. Please initial in the space provided the applicable alternative.

 

_____ ALTERNATIVE ONE: The Optionee covenants, represents and warrants to the Company that he or she has such knowledge and experience in financial and business matters that he or she is capable of evaluating the relative merits and risks of an investment in the Securities and Company and is not utilizing a purchaser representative in connection with evaluating such merits and risks. The Optionee is providing evidence of its knowledge and experience in these matters through the information requested below in this Questionnaire.
   
_____ ALTERNATIVE TWO: The Optionee covenants, represents and warrants to the Company that he or she has chosen to use the services of a purchaser representative acceptable to the Optionee in connection with the Optionee’s acquisition of the Securities. The Optionee hereby acknowledges that the person named below is his or her purchaser representative who will assist and advise the Optionee in evaluating the merits and risks of an investment in the Securities and the Company and affirms that such purchaser representative has previously disclosed in writing any material relationship that exists between the purchaser representative (or its affiliates) and the Company (or its affiliates) that is mutually understood to be contemplated, or that has existed at any time during the previous two years, and any compensation received or to be received as a result of such relationship.
   
   
  (name of Purchaser Representative)
   
   
  (address of Purchaser Representative)
   
  If the Optionee utilizes a purchaser representative, this Questionnaire must be accompanied by a completed and signed purchaser representative Questionnaire, a copy of which can be obtained from the Company upon request.

 

     
  E- 2  

 

FOR INDIVIDUAL INVESTORS

 

1. Name:  
              
2. Residential Address & Telephone Number:
   
   

 

3. Length of Residence in State of Residence:  

 

4. U.S. Citizen: _____ Yes _____ No

 

5. Social Security Number:  

 

6. Business Address & Telephone Number:  
   
   

 

7. Preferred Mailing Address: _____ Residence _____ Business

 

8. Date of Birth:  

 

9. Employer and Position:  

 

10. Name of Business:  

 

11. Business or Professional Education and Degrees:        

 

  School   Degree   Year Received
   
   
           
12. Prior Employment (last 5 years):        
           
  Employer   Nature of Duties   Dates of Employment
   
   
   
   

 

     
  E- 3  

 

13.     Relationship to the Company, if any: ________________________________________________________

 

14. Is the Optionee an officer of director of a publicly-held company?

 

____ Yes ____ No

 

If yes, specify company: __________________________________________________________________

 

15. Does the Optionee beneficially own 10% or more of the voting securities of a publicly-held company?

 

____ Yes _____ No

 

If yes, specify company: __________________________________________________________________

 

16. Within the last 5 years, has the Optionee personally invested in investments sold by means of private placements in reliance on exemptions from registration under the Securities Act and state securities laws?

 

____ Yes _____ No

 

17. Prior investments by the Optionee which were purchased in reliance on exemptions from registration under the Securities Act and State securities laws (initial the highest number applicable):

 

Amount (Cumulative)

 

Real Estate:   Up to   $50,000 to   Over
None: _____   $50,000 _____   $250,000 _____   $250,000 _____
             
Securities:   Up to   $50,000 to   Over
None: _____   $50,000 _____   $250,000 _____   $250,000 _____
             
Other:   Up to   $50,000 to   Over
None: _____   $50,000 _____   $250,000 _____   $250,000 _____

 

18. Does the Optionee consider itself to be an experienced and sophisticated investor?

 

____ Yes _____ No

 

  If so, please provide evidence of investment sophistication and/or experience:
   
   

 

19. Does the Optionee, or any person authorized to execute this Questionnaire, consider itself to have such knowledge of the Company and its business and such experience in financial and business matters to enable it to evaluate the merits and risks of an investment in the Securities and the Company, should the Optionee be given an opportunity to so invest?

 

____ Yes _____ No

 

     
  E- 4  

 

20. If the Optionee is an individual, please indicate the Optionee’s and his/her spouse’s combined gross income during the preceding two years (initial the highest number applicable):

 

  2017     2016
         
_____ Less than $75,000   _____ Less than $75,000
         
_____ $75,001 to $100,000   _____ $75,001 to $100,000
         
_____ $100,001 to $200,000   _____ $100,001 to $200,000
         
_____ $200,001 to $300,000   _____ $200,001 to $300,000
         
_____ $Over $300,000   _____ $Over $300,000

 

21. If the Optionee is an individual, please indicate the Optionee’s and his/her spouse’s combined estimated net worth (exclusive of home, home furnishings and personal automobiles) (initial the highest number applicable):

 

_____ Less than $100,000   _____ $300,0001 to $500,000
         
_____ $100,001 to $200,000   _____ $500,001 to $1,000,000
         
_____ $200,001 to $300,000   _____ Over $1,000,000

 

22. Regardless of the amount of the proposed investment:

 

(a) Will the Optionee’s proposed investment exceed 10% of its individual net worth, or the Optionee’s joint net worth with its spouse as determined in paragraph 21 above?

 

____ Yes _____ No

 

(b) Will the Optionee be able to bear the economic risk of its investment in this transaction?

 

____ Yes _____ No

 

23. Please provide answers to the following questions.

 

  (a) State total assets of the Optionee, including cash, stocks and bonds, automobiles, real estate, and any other assets:
       
    $        
       
  (b) State total liabilities of the Optionee including real estate indebtedness, accounts payable, taxes payable and any other liabilities:
       
    $  
       
  (c) State annual income of the Optionee including salary, securities income, rental income and any other income:
       
    $  

 

     
  E- 5  

 

  (d) State annual expenses of the Optionee, excluding ordinary living expenses, including real estate payments, rent, property taxes and other expenses:
       
    $      
       
  (e) Does the Optionee expect the amount of its assets, liabilities, income and expenses, as stated above, to be subject to significant change in the future:

 

____ Yes _____ No

 

  If yes, explain:
   
   

 

All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, the Optionee agrees that, if necessary, this Questionnaire may be presented to such parties as the Company deems appropriate to establish the availability, under the Securities Act or applicable state securities law, of exemption from registration in connection with the issuance of the Securities hereunder.

 

By completing this Questionnaire, the Optionee authorizes the indirect collection of this information by each applicable regulatory authority or regulator and acknowledges that such information is made available to the public under applicable laws.

 

DATED as of _______ day of __________, 20____.

 

     
    Print Name of Optionee
     
     
    Signature
     
     
    Social Security/Tax I.D. No.

 

     
  F- 1  

 

SCHEDULE F

 

ACKNOWLEDGEMENTS and Representations and warranties OF THE OPTIONEE

 

Capitalized terms used in this Acknowledgements and Representations and Warranties of the Optionee and not specifically defined have the meaning ascribed to them in the Stock Option Agreement between the undersigned (the “ Optionee ”) and ICOX Innovations Inc. (the “ Company ”) to which this Schedule F is attached.

 

The Optionee acknowledges and agrees that:

 

(a) the Securities have not been registered under the 1933 Act or under any state securities or “blue sky” laws of any state of the United States, and are being offered only in a transaction not involving any public offering within the meaning of the 1933 Act, and, unless so registered, may not be offered or sold in the United States or to U.S. Persons, except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act, and in each case only in accordance with applicable state securities laws;

 

(b) the Company will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;

 

(c) the decision to execute this Agreement and acquire the Securities hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company and such decision is based solely upon a review of publicly available information regarding the Company that is available on the website of the United States Securities and Exchange Commission (the “ SEC ”) at www.sec.gov (the “Company Information” );

 

(d) there are risks associated with an investment in the Securities;

 

(e) the Optionee and the Optionee’s advisor(s) (if applicable) have had a reasonable opportunity to ask questions of and receive answers from the Company in connection with the distribution of the Securities hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Company;

 

(f) the books and records of the Company were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Optionee during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Securities hereunder have been made available for inspection by the Optionee, the Optionee’s attorney and/or advisor(s) (if applicable);

 

(g) the Company, its officers, directors, counsel and agents are entitled to rely upon the truth and accuracy of the acknowledgements, representations, warranties, statements, answers, covenants and agreements contained in this Agreement and agrees that if any of such acknowledgements, representations, warranties, statements, answers, covenants, and agreements should become, by the passage of time after the date of this Agreement, no longer accurate or should be breached, the Optionee shall promptly notify the Company, and the Optionee will hold harmless the Company from any loss or damage it may suffer as a result of the Optionee’s failure to correctly complete or comply with the terms of this Agreement;

 

     
  F- 2  

 

(h) the Optionee has been advised to consult its own legal, tax and other advisors with respect to the merits and risks regarding the exercise of the Options and the issuance of the Optioned Shares and with respect to applicable resale restrictions and it is solely responsible (and the Company is in not any way responsible) for compliance with applicable resale restrictions;

 

(i) the Company has advised the Optionee that the Company is relying on an exemption from the registration and prospectus requirements of applicable securities laws and, as a consequence of acquiring the Securities pursuant to this exemption, certain protections, rights and remedies provided by the applicable securities laws, including statutory rights of rescission or damages, will not be available to the Optionee;

 

(j) the Optionee will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Optionee contained herein or in any document furnished by the Optionee to the Company in connection herewith being untrue in any material respect or any breach or failure by the Optionee to comply with any covenant or agreement made by the Optionee to the Company in connection therewith;

 

(k) the Securities are not listed on any stock exchange or automated dealer quotation system and no representation has been made to the Optionee that any of the Securities will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the shares of the Company’s common stock on the OTC Pink;

 

(l) neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;

 

(m) no documents in connection with this Agreement have been reviewed by the SEC or any state securities administrators;

 

(n) there is no government or other insurance covering any of the Securities; and

 

(o) this Agreement is not enforceable by the Optionee unless it has been accepted by the Company.

 

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONEE

 

The Optionee hereby represents and warrants to and covenants with the Company (which representations, warranties and covenants shall survive the closing) that:

 

(a) the Optionee is a bona fide director, officer, employee, independent contractor or consultant of the Company, Parent or Subsidiary;

 

(b) unless the Optionee has completed Schedule D or E, the Optionee is not acquiring the Securities for the account or benefit of, directly or indirectly, any U.S. Person;

 

(b) unless the Optionee has completed Schedule D or E, the Optionee is not a U.S. Person;

 

(c) the acquisition of the Securities by the Optionee as contemplated in this Agreement complies with or is exempt from the applicable securities legislation of the jurisdiction of residence of the Optionee;

 

     
  F- 3  

 

(d) the Optionee has not acquired or is not acquiring the Securities as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the 1933 Act) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of the Securities; provided, however, that the Optionee may sell or otherwise dispose of the Securities pursuant to registration thereof under the 1933 Act and any applicable state and provincial securities laws or under an exemption from such registration requirements;

 

(e) unless the Optionee has completed Schedule D or E, the Optionee is outside the United States when receiving and executing this Agreement and is acquiring the Securities as principal for the Optionee’s own account, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalisation thereof, in whole or in part, and, in particular, it has no intention to distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons, and no other person has a direct or indirect beneficial interest in such Securities;

 

(f) if the Optionee is not resident in the United States or Canada, the Optionee:

 

(i) is knowledgeable of, or has been independently advised as to, the applicable securities laws of the securities regulators having application in the jurisdiction in which the Optionee is resident (the “ International Jurisdiction ”) which would apply to the granting of the Option and the issue, sale or resale of the Optioned Shares;

 

(ii) the Optionee is acquiring the Option or the Optioned Shares pursuant to exemptions from prospectus or equivalent requirements under applicable securities laws or, if such is not applicable, the Optionee is permitted to acquire the Option or the Optioned Shares under the applicable securities laws of the securities regulators in the International Jurisdiction without the need to rely on any exemptions;

 

(iii) the applicable securities laws of the authorities in the International Jurisdiction do not require the Company to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the granting of the Option or the issue, sale or resale of the Optioned Shares; and

 

(iv) the granting of the Option or the issue, sale or resale of the Optioned Shares does not trigger:

 

A. any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase in the International Jurisdiction; or

 

B. any continuous disclosure reporting obligation of the Optionee or the Company in the International Jurisdiction; and

 

(v) the Optionee will, if requested by the Company, deliver to the Company a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in subparagraphs (ii), (iii) and (iv) above to the satisfaction of the Company, acting reasonably;

 

(g) the Optionee has received and carefully read this Agreement and the Company Information;

 

     
  F- 4  

 

(h) the Optionee has received a brief description of the Securities and the Optionee understands that the proceeds from the exercise of the Options will be used by the Company as working capital for general corporate purposes;

 

(i) the Optionee has duly executed and delivered this Agreement and it constitutes a valid and binding agreement of the Optionee enforceable against the Optionee in accordance with its terms;

 

(j) the Optionee has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto and, if the Optionee is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Agreement on behalf of the Optionee;

 

(k) the Optionee:

 

(i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies,

 

(ii) has no need for liquidity in this investment, and

 

(iii) is able to bear the economic risks of an investment in the Securities for an indefinite period of time, and can afford the complete loss of such investment;

 

(l) the Optionee has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and the Company, and the Optionee is providing evidence of such knowledge and experience in these matters through the information requested in this Agreement;

 

(m) the Optionee is aware that an investment in the Company is speculative and involves certain risks, including the possible loss of the investment, and the Optionee has carefully read and considered the matters set forth under the caption “Risk Factors” appearing in the Company’s various disclosure documents, filed with the SEC;

 

(n) the entering into of this Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or, if applicable, the constating documents of, the Optionee, or of any agreement, written or oral, to which the Optionee may be a party or by which the Optionee is or may be bound;

 

(o) the Optionee is purchasing the Securities for its own account for investment purposes only and not for the account of any other person and not for distribution, assignment or resale to others, and no other person has a direct or indirect beneficial interest is such Securities, and the Optionee has not subdivided his interest in the Securities with any other person;

 

(p) the Optionee is not an underwriter of, or dealer in, the shares of the Company’s common stock, nor is the Optionee participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

 

(q) the Optionee understands and agrees that the Company and others will rely upon the truth and accuracy of the acknowledgements, representations, statements, answers and agreements contained in this Agreement, and agrees that if any of such acknowledgements, representations, statements, answers and agreements are no longer accurate or have been breached, the Optionee shall promptly notify the Company;

 

(r) the Optionee has made an independent examination and investigation of an investment in the Securities and the Company and has depended on the advice of its legal and financial advisors and agrees that the Company will not be responsible in anyway whatsoever for the Optionee’s decision to acquire the Securities;

 

     
  F- 5  

 

(s) the Optionee is not aware of any advertisement of any of the Securities and is not acquiring the Securities as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

 

(t) the Optionee has either (a) a pre-existing personal or business relationship with the Company or any of its partners, officers, directors, or controlling persons consisting of personal or business contacts of a nature and duration which enable the Optionee to be aware of the character, business acumen and general business and financial circumstances of the Company or any such partner, officer, director, or controlling person with whom such relationship exists or (b) such business or financial expertise as to be able to protect the Otpionee’s own interests in connection with the acquisition of the Securities; and

 

(u) no person has made to the Optionee any written or oral representations:

 

(i) that any person will resell or repurchase any of the Securities,

 

(ii) that any person will refund the purchase price of any of the Securities,

 

(iii) as to the future price or value of any of the Securities, or

 

(iv) that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities of the Company on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the shares of the Company’s common stock on the OTC Pink.

 

DATED as of ______ day of ______________, 20____.

 

     
    Print Name of Optionee
     
     
    Signature
     
     
    Social Security/Tax I.D. No.

 

     
     

 

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (“ Agreement ”), dated as of May 17, 2018, is by and between ICOX INNOVATIONS INC. , a Nevada corporation (the “ Company ”) and James Carter (the “ Indemnitee ”).

 

WHEREAS:

 

A.       The Indemnitee is a director and/or an officer of the Company;

 

B.       Both the Company and the Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies;

 

C.       The board of directors of the Company (the “ Board ”) has determined that enhancing the ability of the Company to retain and attract as directors and officers the most capable persons is in the best interests of the Company and that the Company therefore should seek to assure such persons that indemnification and insurance coverage is available; and

 

D.       In recognition of the need to provide the Indemnitee with substantial protection against personal liability, in order to procure the Indemnitee’s continued service as a director and/or officer of the Company and to enhance the Indemnitee’s ability to serve the Company in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company’s certificate of incorporation or bylaws (collectively, the “ Constituent Documents ”), any change in the composition of the Board or any change in control or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of, and the advancement of Expenses (as defined in Section 1(f) below) to, Indemnitee as set forth in this Agreement and to the extent insurance is maintained for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.

 

NOW, THEREFORE, in consideration of the foregoing and the Indemnitee’s agreement to continue to provide services to the Company, the parties agree as follows:

 

1. Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

 

  (a) Beneficial Owner ” has the meaning given to the term “beneficial owner” in Rule 13d-3 under the Securities Exchange Act of 1934 , as amended (the “ Exchange Act ”).
     
  (b) Change in Control ” means the occurrence after the date of this Agreement of any of the following events:

 

     
   - 2 -  

 

  (i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the Company’s then outstanding Voting Securities unless the change in relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;
     
  (ii) the consummation of a reorganization, merger or consolidation, unless immediately following such reorganization, merger or consolidation, all of the Beneficial Owners of the Voting Securities of the Company immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding Voting Securities of the entity resulting from such transaction;
     
  (iii) during any period of two consecutive years, not including any period prior to the execution of this Agreement, individuals who at the beginning of such period constituted the Board (including for this purpose any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board; or
     
  (iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

 

  (c) Claim ” means:

 

  (i) any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; or
     
  (ii) any inquiry, hearing or investigation that the Indemnitee determines might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism.

 

  (d) Court ” shall have the meaning ascribed to it in Section 9(e) below.
     
  (e) Disinterested Director ” means a director of the Company who is not and was not a party to the Claim in respect of which indemnification is sought by Indemnitee.

 

     
   - 3 -  

 

  (f) Expenses ” means any and all expenses, including reasonable attorneys’ and experts’ fees, court costs, transcript costs, travel expenses, duplicating, printing and binding costs, telephone charges, and all other costs and expenses incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Claim. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Claim, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 5 only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
     
  (g) Expense Advance ” means any payment of Expenses advanced to Indemnitee by the Company pursuant to Section 4 or Section 5 hereof.
     
  (h) Indemnifiable Event ” means any event or occurrence, whether occurring before, on or after the date of this Agreement, related to the fact that Indemnitee is or was a director, officer, employee or agent of the Company or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, member, manager, trustee or agent of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise (collectively with the Company, “ Enterprise ”) or by reason of an action or inaction by Indemnitee in any such capacity (whether or not serving in such capacity at the time any Loss is incurred for which indemnification can be provided under this Agreement).
     
  (i) Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently performs, nor in the past two (2) years has performed, services for either: (i) the Company or Indemnitee (other than in connection with matters concerning Indemnitee under this Agreement or of other indemnitees under similar agreements) or (ii) any other party to the Claim giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.
     
  (j) Losses ” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other), ERISA excise taxes, amounts paid or payable in settlement, including any interest, assessments, any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement and all other charges paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Claim.
     
  (k) Person ” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity and includes the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act.

 

     
   - 4 -  

 

  (l) Standard of Conduct Determination ” shall have the meaning ascribed to it in Section 9(b) below.
     
  (m) Voting Securities ” means any securities of the Company that vote generally in the election of directors.

 

2. Services to the Company . The Indemnitee agrees to continue to serve as a director or officer of the Company for so long as the Indemnitee is duly elected or appointed or until the Indemnitee tenders his resignation or is no longer serving in such capacity. This Agreement shall not be deemed an employment agreement between the Company (or any of its subsidiaries or Enterprise) and the Indemnitee. The Indemnitee specifically acknowledges that his employment with or service to the Company or any of its subsidiaries or Enterprise, as applicable, is at will and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment agreement between the Indemnitee and the Company (or any of its subsidiaries or Enterprise), other applicable formal severance policies duly adopted by the Board or, with respect to service as a director or officer of the Company, by the Company’s Constituent Documents or Nevada law. This Agreement shall continue in force after the Indemnitee has ceased to serve as a director or officer of the Company or, at the request of the Company, of any of its subsidiaries or Enterprise, as provided in Section 12 hereof.
   
3. Indemnification . Subject to Section 9 and Section 10 of this Agreement, the Company shall indemnify the Indemnitee, to the fullest extent permitted by the laws of the State of Nevada in effect on the date hereof, or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against any and all Losses if the Indemnitee was or is or becomes a party to or participant in, or is threatened to be made a party to or participant in, any Claim by reason of or arising in part out of an Indemnifiable Event, including, without limitation, Claims brought by or in the right of the Company, Claims brought by third parties, and Claims in which the Indemnitee is solely a witness.
   
4. Advancement of Expenses . The Indemnitee shall have the right to advancement by the Company, prior to the final disposition of any Claim by final adjudication to which there are no further rights of appeal, of any and all Expenses actually and reasonably paid or incurred by the Indemnitee in connection with any Claim arising out of an Indemnifiable Event. The Indemnitee’s right to such advancement is not subject to the satisfaction of any standard of conduct. Without limiting the generality or effect of the foregoing, within 60 days after any request by the Indemnitee, the Company shall, in accordance with such request, (a) pay such Expenses on behalf of the Indemnitee, (b) advance to the Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse the Indemnitee for such Expenses. In connection with any request for Expense Advances, the Indemnitee shall not be required to provide any documentation or information to the extent that the provision thereof would undermine or otherwise jeopardize attorney-client privilege. In connection with any request for Expense Advances, the Indemnitee shall execute and deliver to the Company an undertaking (which shall be accepted without reference to the Indemnitee’s ability to repay the Expense Advances) to repay any amounts paid, advanced, or reimbursed by the Company for such Expenses to the extent that it is ultimately determined, following the final disposition of such Claim, that the Indemnitee is not entitled to indemnification hereunder. The Indemnitee’s obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon.

 

     
   - 5 -  

 

5. Indemnification for Expenses in Enforcing Rights . To the fullest extent allowable under applicable law, the Company shall also indemnify against, and, if requested by the Indemnitee, shall advance to the Indemnitee subject to and in accordance with Section 4, any Expenses actually and reasonably paid or incurred by the Indemnitee in connection with any action or proceeding by the Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any other agreement or provision of the Constituent Documents now or hereafter in effect relating to Claims relating to Indemnifiable Events, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company. However, in the event that the Indemnitee is ultimately determined not to be entitled to such indemnification or insurance recovery, as the case may be, then all amounts advanced under this Section 5 shall be repaid. The Indemnitee shall be required to reimburse the Company in the event that a final judicial determination is made that such action brought by the Indemnitee was frivolous or not made in good faith.
   
6. Partial Indemnity . If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of any Losses in respect of a Claim related to an Indemnifiable Event but not for the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled.
   
7. Notification and Defense of Claims .

 

  (a) Notification of Claims . The Indemnitee shall notify the Company in writing as soon as practicable of any Claim which could relate to an Indemnifiable Event or for which the Indemnitee could seek Expense Advances, including a brief description (based upon information then available to the Indemnitee) of the nature of, and the facts underlying, such Claim. The failure by the Indemnitee to timely notify the Company hereunder shall not relieve the Company from any liability hereunder unless the Company’s ability to participate in the defense of such claim was materially and adversely affected by such failure/except that the Company shall not be liable to indemnify the Indemnitee under this Agreement with respect to any judicial award in a Claim related to an Indemnifiable Event if the Company was not given a reasonable and timely opportunity to participate at its expense in the defense of such action. If at the time of the receipt of such notice, the Company has directors’ and officers’ liability insurance in effect under which coverage for Claims related to Indemnifiable Events is potentially available, the Company shall give prompt written notice to the applicable insurers in accordance with the procedures set forth in the applicable policies. The Company shall provide to the Indemnitee a copy of such notice delivered to the applicable insurers, and copies of all subsequent correspondence between the Company and such insurers regarding the Claim, in each case substantially concurrently with the delivery or receipt thereof by the Company.

 

     
   - 6 -  

 

  (b) Defense of Claims . The Company shall be entitled to participate in the defense of any Claim relating to an Indemnifiable Event at its own expense and, except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to the Indemnitee. After notice from the Company to the Indemnitee of its election to assume the defense of any such Claim, the Company shall not be liable to the Indemnitee under this Agreement or otherwise for any Expenses subsequently directly incurred by the Indemnitee in connection with the Indemnitee’s defense of such Claim other than reasonable costs of investigation or as otherwise provided below. The Indemnitee shall have the right to employ its own legal counsel in such Claim, but all Expenses related to such counsel incurred after notice from the Company of its assumption of the defense shall be at the Indemnitee’s own expense; provided, however, that if (i) the Indemnitee’s employment of its own legal counsel has been authorized by the Company, (ii) the Indemnitee has reasonably determined that there may be a conflict of interest between the Indemnitee and the Company in the defense of such Claim, (iii) after a Change in Control, the Indemnitee’s employment of its own counsel has been approved by the Independent Counsel or (iv) the Company shall not in fact have employed counsel to assume the defense of such Claim, then the Indemnitee shall be entitled to retain its own separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any such Claim) and all Expenses related to such separate counsel shall be borne by the Company.

 

8. Procedure upon Application for Indemnification . In order to obtain indemnification pursuant to this Agreement, the Indemnitee shall submit to the Company a written request therefor, including in such request such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification following the final disposition of the Claim, provided that documentation and information need not be so provided to the extent that the provision thereof would undermine or otherwise jeopardize attorney-client privilege. Indemnification shall be made insofar as the Company determines the Indemnitee is entitled to indemnification in accordance with Section 9 below.
   
9. Determination of Right to Indemnification .

 

  (a) Mandatory Indemnification; Indemnification as a Witness .

 

  (i) To the extent that the Indemnitee shall have been successful on the merits or otherwise in defense of any Claim relating to an Indemnifiable Event or any portion thereof or in defense of any issue or matter therein, including without limitation dismissal without prejudice, the Indemnitee shall be indemnified against all Losses relating to such Claim in accordance with Section 3 to the fullest extent allowable by law, and no Standard of Conduct Determination (as defined in Section 9(b)) shall be required.

 

     
   - 7 -  

 

  (ii) To the extent that the Indemnitee’s involvement in a Claim relating to an Indemnifiable Event is to prepare to serve and serve as a witness, and not as a party, the Indemnitee shall be indemnified against all Losses incurred in connection therewith to the fullest extent allowable by law and no Standard of Conduct Determination (as defined in Section 9(b)) shall be required.

 

  (b) Standard of Conduct . To the extent that the provisions of Section 9(a) are inapplicable to a Claim related to an Indemnifiable Event that shall have been finally disposed of, any determination of whether the Indemnitee has satisfied any applicable standard of conduct under Nevada law that is a legally required condition to indemnification of the Indemnitee hereunder against Losses relating to such Claim and any determination that Expense Advances must be repaid to the Company (a “ Standard of Conduct Determination ”) shall be made as follows:

 

  (i) if no Change in Control has occurred, (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum or (C) if there are no such Disinterested Directors, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to the Indemnitee; and
     
  (ii) if a Change in Control shall have occurred, (A) if the Indemnitee so requests in writing, by a majority vote of the Disinterested Directors, even if less than a quorum of the Board or (B) otherwise, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to the Indemnitee.

 

The Company shall indemnify and hold harmless the Indemnitee against and, if requested by the Indemnitee, shall reimburse the Indemnitee for, or advance to the Indemnitee, within 60 days of such request, any and all Expenses incurred by the Indemnitee in cooperating with the person or persons making such Standard of Conduct Determination.

 

  (c) Making the Standard of Conduct Determination . The Company shall use its reasonable best efforts to cause any Standard of Conduct Determination required under Section 9(b) to be made as promptly as practicable. If the person or persons designated to make the Standard of Conduct Determination under Section 9(b) shall not have made a determination within 30 days after the later of (A) receipt by the Company of a written request from the Indemnitee for indemnification pursuant to Section 8 (the date of such receipt being the “ Notification Date ”) and (B) the selection of an Independent Counsel, if such determination is to be made by Independent Counsel, then the Indemnitee shall be deemed to have satisfied the applicable standard of conduct; provided that such 30-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person or persons making such determination in good faith requires such additional time to obtain or evaluate information relating thereto. Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of the Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of any Claim.

 

     
   - 8 -  

 

  (d) Payment of Indemnification . If, in regard to any Losses:

 

  (i) the Indemnitee shall be entitled to indemnification pursuant to Section 9(a);
     
  (ii) no Standard Conduct Determination is legally required as a condition to indemnification of the Indemnitee hereunder; or
     
  (iii) the Indemnitee has been determined or deemed pursuant to Section 9(b) or Section 9(c) to have satisfied the Standard of Conduct Determination,

 

then the Company shall pay to the Indemnitee, within ten days after the later of (A) the Notification Date or (B) the earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) is satisfied, an amount equal to such Losses.

 

  (e) Selection of Independent Counsel for Standard of Conduct Determination . If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 9(b)(i), the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to the Indemnitee advising him of the identity of the Independent Counsel so selected. If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 9(b)(ii), the Independent Counsel shall be selected by the Indemnitee, and the Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either case, the Indemnitee or the Company, as applicable, may, within five days after receiving written notice of selection from the other, deliver to the other a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the definition of “ Independent Counsel ” in Section 1(i), and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person or firm so selected shall act as Independent Counsel. If such written objection is properly and timely made and substantiated, (i) the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit; and (ii) the non-objecting party may, at its option, select an alternative Independent Counsel and give written notice to the other party advising such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two immediately preceding sentences, the introductory clause of this sentence and numbered clause (i) of this sentence shall apply to such subsequent selection and notice. If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative selections. If no Independent Counsel that is permitted under the foregoing provisions of this Section 9(e) to make the Standard of Conduct Determination shall have been selected within 20 days after the Company gives its initial notice pursuant to the first sentence of this Section 9(e) or the Indemnitee gives its initial notice pursuant to the second sentence of this Section 9(e), as the case may be, either the Company or the Indemnitee may petition a court in Nevada (the “ Court ”) to resolve any objection which shall have been made by the Company or the Indemnitee to the other’s selection of Independent Counsel and/or to appoint as Independent Counsel a person to be selected by the Court or such other person as the Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel. In all events, the Company shall pay all of the reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 9(b).

 

     
   - 9 -  

 

  (f) Presumptions and Defenses .

 

  (i) Indemnitee’s Entitlement to Indemnification . In making any Standard of Conduct Determination, the person or persons making such determination shall presume that the Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification, and the Company shall have the burden of proof to overcome that presumption and establish that the Indemnitee is not so entitled. Any Standard of Conduct Determination that is adverse to the Indemnitee may be challenged by the Indemnitee in the Court. No determination by the Company (including by its directors or any Independent Counsel) that the Indemnitee has not satisfied any applicable standard of conduct may be used as a defense to any legal proceedings brought by the Indemnitee to secure indemnification or reimbursement or advance payment of Expenses by the Company hereunder or create a presumption that the Indemnitee has not met any applicable standard of conduct.
     
  (ii) Reliance as a Safe Harbor . For purposes of this Agreement, and without creating any presumption as to a lack of good faith if the following circumstances do not exist, the Indemnitee shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company if the Indemnitee’s actions or omissions to act are taken in good faith reliance upon the records of the Company, including its financial statements, or upon information, opinions, reports or statements furnished to the Indemnitee by the officers or employees of the Company or any of its subsidiaries in the course of their duties, or by committees of the Board or by any other Person (including legal counsel, accountants and financial advisors) as to matters the Indemnitee reasonably believes are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. In addition, the knowledge and/or actions, or failures to act, of any director, officer, agent or employee of the Company shall not be imputed to the Indemnitee for purposes of determining the right to indemnity hereunder.

 

     
   - 10 -  

 

  (iii) No Other Presumptions . For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that the Indemnitee did not meet any applicable standard of conduct or have any particular belief, or that indemnification hereunder is otherwise not permitted.
     
  (iv) Defense to Indemnification and Burden of Proof . It shall be a defense to any action brought by the Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Losses incurred in defending against a Claim related to an Indemnifiable Event in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify the Indemnitee for the amount claimed. In connection with any such action or any related Standard of Conduct Determination, the burden of proving such a defense or that the Indemnitee did not satisfy the applicable standard of conduct shall be on the Company.
     
  (v) Resolution of Claims . The Company acknowledges that a settlement or other disposition short of final judgment may be successful on the merits or otherwise for purposes of Section 9(a)(i) if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Claim relating to an Indemnifiable Event to which the Indemnitee is a party is resolved in any manner other than by adverse judgment against the Indemnitee (including, without limitation, settlement of such action, claim or proceeding with our without payment of money or other consideration) it shall be presumed that the Indemnitee has been successful on the merits or otherwise for purposes of Section 9(a)(i). The Company shall have the burden of proof to overcome this presumption.

 

10. Exclusions from Indemnification . Notwithstanding anything in this Agreement to the contrary, the Company shall not be obligated to:

 

  (a) indemnify or advance funds to the Indemnitee for Expenses or Losses with respect to proceedings initiated by the Indemnitee, including any proceedings against the Company or its directors, officers, employees or other indemnitees and not by way of defense, except:

 

  (i) proceedings referenced in Section 5 above (unless a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous); or
     
  (ii) where the Company has joined in or the Board has consented to the initiation of such proceedings;

 

     
   - 11 -  

 

  (b) indemnify the Indemnitee if a final decision by a court of competent jurisdiction determines that such indemnification is prohibited by applicable law;
     
  (c) indemnify the Indemnitee for the disgorgement of profits arising from the purchase or sale by the Indemnitee of securities of the Company in violation of Section 16(b) of the Exchange Act, or any similar successor statute; and
     
  (d) indemnify or advance funds to the Indemnitee for the Indemnitee’s reimbursement to the Company of any bonus or other incentive-based or equity-based compensation previously received by the Indemnitee or payment of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements under Section 304 of the Sarbanes-Oxley Act of 2002 in connection with an accounting restatement of the Company or the payment to the Company of profits arising from the purchase or sale by the Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act ).

 

11. Settlement of Claims . The Company shall not be liable to the Indemnitee under this Agreement for any amounts paid in settlement of any threatened or pending Claim related to an Indemnifiable Event effected without the Company’s prior written consent, which shall not be unreasonably withheld; provided, however, that if a Change in Control has occurred, the Company shall be liable for indemnification of the Indemnitee for amounts paid in settlement if an Independent Counsel has approved the settlement. The Company shall not settle any Claim related to an Indemnifiable Event in any manner that would impose any Losses on the Indemnitee without the Indemnitee’s prior written consent.
   
12. Duration . All agreements and obligations of the Company contained herein shall continue during the period that the Indemnitee is a director or officer of the Company (or is serving at the request of the Company as a director, officer, employee, member, trustee or agent of another Enterprise) and shall continue thereafter (i) so long as the Indemnitee may be subject to any possible Claim relating to an Indemnifiable Event (including any rights of appeal thereto) and (ii) throughout the pendency of any proceeding (including any rights of appeal thereto) commenced by the Indemnitee to enforce or interpret his or her rights under this Agreement, even if, in either case, he or she may have ceased to serve in such capacity at the time of any such Claim or proceeding.

 

     
   - 12 -  

 

13. Non-Exclusivity . The rights of the Indemnitee hereunder will be in addition to any other rights the Indemnitee may have under the Constituent Documents, the general corporate law of the State of Nevada, any other contract or otherwise (collectively, “ Other Indemnity Provisions ”); provided, however, that (a) to the extent that the Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, the Indemnitee will be deemed to have such greater right hereunder and (b) to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the date hereof, the Indemnitee will be deemed to have such greater right hereunder. The Company will not adopt any amendment to any of the Constituent Documents the effect of which would be to deny, diminish or encumber the Indemnitee’s right to indemnification under this Agreement or any Other Indemnity Provision.
   
14. Liability Insurance . For the duration of the Indemnitee’s service as a director and/or officer of the Company, and thereafter for so long as the Indemnitee shall be subject to any pending Claim relating to an Indemnifiable Event, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to continue to maintain in effect policies of directors’ and officers’ liability insurance providing coverage that is at least substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance. In all policies of directors’ and officers’ liability insurance maintained by the Company, the Indemnitee shall be named as an insured in such a manner as to provide the Indemnitee the same rights and benefits as are provided to the most favorably insured of the Company’s directors, if the Indemnitee is a director, or of the Company’s officers, if the Indemnitee is an officer (and not a director) by such policy. Upon request, the Company will provide to the Indemnitee copies of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials.
   
15. No Duplication of Payments . The Company shall not be liable under this Agreement to make any payment to the Indemnitee in respect of any Losses to the extent the Indemnitee has otherwise received payment under any insurance policy, the Constituent Documents, Other Indemnity Provisions or otherwise of the amounts otherwise indemnifiable by the Company hereunder.
   
16. Subrogation . In the event of payment to the Indemnitee under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee. The Indemnitee shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
   
17. Amendments . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.

 

     
   - 13 -  

 

18. Binding Effect . This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part of the business and/or assets of the Company, by written agreement in form and substances satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
   
19. Severability . The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any portion thereof) are held by a court of competent jurisdiction to be invalid, illegal, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
   
20. Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, by postage prepaid, certified or registered mail:

 

  (a) if to the Indemnitee, to the address set forth on the signature page hereto.
     
  (b) if to the Company, to:

 

ICOX Innovations Inc.
4101 Redwood Ave., Building F
Los Angeles, CA 90066

 

  Attention: Michael Blum
  Email: michael.blum@icoxinnovations.com

 

Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing.

 

21. Governing Law and Forum . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Nevada applicable to contracts made and to be performed in such state without giving effect to its principles of conflicts of laws.
   
22. Headings . The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof.

 

     
   - 14 -  

 

23. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

ICOX INNOVATIONS INC.  
     
Per: /s/ Michael Blum  
Name: Michael Blum  
Title: CFO  

 

INDEMNITEE

 

/s/ James Carter  
Name: James Carter  

 

Address: 12532 23rd Avenue  
  Surrey, British Columbia V4A 2C4, Canada  

 

     
 

 

 

 

 

 

  ICOx Innovations, Inc.
  4101 Redwood Avenue
  Building F
  Los Angeles, Ca 90066
   
  June 22, 2018

 

Alphonso Jackson

1411 Key Blvd

Unit 601

Arlington, Va 22209

 

Re: Board of Directors Offer Letter

 

Dear Alphonso,

 

I am very pleased to welcome you as a Member of the Board of Directors of ICOx Innovations, Inc. We are excited about your contributions to what we believe is one of the most differentiated companies with some of the highest potential in the Cryptocurrency Industry.

 

Please find below the terms relating to your service as a member of the Board.

 

Term . You will serve as a member of the Board until the annual meeting for the year in which your term expires or until your successor has been elected and qualified, subject however, to your prior death, resignation, retirement, disqualification or removal from office.

 

Compensation . As a member of the Board you will receive $50,000 in annual cash compensation and 100,000 stock options.

 

Expenses . The Company agrees to reimburse all travel and other reasonable documented expenses relating to your attendance at meetings of the Board. In addition, the Company agrees to reimburse you for reasonable expenses that you incur in connection with the performance of your duties as a director of the Company.

 

Taxes . All payments under this Agreement shall be in US dollars and subject to withholding of such amounts, if any, relating to tax or other deductions as the Corporation may reasonably determine and should withhold pursuant to any applicable law or regulation. The Director shall be responsible to pay for all federal, state, provincial and local taxes assessed on any income received from the Company under this Agreement, which are over and above the amounts that may be deducted and remitted on the Director’s behalf by the Corporation.

 

 
 

 

D&O Insurance . During your term as a member of the Board, the Company shall include you as an insured under the Company’s directors and officer’s insurance policy.

 

Confidentiality . You agree to retain all non-public information obtained from ICOx as confidential and agree not to release or discuss any of such information unless you have obtained the prior consent of ICOx or are otherwise forced, compelled, or required to disclose this information by operation of law or applicable government authority.

 

Any business opportunities related to the business of the Corporation which become known to the Director will be fully disclosed and made available and no action to divert from the Corporation any opportunity which is within the scope of its business will be made.

 

The Director shall not disparage the Corporation or any of its affiliates, directors, officers, employees or other representatives in any manner and shall in all respects avoid any negative criticism of the Corporation.

 

Indemnification . You will receive indemnification as a Director of the Company to the maximum extent extended to directors of the Company generally, as set forth in the Company’s Certificate of Incorporation and bylaws. The Corporation agrees that, if the Director is made a party, or is threatened to be made a party, to any action, suit or proceeding, by reason of the fact that he is or was serving at the request of the Corporation as a Director, the Director shall be defended, indemnified and held harmless by the Corporation to the fullest extent legally permitted.

 

Assignment . This agreement may not be assigned.

 

Severability . If any provision contained herein is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate and distinct.

 

Binding Effect . This agreement shall ensure to the benefit of and be binding upon the parties hereto and their respective personal or legal representatives, heirs, executors, administrators, successors and assigns. Upon the termination of this agreement, the Director’s respective rights and obligations of the parties shall survive such termination or expiration to the extent necessary to carry out the intended preservation of such rights and obligations.

 

Governing Law . This agreement shall be construed in accordance with the laws of the State of California, without giving effect to the principles of conflicts of law thereof.

 

 
 

 

Entire Agreement; Amendment; Waiver, Counterparts . This Agreement expresses the entire understanding with respect to the subject matter hereof and supersedes and terminates any prior oral or written agreements with respect to the subject matter hereof. Any term of this Agreement may be amended and observance of any term of this Agreement may be waived only with the written consent of the parties hereto. Waiver of any term or condition of this Agreement by any party shall not be construed as a waiver of any subsequent breach or failure of the same term or condition or waiver of any other term or condition of this Agreement. The failure of any party at any time to require performance by any other party or any provision of this Agreement shall not affect the right of any such party to require future performance of such provision or any other provision of agreement. This Agreement may be executed in separate counterparts each of which will be an original and all of which taken together will constitute one and the same agreement, and may be executed using facsimiles of signatures, and a facsimile of a signature shall be deemed to be the same, and equally enforceable, as an original of such signature.

 

This Agreement sets forth the complete terms of your service on the Board. If the foregoing terms are agreeable, please indicate your acceptance by signing in the space provided below and returning this Agreement to the Company.

 

Sincerely,

 

Signature: /s/ Michael A. Blum  
Name:    
Title:    
Date:    
     
Accepted and Agreed:  
     
Signature: /s/ Alphonso Jackson  
Name: Alphonso Jackson  
Date: June 22, 2018  

 

 
 

 

 

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

Unless permitted under securities legislation, the holder of this security must not trade the security before OCTOBER 8, 2018.

 

STOCK OPTION AGREEMENT

 

This AGREEMENT is entered into as of the June 7, 2018 (the “Date of Grant” ).

 

BETWEEN:

 

ICOX INNOVATIONS INC. , a company incorporated pursuant to the laws of the State of Nevada, with an office at 4101 Redwood Avenue, Building F, Los Angeles, CA 90066

 

(the “Company” )

 

AND:

 

ALPHONSO JACKSON, a businessman with an address at 1411 Key Blvd., Unit 601, Arlington, VA 22209

 

(the “Optionee” )

 

WHEREAS:

 

A. The Company’s board of directors (the “Board” ) has approved and adopted a 2017 Equity Incentive Plan (the “Plan” ), whereby the Board is authorized to grant stock options to purchase shares of common stock of the Company to the directors, officers, employees, and consultants of the Company or any Parent or Subsidiary of the Company (as defined herein);

 

B. The Optionee is a director, officer, employee or consultant of the Company, the Parent or a Subsidiary; and

 

C. The Company wishes to grant stock options to purchase a total of 100,000 Optioned Shares (as defined herein) to the Optionee, as follows:

 

      Incentive Stock Options (as defined herein)
  X   Non-Qualified Stock Options (as defined herein)

 

     
  2  

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions

 

1.1 In this Agreement, the following terms shall have the following meanings:

 

  (a) 1933 Act ” means the Securities Act of 1933, as amended;
     
  (b) Board ” means the board of directors of the Company;
     
  (c) Canadian Accredited Investor Questionnaire ” means a questionnaire substantially in the form of the Canadian Accredited Investor Questionnaire attached to this Agreement as Schedule B;
     
  (d) Code ” means the Internal Revenue Code of 1986;
     
  (e) Common Stock ” means the shares of common stock of the Company;
     
  (f) Exercise Price ” means $0.60 per share;
     
  (g) Expiry Date ” means June 7, 2028;
     
  (h) Incentive Stock Options ” means any Options that meet all the requirements under section 422 of the Code;
     
  (i) Non-Qualified Stock Options ” means any Options that do not qualify as Incentive Stock Options and, thus, do not meet the requirements under section 422 of the Code;
     
  (j) Notice of Exercise ” means a notice in writing addressed to the Company at its address first recited hereto (or such other address of which the Company may from time to time notify the Optionee in writing), substantially in the form attached as Schedule B hereto, which notice shall specify therein the number of Optioned Shares in respect of which the Options are being exercised;
     
  (k) Options ” means the right and option to purchase, from time to time, all, or any part of the Optioned Shares granted to the Optionee by the Company pursuant to Section 2.1 of this Agreement;
     
  (l) Optioned Shares ” means the shares of Common Stock that are issued pursuant to the exercise of the Options;
     
  (m) Parent ” means a company or other entity that owns at least fifty percent (50%) of the outstanding voting stock or voting power of the Company;
     
  (n) Plan ” has the meaning ascribed thereto in Recital A of this Agreement;
     
  (o) Securities ” means, collectively, the Options and the Optioned Shares;
     
  (p) Subsidiary ” means a company or other entity, at least fifty percent (50%) of the outstanding voting stock or voting power of which is beneficially owned, directly or indirectly, by the Company; and
     
  (q) Vested Options ” means the Options that have vested in accordance with Section 2.2 of this Agreement.

 

     
  3  

 

1.2 Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Plan.

 

2. The Options

 

2.1 The Company hereby grants to the Optionee, on the terms and conditions set out in this Agreement and in the Plan, Options to purchase a total of 100,000 Optioned Shares at the Exercise Price.

 

2.2 The Options will vest in accordance with Schedule A to this Agreement. The Options may be exercised immediately after vesting.

 

2.3 The Options shall, at 5:00 p.m. (Pacific time) on the Expiry Date, expire and be of no further force or effect whatsoever.

 

2.4 The Company shall not be obligated to cause the issuance, transfer or delivery of a certificate or certificates representing Optioned Shares to the Optionee, until provision has been made by the Optionee, to the satisfaction of the Company, for the payment of the aggregate Exercise Price for all Optioned Shares for which the Options shall have been exercised, and for satisfaction of any tax withholding obligations associated with such exercise.

 

2.5 Subject to the provisions of this Agreement and the Plan and subject to compliance with any applicable securities laws, the Options shall be exercisable, in full or in part, at any time after vesting, until termination. If less than all of the Optioned Shares included in the vested portion of any Options are purchased, the remainder may be purchased at any subsequent time prior to the Expiry Date. Only whole shares may be issued pursuant to the exercise of any Options, and to the extent that any Option covers less than one (1) share, it is not exercisable.

 

2.6 Each exercise of the Options shall be by means of delivery of a Notice of Exercise (which may be in the form attached hereto as Schedule C) to the Chief Financial Officer of the Company at its principal executive office, specifying the number of Optioned Shares to be purchased and accompanied by payment in cash or by certified check or cashier’s check in the amount of the full Exercise Price for the Common Stock to be purchased. In addition to payment in cash or by certified check or cashier’s check and if agreed to in advance by the Company, the Optionee or transferee of the Options may pay for all or any portion of the aggregate Exercise Price by complying with any other payment mechanism approved by the Board at the time of exercise.

 

2.7 Reference is made to the Plan for particulars of the rights and obligations of the Optionee and the Company in respect of:

 

  (a) the terms and conditions on which the Options are granted except to the extent set forth herein; and,
     
  (b) a consolidation or subdivision of the Company’s share capital or a corporate reorganization;

 

all to the same effect as if the provisions of the Plan were set out in this Agreement and to all of which the Optionee assents. A copy of the Plan is available to the Optionee at no charge, at the Company’s principal executive office. Any provision of this Agreement that is inconsistent with the Plan shall be considered void and replaced with the applicable provision of the Plan. The Company may modify, extend or renew this Agreement or the Options represented hereby or accept the surrender thereof (to the extent not previously exercised) and authorize the granting of a new option in substitution therefore (to the extent not previously exercised), subject at all times to the Plan, the applicable rules of any applicable regulatory authority or stock exchange, and any applicable laws. Notwithstanding the foregoing provisions of this Section 2.7, the Company shall not have the right to make any modification which would materially alter the terms of the Options to the Optionee’s detriment or materially impair any rights of the Optionee hereunder without the consent of the Optionee.

 

     
  4  

 

2.8 By accepting the Options, the Optionee represents and agrees that none of the Optioned Shares purchased upon exercise of the Options will be distributed in violation of applicable federal and state laws and regulations. The Optionee further represents and agrees to provide the Company with any other document reasonably requested by the Company or the Company’s Counsel.

 

3. Documents Required from Optionee

 

3.1 The Optionee must complete, sign and return to the Company:

 

  (a) a copy of this Agreement;
     
  (b) a copy of the Acknowledgements, and Representations and Warranties of the Optionee attached hereto as Schedule F;
     
  (c) if the Optionee is resident in Canada, a Canadian Questionnaire in the form attached hereto as Schedule C; and
     
  (d) if the Optionee is resident in the United States and if an exemption from the registration requirements imposed by the 1933 Act is necessary for entry into this Agreement, one of the two questionnaires in the forms attached hereto as Schedule D and Schedule E, whichever applies.

 

3.2 The Optionee shall complete, sign and return to the Company as soon as possible, on request by the Company, any documents, questionnaires, notices and undertakings as may be required by regulatory authorities, and applicable law.

 

4.       Subject to Plan

 

The terms of the Options will be subject to the Plan, as may from time to time be amended, and any inconsistencies between this Agreement and the Plan, as the same may be from time to time amended, shall be governed by the provisions of the Plan. A copy of the Plan will be delivered to the Optionee, and will be available for inspection at the principal offices of the Company.

 

5. Acknowledgement and Waiver

 

The Optionee hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Optionee might be entitled in connection with the distribution of any of the Securities.

 

6. Professional Advice

 

The acceptance of the Options and the sale of Common Stock issued pursuant to the exercise of Options may have consequences under federal, state and provincial tax and securities laws which may vary depending upon the individual circumstances of the Optionee. Accordingly, the Optionee acknowledges that he or she has been advised to consult his or her personal legal and tax advisor in connection with this Agreement and his or her dealings with respect to Options. Without limiting other matters to be considered with the assistance of the Optionee’s professional advisors, the Optionee should consider: (a) the merits and risks of an investment in the underlying Optioned Shares; and (b) any resale restrictions that might apply under applicable securities laws.

 

     
  5  

 

7. Legending of Subject Securities

 

7.1 The Optionee hereby acknowledges that that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, the certificates representing any of the Optioned Shares may bear a legend in substantially the following form:

 

If the Optionee is not resident in the United States:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

 

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

Unless permitted under securities legislation, the holder of this security must not trade the security before [ insert the date that is 4 months and a day after the distribution date ].

 

If the Option is resident in the United States:

 

NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

Unless permitted under securities legislation, the holder of this security must not trade the security before [ insert the date that is 4 months and a day after the distribution date ].

 

7.2 The Optionee hereby acknowledges and agrees to the Company making a notation on its records or giving instructions to the registrar and transfer agent of the Company in order to implement the restrictions on transfer set forth and described in this Agreement.

 

     
  6  

 

8. Resale restrictions

 

8.1 This Agreement and the Options represented hereby are not transferable. Optioned Shares received upon exercise of any Options will be subject to resale restrictions contained in the securities legislation applicable to the Company and the Optionee. The Optionee acknowledges and agrees that the Optionee is solely responsible (and the Company is not in any way responsible) for compliance with applicable resale restrictions.

 

8.2 The Optionee acknowledges that any resale of any of the Optioned Shares will be subject to resale restrictions contained in the securities legislation applicable to the Optionee or proposed transferee. The Optionee acknowledges that none of the Optioned Shares have been registered under the 1933 Act or the securities laws of any state of the United States. The Optioned Shares may not be offered or sold in the United States unless registered in accordance with federal securities laws and all other applicable securities laws or exemptions from such registration requirements are available. The Optionee acknowledges that the Optioned Shares are subject to resale restrictions in Canada and may not be traded in Canada except as permitted by the applicable provincial securities laws and the rules made thereunder.

 

9. No Employment Relationship

 

The grant of an Option shall in no way constitute any form of agreement or understanding binding on the Company or any related company, express or implied, that the Company or any related company will employ or contract with an Optionee, for any length of time, nor shall it interfere in any way with the Company’s or, where applicable, a related company’s right to terminate Optionee’s employment at any time, which right is hereby reserved.

 

10. Governing Law

 

This Agreement is governed by the laws of the State of Nevada and the federal laws of the United States of America as applicable therein. The Optionee irrevocably attorns to the jurisdiction of the courts of the State of Arizona.

 

11. Costs

 

The Optionee acknowledges and agrees that all costs and expenses incurred by the Optionee (including any fees and disbursements of any special counsel retained by the Optionee) relating to the acquisition of the Securities shall be borne by the Optionee.

 

12. Survival

 

This Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the shares underlying the Options by the Optionee pursuant hereto.

 

13. Assignment

 

This Agreement is not transferable or assignable.

 

14. Currency

 

Unless explicitly stated otherwise, all funds in this Agreement are stated in United States dollars.

 

15. Severability

 

The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.

 

     
  7  

 

16. Counterparts and Electronic Means

 

This Agreement may be executed in several counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument. Delivery of an executed copy of this Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Agreement as of the date first above written.

 

17. Entire Agreement

 

This Agreement is the only agreement between the Optionee and the Company with respect to the Options, and this Agreement and the Plan, once approved, supersede all prior and contemporaneous oral and written statements and representations and contain the entire agreement between the parties with respect to the Options.

 

IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as of the date first above written.

 

ICOX INNOVATIONS INC.    
       
Per: /s/ Michael A. Blum    
  Authorized Signatory    

 

WITNESSED BY: )  
  )  
  )  
  )  
  )  
Name ) /s/ Alphonso Jackson
  ) ALPHONSO JACKSON
  )  
Address )  
  )  
  )  
  )  
  )  
Occupation )  

 

     
  A- 1  

 

SCHEDULE A

 

VESTING SCHEDULE

 

1/3 of the Options will vest on June 7, 2018, June 7, 2019 and June 7, 2020.

 

     
  B- 1  

 

SCHEDULE B

 

NOTICE OF EXERCISE

 

TO: ICOX Innovations Inc.
  4101 Redwood Avenue
  Building F
  Los Angeles, CA 90066

 

This Notice of Exercise shall constitute a proper Notice of Exercise pursuant to section 2.6 of the Stock Option Agreement dated June 7, 2018 (the “ Agreement ”), between ICOX Innovations Inc. (the “Company” ) and the undersigned. The undersigned hereby elects to exercise the Optionee’s options to purchase ____________________ shares of the common stock of the Company at a price of $0.60 per share on the terms and conditions set forth in the Agreement.

 

Payment of aggregate consideration of $____________in cash or by certified check or cashier’s check accompanies this notice.

 

The Optionee hereby represents and warrants to the Company that all representations and warranties set out in the Agreement (and the applicable schedules hereto) are true as of the date of the exercise of the Options under the Agreement. The Optionee hereby further represents and warrants to the Company that the shares are being purchased only for investment and without intention to sell or distribute such shares.

 

The Optionee hereby directs the Company to issue, register and deliver the certificates representing the shares as follows:

 

Registration Information:   Delivery Instructions:
     
Name to appear on certificates   Name
     
Address   Address
     
City, State, and Zip Code    
     
    Telephone Number

 

DATED at _____________________________, the ______ day of______________, _______.

 

    X
    Signature
     
    (Name and, if applicable, Office)
     
    (Address)
     
    (City, State, and Zip Code)
     
    Fax Number or E-mail Address
     
    Social Security/Tax I.D. No.

 

     
  C- 1  

 

SCHEDULE C

 

CANADIAN QUESTIONNAIRE

 

TO: ICOX INNOVATIONS INC. (the “ Company ”)

 

RE: Stock options (the “ Options ”) of the Company

 

Capitalized terms used in this Canadian Questionnaire (this “ Questionnaire ”) and not specifically defined have the meaning ascribed to them in the Stock Option Agreement between the undersigned (the “ Optionee ”) and the Company to which this Schedule C is attached.

 

All dollar amounts referred to in this Questionnaire and Appendices A, B and C are in lawful money of Canada, unless otherwise indicated.

 

In connection with the grant to the Optionee of the Options, the Optionee hereby represents, warrants and certifies to the Company that the Optionee:

 

  (i) is acquiring the Options as principal (or deemed principal under the terms of National Instrument 45-106 – Prospectus Exemptions adopted by the Canadian Securities Administrators (“ NI 45-106 ”));

 

  (ii) (A) is resident in or is subject to the laws of one of the following (check one):

 

  [  ] Alberta [  ] New Brunswick [  ] Prince Edward Island
       
  [  ] British Columbia [  ] Nova Scotia [  ] Quebec
       
  [  ] Manitoba [  ] Ontario [  ] Saskatchewan
       
  [  ] Newfoundland and Labrador   [  ] Yukon
       
  [  ] Northwest Territories    

 

or

 

    (B) [  ] is resident in a country other than Canada or the United States; and

 

  (iii) has not been provided with any offering memorandum in connection with the acquisition of the Options.

 

In connection with the grant of the Options, the Optionee hereby represents, warrants, covenants and certifies that the Optionee meets one or more of the following criteria:

 

A. OPTIONEE QUALIFYING UNDER THE EMPLOYEE, DIRECTOR, OFFICER AND CONSULTANT EXEMPTION

 

In connection with the grant of the Options, the Optionee hereby represents, warrants, covenants and certifies that the Optionee meets one or more of the following criteria:

 

  [  ] (i) is an employee, officer or director of the Company; or
       
  [  ] (ii) is a consultant of the Company who provides services to the Company or a related entity of the Company and spends or will spend a significant amount of time and attention on the business and affairs of the Company or a related entity of the Company; and has voluntarily agreed to the grant of the Options.

 

     
  C- 2  

 

B. OPTIONEES QUALIFYING UNDER THE ACCREDITED INVESTOR EXEMPTION

 

In connection with the grant of the Options, the Optionee hereby represents, warrants, covenants and certifies that the Optionee meets one or more of the following criteria:

 

(a) _______ the Optionee is an “accredited investor” within the meaning of NI 45-106, by virtue of satisfying the indicated criterion below (YOU MUST INITIAL OR PLACE A CHECK-MARK ON THE APPROPRIATE LINE(S)) ( see certain guidance with respect to accredited investors that starts on page C-5 below )

 

  [  ] (i) except in Ontario, a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer,
       
  [  ] (ii) an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (i),
       
  [  ] (iii) an individual formerly registered under the securities legislation of a jurisdiction of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador),
       
  [  ] (iv) an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $1,000,000 (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “A” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-9 ),
       
  [  ] (v) an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000,
       
  [  ] (vi) an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “A” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-9 ), or
       
  [  ] (vii) an individual who, either alone or with a spouse, has net assets of at least $5,000,000 (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “A” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-9 ).

 

(b) if the Optionee is an “accredited investor” within the meaning of NI 45-106 by virtue of satisfying the indicated criterion as set out in paragraphs (iv), (vi) or (vii) above, the Optionee has provided the Company with the signed risk acknowledgment form set out in Appendix “A” to this Questionnaire;

 

C. OPTIONEES QUALIFYING UNDER THE FAMILY, FRIENDS AND BUSINESS ASSOCIATES EXEMPTION

 

In connection with the grant of the Options, the Optionee hereby represents, warrants, covenants and certifies that the Optionee meets one or more of the following criteria:

 

(a) the Optionee is ( YOU MUST PLACE A CHECK-MARK ON THE APPROPRIATE LINE AND PROVIDE THE REQUESTED INFORMATION, AS APPLICABLE ):

 

     
  C- 3  

 

  [  ] (i) a director, executive officer or control person of the Company, or of an affiliate of the Company,
       
  [  ] (ii) _______ a close personal friend ( see guidance on making this determination that starts on page C-6 below ) of ___________________________________ ( print name of person ), who is a director, executive officer, founder or control person of the Company, or of an affiliate of the Company, and has been for __________________________ years based on                                      the                                          following factors: ________________________________________________________________
       
       
       
       
      ( explain the nature of the close personal friendship ),
       
  [  ] (iii) a close business associate ( see guidance on making this determination that starts on page C-6 below ) of ______________________________________ ( print name of person ), who is a director, executive officer, founder or control person of the Company, or of an affiliate of the Company, and has been for __________________________ years based on the following factors: __________________________
       
       
       
       
      ___________ ( explain the nature of the close business association ),

 

(b) if the Optionee is resident in the Province of Ontario or is subject to the securities laws of the Province of Ontario, the Optionee has provided the Company with a signed risk acknowledgement form in the form attached as Appendix “B” to this Questionnaire (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “B” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-11) , or
   
(c) if the Optionee is resident in the Province of Saskatchewan or is subject to the securities laws of the Province of Saskatchewan, and the Optionee is relying on the indicated criterion as set out in subsections C(a)(ii) or C(a)(iii) if the distribution is based in whole or in part on a close personal friendship or a close business association, the Optionee has provided the Company with a signed risk acknowledgement form in the form attached as Appendix “C” to this Questionnaire (YOU MUST ALSO COMPLETE AND SIGN APPENDIX “C” TO THIS QUESTIONNAIRE THAT STARTS ON PAGE C-14 ); or

 

For the purposes of this Questionnaire and the appendices attached hereto:

 

  (a) an issuer is “ affiliated ” with another issuer if

 

  (i) one of them is the subsidiary of the other, or
     
  (ii) each of them is controlled by the same person;

 

  (b) control person ” means

 

  (i) a person who holds a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, or
     
  (ii) each person in a combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, which holds in total a sufficient number of the voting rights attached to all outstanding voting securities of an issuer to affect materially the control of the issuer, and, if a person or combination of persons holds more than 20% of the voting rights attached to all outstanding voting securities of an issuer, the person or combination of persons is deemed, in the absence of evidence to the contrary, to hold a sufficient number of the voting rights to affect materially the control of the issuer;

 

     
  C- 4  

 

  (c) director ” means

 

(i) a member of the board of directors of a company or an individual who performs similar functions for a company, and

 

(ii) with respect to a person that is not a company, an individual who performs functions similar to those of a director of a company;

 

  (d) executive officer ” means, for an issuer, an individual who is

 

(i) a chair, vice-chair or president,

 

(ii) a vice-president in charge of a principal business unit, division or function including sales, finance or production, or

 

(iii) performing a policy-making function in respect of the issuer;

 

  (e) financial assets ” means

 

(i) cash,

 

(ii) securities, or

 

(iii) a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;

 

  (f) foreign jurisdiction ” means a country other than Canada or a political subdivision of a country other than Canada;

 

(j) individual ” means a natural person, but does not include

 

(i) a partnership, unincorporated association, unincorporated syndicate, unincorporated organization or trust, or

 

(ii) a natural person in the person’s capacity as a trustee, executor, administrator or personal or other legal representative;

 

(k) jurisdiction ” or “jurisdiction of Canada” means a province or territory of Canada except when used in the term foreign jurisdiction;

 

  (l) person ” includes

 

(i) an individual;

 

(ii) a corporation;

 

(iii) a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not; and

 

(iv) an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative;

 

  (m) related liabilities ” means

 

(i) liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or

 

(ii) liabilities that are secured by financial assets; and

 

     
  C- 5  

 

  (n) spouse ” means, an individual who,

 

(i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual,

 

(ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or

 

(iii) in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta).

 

Guidance On Accredited Investor Exemptions for Individuals

 

An individual accredited investor is an individual:

 

(a) who, either alone or with a spouse, beneficially owns financial assets (please see the guidance below regarding what financial assets are) having an aggregate realizable value that. before taxes but net of any related liabilities (please see the guidance below regarding what related liabilities are), exceeds $1,000,000;

 

(b) whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;

 

(c) who, either alone or with a spouse, has net assets (please see the guidance below regarding calculating net assets) of at least $5,000,000; and

 

(d) who beneficially owns financial assets (please see the guidance below regarding what financial assets are) having an aggregate realizable value that, before taxes but net of any related liabilities (please see the guidance below regarding what related liabilities are), exceeds $5,000,000.

 

The monetary thresholds above are intended to create bright-line standards. Optionees who do not satisfy these monetary thresholds do not qualify as accredited investors.

 

Spouses

 

Sections (a), (b) and (c) above are designed to treat spouses as a single investing unit, so that either spouse qualifies as an accredited investor if the combined financial assets of both spouses exceed $1,000,000, the combined net income of both spouses exceeds $300,000, or the combined net assets of both spouses exceed $5,000,000. Section (d) above does not treat spouses as a single investing unit.

 

If the combined net income of both spouses does not exceed $300,000, but the net income of one of the spouses exceeds $200,000, only the spouse whose net income exceeds $200,000 qualifies as an accredited investor.

 

Financial Assets and Related Liabilities

 

For the purposes of Sections (a) and (d) above, “ financial assets ” means: (1) cash, (2) securities, or (3) a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation. These financial assets are generally liquid or relatively easy to liquidate. The value of a optionee’s personal residence is not included in a calculation of financial assets.

 

The calculation of financial assets must exclude “ related liabilities ”, meaning: (1) liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or (2) liabilities that are secured by financial assets.

 

     
  C- 6  

 

As a general matter, it should not be difficult to determine whether financial assets are beneficially owned by an individual, an individual’s spouse, or both, in any particular instance. However, in the case where financial assets are held in a trust or in another type of investment vehicle for the benefit of an individual, there may be questions as to whether the individual beneficially owns the financial assets. The following factors are indicative of beneficial ownership of financial assets:

 

  physical or constructive possession of evidence of ownership of the financial asset;
     
  entitlement to receipt of any income generated by the financial asset;
     
  risk of loss of the value of the financial asset; and
     
  the ability to dispose of the financial asset or otherwise deal with it as the individual sees fit.

 

For example, securities held in a self-directed RRSP for the sole benefit of an individual are beneficially owned by that individual.

 

In general, financial assets in a spousal RRSP can be included for the purposes of the $1,000,000 financial asset test in Section (a) above because Section (a) takes into account financial assets owned beneficially by a spouse. However, financial assets in a spousal RRSP cannot be included for purposes of the $5,000,000 financial asset test in Section (d) above.

 

Financial assets held in a group RRSP under which the individual does not have the ability to acquire the financial assets and deal with them directly do not meet the beneficial ownership requirements in either Sections (a) or (d) above.

 

Guidance on Close Personal Friend and Close Business Associate Determination

 

A “ close personal friend ” of a director, executive officer, founder or control person of an issuer is an individual who knows the director, executive officer, founder or control person well enough and has known them for a sufficient period of time to be in a position to assess their capabilities and trustworthiness and to obtain information from them with respect to the investment.

 

The following factors are relevant to this determination:

 

(a) the length of time the individual has known the director, executive officer, founder or control person,

 

(b) the nature of the relationship between the individual and the director, executive officer, founder or control person including such matters as the frequency of contacts between them and the level of trust and reliance in the other circumstances, and

 

(c) the number of “close personal friends” of the director, executive officer, founder or control person to whom securities have been distributed in reliance on the private issuer exemption or the family, friends and business associates exemption.

 

An individual is not a close personal friend solely because the individual is:

 

(a) a relative,

 

(b) a member of the same club, organization, association or religious group,

 

(c) a co-worker, colleague or associate at the same workplace,

 

(d) a client, customer, former client or former customer,

 

(e) a mere acquaintance, or

 

(f) connected through some form of social media, such as Facebook, Twitter or LinkedIn.

 

     
  C- 7  

 

The relationship between the individual and the director, executive officer, founder or control person must be direct. For example, the exemption is not available to a close personal friend of a close personal friend of a director of the issuer. Further, a relationship that is primarily founded on participation in an internet forum is not considered to be that of a close personal friend.

 

A “ close business associate ” is an individual who has had sufficient prior business dealings with a director, executive officer, founder or control person of the issuer to be in a position to assess their capabilities and trustworthiness and to obtain information from them with respect to the investment.

 

The following factors are relevant to this determination:

 

(a) the length of time the individual has known the director, executive officer, founder or control person,

 

(b) the nature of any specific business relationships between the individual and the director, executive officer, founder or control person, including, for each relationship, when it began, the frequency of contact between them and when it terminated if it is not ongoing, and the level of trust and reliance in the other circumstances,

 

(c) the nature and number of any business dealings between the individual and the director, executive officer, founder or control person, the length of the period during which they occurred, and the nature and date of the most recent business dealing, and

 

(d) the number of “close business associates” of the director, executive officer, founder or control person to whom securities have been distributed in reliance on the private issuer exemption or the family, friends and business associates exemption.

 

An individual is not a close business associate solely because the individual is:

 

(a) a member of the same club, organization, association or religious group,

 

(b) a co-worker, colleague or associate at the same workplace,

 

(c) a client, customer, former client or former customer,

 

(d) a mere acquaintance, or

 

(e) connected through some form of social media, such as Facebook, Twitter or LinkedIn.

 

The relationship between the individual and the director, executive officer, founder or control person must be direct. For example, the exemptions are not available for a close business associate of a close business associate of a director of the issuer. Further, a relationship that is primarily founded on participation in an internet forum is not considered to be that of a close business associate.

 

The Optionee acknowledges and agrees that, in addition to resale restrictions imposed under U.S. securities laws, there are additional restrictions on the Optionee’s ability to resell the Securities under Canadian securities laws and National Instrument 45-102 as adopted by the Canadian Securities Administrators;

 

The Optionee agrees that the above representations and warranties will be true and correct both as of the execution of this Questionnaire acknowledges that they will survive the completion of the issue of the Option.

 

     
  C- 8  

 

The Optionee acknowledges that the foregoing representations and warranties are made by the Optionee with the intent that they be relied upon in determining the suitability of the Optionee to acquire the Options and that this Questionnaire is incorporated into and forms part of the Agreement and the undersigned undertakes to immediately notify the Company of any change in any statement or other information relating to the Optionee set forth herein which takes place prior to the closing time of the grant of the Options.

 

The Optionee undertakes to immediately notify the Company of any change in any statement or other information relating to the Optionee set forth in the Agreement or in this Questionnaire which takes place prior to the issuance of the Options.

 

By completing this Questionnaire, the Optionee authorizes the indirect collection of this information by each applicable regulatory authority or regulator and acknowledges that such information is made available to the public under applicable laws.

 

DATED as of ________ day of _________________, 20____.

 

     
    Print Name of Optionee
     
     
    Signature

 

     
  C- 9  

 

APPENDIX “A”
TO CANADIAN QUESTIONNAIRE

 

Form 45-106F9

WARNING!

 

This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment.

 

SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
1. About your investment
Type of securities: Stock Options Issuer: ICOX INNOVATIONS INC. (the “ Issuer ”)
Purchased from: The Issuer.
SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER
2. Risk acknowledgement
This investment is risky. Initial that you understand that: Your
initials
Risk of loss – You could lose your entire investment of US$_______. [Instruction: Insert the total dollar amount of the investment.]  
Liquidity risk – You may not be able to sell your investment quickly – or at all.  
Lack of information – You may receive little or no information about your investment.  
Lack of advice – You will not receive advice from the salesperson about whether this investment is suitable for you unless the salesperson is registered. The salesperson is the person who meets with, or provides information to, you about making this investment. To check whether the salesperson is registered, go to www.aretheyregistered.ca .  
3. Accredited investor status
You must meet at least one of the following criteria to be able to make this investment. Initial the statement that applies to you. (You may initial more than one statement.) The person identified in section 6 is responsible for ensuring that you meet the definition of accredited investor. That person, or the salesperson identified in section 5, can help you if you have questions about whether you meet these criteria.

Your
initials

 

Your net income before taxes was more than $200,000 in each of the 2 most recent calendar years, and you expect it to be more than $200,000 in the current calendar year. (You can find your net income before taxes on your personal income tax return.)  
Your net income before taxes combined with your spouse’s was more than $300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year.  
Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the cash and securities.  
Either alone or with your spouse, you have net assets worth more than $5 million. (Your net assets are your total assets (including real estate) minus your total debt.)  

 

     
  C- 10  

 

4. Your name and signature
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form.
First and last name (please print):
Signature: Date:
SECTION 5 TO BE COMPLETED BY THE SALESPERSON
5. Salesperson information
[Instruction: The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.]
First and last name of salesperson (please print):
Telephone: Email:
Name of firm (if registered):
SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
6. For more information about this investment
ICOX INNOVATIONS INC.
4101 Redwood Avenue, Building F
Los Angeles, CA 90066
Attn: Michael Blum
Telephone: 213.675.5300
Email: Michael.blum@icoxinnovations.com
 
For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www.securities-administrators.ca .

 

Form instructions:

 

1. This form does not mandate the use of a specific font size or style but the font must be legible
   
2. The information in sections 1, 5 and 6 must be completed before the purchaser completes and signs the form.
   
3. The purchaser must sign this form. Each of the purchaser and the issuer or selling security holder must receive a copy of this form signed by the purchaser. The issuer or selling security holder is required to keep a copy of this form for 8 years after the distribution.

 

     
  C- 11  

 

APPENDIX “B” TO CANADIAN QUESTIONNAIRE
Form 45-106F12

 

RISK ACKNOWLEDGEMENT FORM FOR FAMILY, FRIEND AND
BUSINESS ASSOCIATE INVESTORS

 

WARNING!

 

This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment.

 

SECTION 1 TO BE COMPLETED BY THE ISSUER
1. About your investment
Type of securities: Stock Options Issuer: ICOX Innovations Inc. (the “ Issuer ”)

SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER
2. Risk acknowledgement
This investment is risky. Initial that you understand that: Your initials
Risk of loss – You could lose your entire investment of US$______________.
[Instruction: Insert the total dollar amount of the investment.]
 
Liquidity risk – You may not be able to sell your investment quickly – or at all.  
Lack of information – You may receive little or no information about your investment. The information you receive may be limited to the information provided to you by the family member, friend or close business associate specified in section 3 of this form.  
3. Family, friend or business associate status
You must meet one of the following criteria to be able to make this investment. Initial the statement that applies to you: Your initials
A) You are:  
  1) [check all applicable boxes]  
         
    [  ] a director of the issuer or an affiliate of the issuer  
         
    [  ] an executive officer of the issuer or an affiliate of the issuer  
         
    [  ] a control person of the issuer or an affiliate of the issuer  
         
    [  ] a founder of the issuer  
         
OR        
         
  2) [check all applicable boxes]  
         
    [  ] a person of which a majority of the voting securities are beneficially owned by, or a majority of the directors are, (i) individuals listed in (1) above and/or (ii) family members, close personal friends or close business associates of individuals listed in (1) above  
         
    [  ] a trust or estate of which all of the beneficiaries or a majority of the trustees or executors are (i) individuals listed in (1) above and/or (ii) family members, close personal friends or close business associates of individuals listed in (1) above  

 

     
  C- 12  

 

B) You are a family member of _____________________________________ [Instruction: Insert the name

of the person who is your relative either directly or through his or her spouse] , who holds the following position at the issuer or an affiliate of the issuer:____________________________________________.

 

You are the __________________ of that person or that person’s spouse.

 

[Instruction: To qualify for this investment, you must be (a) the spouse of the person listed above or (b) the parent, grandparent, brother, sister, child or grandchild of that person or that person’s spouse.]

 

C) You are a close personal friend of ___________________________ [Instruction: Insert the name of your close personal friend] , who holds the following position at the issuer or an affiliate of the issuer: ________________________________.

 

You have known that person for ________ years.

 

D) You are a close business associate of _______________________________________ [Instruction: Insert the name of your close business associate] , who holds the following position at the issuer or an affiliate of the issuer: ________________________.

 

You have known that person for ________ years.

 
4. Your name and signature
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form. You also confirm that you are eligible to make this investment because you are a family member, close personal friend or close business associate of the person identified in section 5 of this form.  
 First and last name (please print):
Signature: Date:
SECTIONS 5 TO BE COMPLETED BY PERSON WHO CLAIMS THE CLOSE PERSONAL RELATIONSHIP, IF APPLICABLE
5. Contact person at the issuer or an affiliate of the issuer

[Instruction: To be completed by the director, executive officer, control person or founder with whom the purchaser has a close personal relationship indicated under sections 3B, C or D of this form.]

 

By signing this form, you confirm that you have, or your spouse has, the following relationship with the purchaser: [check the box that applies]

 

[  ] family relationship as set out in section 3B of this form

 

[  ] close personal friendship as set out in section 3C of this form

 

[  ] close business associate relationship as set out in section 3D of this form

First and last name of contact person (please print):
Position with the issuer or affiliate of the issuer (director, executive officer, control person or founder):
Telephone: Email:
Signature: Date:

 

     
  C- 13  

 

SECTIONS 6 TO BE COMPLETED BY THE ISSUER
6. For more information about this investment

 

ICOX INNOVATIONS INC.

4101 Redwood Avenue, Building F
Los Angeles, CA 90066

Attn: Michael Blum

Telephone: 213.675.5300

Email: Michael.blum@icoxinnovations.com

 For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www.securities-administrators.ca.

 

Signature of executive officer of the issuer (other than the purchaser): Date:

 

Form instructions:

 

1. This form does not mandate the use of a specific font size or style but the font must be legible.

 

2. The information in sections 1, 5 and 6 must be completed before the purchaser completes and signs the form .

 

3. The purchaser, an executive officer who is not the purchaser and, if applicable, the person who claims the close personal relationship to the purchaser must sign this form. Each of the purchaser, contact person at the issuer and the issuer must receive a copy of this form signed by the purchaser. The issuer is required to keep a copy of this form for 8 years after the distribution.

 

4. The detailed relationships required to purchase securities under this exemption are set out in section 2.5 of National Instrument 45-106 Prospectus and Registration Exemptions. For guidance on the meaning of “close personal friend” and “close business associate”, please refer to sections 2.7 and 2.8, respectively, of Companion Policy 45-106CP Prospectus and Registration Exemptions.

 

     
  C- 14  

 

APPENDIX “C” TO CANADIAN QUESTIONNAIRE

 

Form 45-106F5

 

RISK ACKNOWLEDGEMENT
SASKATCHEWAN CLOSE PERSONAL FRIENDS AND CLOSE BUSINESS ASSOCIATES

 

 

You are buying Exempt Market Securities. They are called exempt market securities because two parts of securities law do not apply to them. If an issuer wants to sell exempt market securities to you:

 

the issuer does not have to give you a prospectus (a document that describes the investment in detail and gives you some legal protections), and

 

the securities do not have to be sold by an investment dealer registered with a securities regulatory authority or regulator.

 

There are restrictions on your ability to resell exempt market securities . Exempt market securities are more risky than other securities.

 

You may not receive any written information about the issuer or its business. If you have any questions about the issuer or its business, ask for written clarification before you purchase the securities. You should consult your own professional advisers before investing in the securities.

 

The securities you are buying are not listed . The securities you are buying are not listed on any stock exchange, and they may never be listed. There may be no market for these securities. You may never be able to sell these securities.

 

For more information on the exempt market, refer to the Saskatchewan Financial Services Commission’s website at http://www.sfsc.gov.sk.ca .

 

[Instruction: The purchaser must sign 2 copies of this form. The purchaser and the issuer must each receive a signed copy.]

 

     
  D- 1  

 

SCHEDULE D

 

UNITED STATES ACCREDITED INVESTOR QUESTIONNAIRE

 

Capitalized terms used in this United States Accredited Investor Questionnaire (this “ Questionnaire ”) and not specifically defined have the meaning ascribed to them in the Stock Option Agreement between the undersigned (the “ Optionee ”) and ICOX Innovations Inc. (the “ Company ”) to which this Schedule D is attached.

 

All dollar amounts referred to in this Questionnaire are in lawful money of the United States, unless otherwise indicated.

 

The Optionee covenants, represents and warrants to the Company that he or she satisfies one or more of the categories of “Accredited Investors”, as defined by Regulation D promulgated under the Securities Act of 1933 (the “Securities Act” ), as indicated below: (Please initial in the space provide those categories, if any, of an “Accredited Investor” which the Optionee satisfies)

 

  ______  Category 1 An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust or partnership, not formed for the specific purpose of acquiring the Securities, with total assets in excess of $5,000,000;
       
  ______ Category 2 A natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1,000,000. For purposes of this Category 2, “net worth” means the excess of total assets at fair market value (including personal and real property, but excluding the estimated fair market value of a person’s primary home) over total liabilities. Total liabilities excludes any mortgage on the primary home in an amount of up to the home’s estimated fair market value as long as the mortgage was incurred more than 60 days before the Securities are acquired, but includes (i) any mortgage amount in excess of the home’s fair market value and (ii) any mortgage amount that was borrowed during the 60-day period before the date of the acquisition of Securities for the purpose of investing in the Securities;
       
  ______ Category 3 A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
       
  ______ Category 4 A “bank” as defined under Section (3)(a)(2) of the Securities Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 (United States) or a business development company as defined in Section 2(a)(48) of such Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors;

 

     
  D- 2  

 

  ______  Category 5 A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940 (United States);
       
  ______ Category 6 A director or executive officer of the Company;
       
  ______ Category 7 A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the Securities Act;
       
  ______ Category 8 An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories;

 

Note that the Optionee claiming to satisfy one of the above categories of Accredited Investor may be required to supply the Company with a balance sheet, prior years’ federal income tax returns or other appropriate documentation to verify and substantiate the Optionee’s status as an Accredited Investor.

 

If the Optionee is an entity which initialled the last category in reliance upon the Accredited Investor categories above, state the name, address, total personal income from all sources for the previous calendar year, and the net worth (exclusive of home, home furnishings and personal automobiles) for each equity owner of the said entity:

 

All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, the Optionee agrees that, if necessary, this Questionnaire may be presented to such parties as the Company deems appropriate to establish the availability, under the Securities Act or applicable state securities law, of exemption from registration in connection with the issuance of the Securities hereunder.

 

By completing this Questionnaire, the Optionee authorizes the indirect collection of this information by each applicable regulatory authority or regulator and acknowledges that such information is made available to the public under applicable laws.

 

DATED as of _______ day of _________________, 20____.

 

     
    Print Name of Optionee
     
     
    Signature
     
     
    Social Security/Tax I.D. No.

 

     
  E- 1  

 

SCHEDULE E

 

UNITED STATES NON-ACREDITED INVESTOR QUESTIONNAIRE

 

Capitalized terms used in this United States Non-Accredited Investor Questionnaire (this “ Questionnaire ”) and not specifically defined have the meaning ascribed to them in the Stock Option Agreement between the undersigned (the “ Optionee ”) and ICOX Innovations Inc. (the “ Company ”) to which this Schedule E is attached.

 

All dollar amounts referred to in this Questionnaire are in lawful money of the United States, unless otherwise indicated.

 

The purpose of this Questionnaire is to assure the Company that the Optionee will meet the standards imposed by the Securities Act of 1933 (the “Securities Act” ) and the appropriate exemptions of applicable state securities laws. The Company will rely on the information contained in this Questionnaire for the purposes of such determination. The Option and the Optioned Shares (together, the “Securities” ) will not be registered under the Securities Act and has been issued in reliance upon the exemption from registration afforded by Section 3(b) and/or Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. This Questionnaire is not an offer of any securities of the Company in any state other than those specifically authorized by the Company.

 

Please attach additional pages if necessary to answer any question fully.

 

REPRESENTATIONS OF OPTIONEE

 

This item is presented in alternative form. Please initial in the space provided the applicable alternative.

 

_____ ALTERNATIVE ONE: The Optionee covenants, represents and warrants to the Company that he or she has such knowledge and experience in financial and business matters that he or she is capable of evaluating the relative merits and risks of an investment in the Securities and Company and is not utilizing a purchaser representative in connection with evaluating such merits and risks. The Optionee is providing evidence of its knowledge and experience in these matters through the information requested below in this Questionnaire.
   
_____ ALTERNATIVE TWO: The Optionee covenants, represents and warrants to the Company that he or she has chosen to use the services of a purchaser representative acceptable to the Optionee in connection with the Optionee’s acquisition of the Securities. The Optionee hereby acknowledges that the person named below is his or her purchaser representative who will assist and advise the Optionee in evaluating the merits and risks of an investment in the Securities and the Company and affirms that such purchaser representative has previously disclosed in writing any material relationship that exists between the purchaser representative (or its affiliates) and the Company (or its affiliates) that is mutually understood to be contemplated, or that has existed at any time during the previous two years, and any compensation received or to be received as a result of such relationship.
   
   
  (name of Purchaser Representative)
   
   
  (address of Purchaser Representative)
   
  If the Optionee utilizes a purchaser representative, this Questionnaire must be accompanied by a completed and signed purchaser representative Questionnaire, a copy of which can be obtained from the Company upon request.

 

     
  E- 2  

 

FOR INDIVIDUAL INVESTORS

 

1. Name:  
              
2. Residential Address & Telephone Number:
   
   

 

3. Length of Residence in State of Residence:  

 

4. U.S. Citizen: _____ Yes _____ No

 

5. Social Security Number:  

 

6. Business Address & Telephone Number:  
   
   

 

7. Preferred Mailing Address: _____ Residence _____ Business

 

8. Date of Birth:  

 

9. Employer and Position:  

 

10. Name of Business:  

 

11. Business or Professional Education and Degrees:        

 

  School   Degree   Year Received
   
   
           
12. Prior Employment (last 5 years):        
           
  Employer   Nature of Duties   Dates of Employment
   
   
   
   

 

     
  E- 3  

 

13.     Relationship to the Company, if any: ________________________________________________________

 

14. Is the Optionee an officer of director of a publicly-held company?

 

____ Yes ____ No

 

If yes, specify company: __________________________________________________________________

 

15. Does the Optionee beneficially own 10% or more of the voting securities of a publicly-held company?

 

____ Yes _____ No

 

If yes, specify company: __________________________________________________________________

 

16. Within the last 5 years, has the Optionee personally invested in investments sold by means of private placements in reliance on exemptions from registration under the Securities Act and state securities laws?

 

____ Yes _____ No

 

17. Prior investments by the Optionee which were purchased in reliance on exemptions from registration under the Securities Act and State securities laws (initial the highest number applicable):

 

Amount (Cumulative)

 

Real Estate:   Up to   $50,000 to   Over
None: _____   $50,000 _____   $250,000 _____   $250,000 _____
             
Securities:   Up to   $50,000 to   Over
None: _____   $50,000 _____   $250,000 _____   $250,000 _____
             
Other:   Up to   $50,000 to   Over
None: _____   $50,000 _____   $250,000 _____   $250,000 _____

 

18. Does the Optionee consider itself to be an experienced and sophisticated investor?

 

____ Yes _____ No

 

  If so, please provide evidence of investment sophistication and/or experience:
   
   

 

19. Does the Optionee, or any person authorized to execute this Questionnaire, consider itself to have such knowledge of the Company and its business and such experience in financial and business matters to enable it to evaluate the merits and risks of an investment in the Securities and the Company, should the Optionee be given an opportunity to so invest?

 

____ Yes _____ No

 

     
  E- 4  

 

20. If the Optionee is an individual, please indicate the Optionee’s and his/her spouse’s combined gross income during the preceding two years (initial the highest number applicable):

 

  2017     2016
         
_____ Less than $75,000   _____ Less than $75,000
         
_____ $75,001 to $100,000   _____ $75,001 to $100,000
         
_____ $100,001 to $200,000   _____ $100,001 to $200,000
         
_____ $200,001 to $300,000   _____ $200,001 to $300,000
         
_____ $Over $300,000   _____ $Over $300,000

 

21. If the Optionee is an individual, please indicate the Optionee’s and his/her spouse’s combined estimated net worth (exclusive of home, home furnishings and personal automobiles) (initial the highest number applicable):

 

_____ Less than $100,000   _____ $300,0001 to $500,000
         
_____ $100,001 to $200,000   _____ $500,001 to $1,000,000
         
_____ $200,001 to $300,000   _____ Over $1,000,000

 

22. Regardless of the amount of the proposed investment:

 

(a) Will the Optionee’s proposed investment exceed 10% of its individual net worth, or the Optionee’s joint net worth with its spouse as determined in paragraph 21 above?

 

____ Yes _____ No

 

(b) Will the Optionee be able to bear the economic risk of its investment in this transaction?

 

____ Yes _____ No

 

23. Please provide answers to the following questions.

 

  (a) State total assets of the Optionee, including cash, stocks and bonds, automobiles, real estate, and any other assets:
       
    $        
       
  (b) State total liabilities of the Optionee including real estate indebtedness, accounts payable, taxes payable and any other liabilities:
       
    $  
       
  (c) State annual income of the Optionee including salary, securities income, rental income and any other income:
       
    $  

 

     
  E- 5  

 

  (d) State annual expenses of the Optionee, excluding ordinary living expenses, including real estate payments, rent, property taxes and other expenses:
       
    $      
       
  (e) Does the Optionee expect the amount of its assets, liabilities, income and expenses, as stated above, to be subject to significant change in the future:

 

____ Yes _____ No

 

  If yes, explain:
   
   

 

All information contained in this Questionnaire will be treated as confidential. However, by signing and returning this Questionnaire, the Optionee agrees that, if necessary, this Questionnaire may be presented to such parties as the Company deems appropriate to establish the availability, under the Securities Act or applicable state securities law, of exemption from registration in connection with the issuance of the Securities hereunder.

 

By completing this Questionnaire, the Optionee authorizes the indirect collection of this information by each applicable regulatory authority or regulator and acknowledges that such information is made available to the public under applicable laws.

 

DATED as of _______ day of __________, 20____.

 

     
    Print Name of Optionee
     
     
    Signature
     
     
    Social Security/Tax I.D. No.

 

     
  F- 1  

 

SCHEDULE F

 

ACKNOWLEDGEMENTS and Representations and warranties OF THE OPTIONEE

 

Capitalized terms used in this Acknowledgements and Representations and Warranties of the Optionee and not specifically defined have the meaning ascribed to them in the Stock Option Agreement between the undersigned (the “ Optionee ”) and ICOX Innovations Inc. (the “ Company ”) to which this Schedule F is attached.

 

The Optionee acknowledges and agrees that:

 

(a) the Securities have not been registered under the 1933 Act or under any state securities or “blue sky” laws of any state of the United States, and are being offered only in a transaction not involving any public offering within the meaning of the 1933 Act, and, unless so registered, may not be offered or sold in the United States or to U.S. Persons, except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act, and in each case only in accordance with applicable state securities laws;

 

(b) the Company will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;

 

(c) the decision to execute this Agreement and acquire the Securities hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company and such decision is based solely upon a review of publicly available information regarding the Company that is available on the website of the United States Securities and Exchange Commission (the “ SEC ”) at www.sec.gov (the “Company Information” );

 

(d) there are risks associated with an investment in the Securities;

 

(e) the Optionee and the Optionee’s advisor(s) (if applicable) have had a reasonable opportunity to ask questions of and receive answers from the Company in connection with the distribution of the Securities hereunder, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Company;

 

(f) the books and records of the Company were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Optionee during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Securities hereunder have been made available for inspection by the Optionee, the Optionee’s attorney and/or advisor(s) (if applicable);

 

(g) the Company, its officers, directors, counsel and agents are entitled to rely upon the truth and accuracy of the acknowledgements, representations, warranties, statements, answers, covenants and agreements contained in this Agreement and agrees that if any of such acknowledgements, representations, warranties, statements, answers, covenants, and agreements should become, by the passage of time after the date of this Agreement, no longer accurate or should be breached, the Optionee shall promptly notify the Company, and the Optionee will hold harmless the Company from any loss or damage it may suffer as a result of the Optionee’s failure to correctly complete or comply with the terms of this Agreement;

 

     
  F- 2  

 

(h) the Optionee has been advised to consult its own legal, tax and other advisors with respect to the merits and risks regarding the exercise of the Options and the issuance of the Optioned Shares and with respect to applicable resale restrictions and it is solely responsible (and the Company is in not any way responsible) for compliance with applicable resale restrictions;

 

(i) the Company has advised the Optionee that the Company is relying on an exemption from the registration and prospectus requirements of applicable securities laws and, as a consequence of acquiring the Securities pursuant to this exemption, certain protections, rights and remedies provided by the applicable securities laws, including statutory rights of rescission or damages, will not be available to the Optionee;

 

(j) the Optionee will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Optionee contained herein or in any document furnished by the Optionee to the Company in connection herewith being untrue in any material respect or any breach or failure by the Optionee to comply with any covenant or agreement made by the Optionee to the Company in connection therewith;

 

(k) the Securities are not listed on any stock exchange or automated dealer quotation system and no representation has been made to the Optionee that any of the Securities will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the shares of the Company’s common stock on the OTC Pink;

 

(l) neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;

 

(m) no documents in connection with this Agreement have been reviewed by the SEC or any state securities administrators;

 

(n) there is no government or other insurance covering any of the Securities; and

 

(o) this Agreement is not enforceable by the Optionee unless it has been accepted by the Company.

 

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE OPTIONEE

 

The Optionee hereby represents and warrants to and covenants with the Company (which representations, warranties and covenants shall survive the closing) that:

 

(a) the Optionee is a bona fide director, officer, employee, independent contractor or consultant of the Company, Parent or Subsidiary;

 

(b) unless the Optionee has completed Schedule D or E, the Optionee is not acquiring the Securities for the account or benefit of, directly or indirectly, any U.S. Person;

 

(b) unless the Optionee has completed Schedule D or E, the Optionee is not a U.S. Person;

 

(c) the acquisition of the Securities by the Optionee as contemplated in this Agreement complies with or is exempt from the applicable securities legislation of the jurisdiction of residence of the Optionee;

 

     
  F- 3  

 

(d) the Optionee has not acquired or is not acquiring the Securities as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the 1933 Act) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of the Securities; provided, however, that the Optionee may sell or otherwise dispose of the Securities pursuant to registration thereof under the 1933 Act and any applicable state and provincial securities laws or under an exemption from such registration requirements;

 

(e) unless the Optionee has completed Schedule D or E, the Optionee is outside the United States when receiving and executing this Agreement and is acquiring the Securities as principal for the Optionee’s own account, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalisation thereof, in whole or in part, and, in particular, it has no intention to distribute either directly or indirectly any of the Securities in the United States or to U.S. Persons, and no other person has a direct or indirect beneficial interest in such Securities;

 

(f) if the Optionee is not resident in the United States or Canada, the Optionee:

 

(i) is knowledgeable of, or has been independently advised as to, the applicable securities laws of the securities regulators having application in the jurisdiction in which the Optionee is resident (the “ International Jurisdiction ”) which would apply to the granting of the Option and the issue, sale or resale of the Optioned Shares;

 

(ii) the Optionee is acquiring the Option or the Optioned Shares pursuant to exemptions from prospectus or equivalent requirements under applicable securities laws or, if such is not applicable, the Optionee is permitted to acquire the Option or the Optioned Shares under the applicable securities laws of the securities regulators in the International Jurisdiction without the need to rely on any exemptions;

 

(iii) the applicable securities laws of the authorities in the International Jurisdiction do not require the Company to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the granting of the Option or the issue, sale or resale of the Optioned Shares; and

 

(iv) the granting of the Option or the issue, sale or resale of the Optioned Shares does not trigger:

 

A. any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase in the International Jurisdiction; or

 

B. any continuous disclosure reporting obligation of the Optionee or the Company in the International Jurisdiction; and

 

(v) the Optionee will, if requested by the Company, deliver to the Company a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in subparagraphs (ii), (iii) and (iv) above to the satisfaction of the Company, acting reasonably;

 

(g) the Optionee has received and carefully read this Agreement and the Company Information;

 

     
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(h) the Optionee has received a brief description of the Securities and the Optionee understands that the proceeds from the exercise of the Options will be used by the Company as working capital for general corporate purposes;

 

(i) the Optionee has duly executed and delivered this Agreement and it constitutes a valid and binding agreement of the Optionee enforceable against the Optionee in accordance with its terms;

 

(j) the Optionee has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto and, if the Optionee is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Agreement on behalf of the Optionee;

 

(k) the Optionee:

 

(i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies,

 

(ii) has no need for liquidity in this investment, and

 

(iii) is able to bear the economic risks of an investment in the Securities for an indefinite period of time, and can afford the complete loss of such investment;

 

(l) the Optionee has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Securities and the Company, and the Optionee is providing evidence of such knowledge and experience in these matters through the information requested in this Agreement;

 

(m) the Optionee is aware that an investment in the Company is speculative and involves certain risks, including the possible loss of the investment, and the Optionee has carefully read and considered the matters set forth under the caption “Risk Factors” appearing in the Company’s various disclosure documents, filed with the SEC;

 

(n) the entering into of this Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or, if applicable, the constating documents of, the Optionee, or of any agreement, written or oral, to which the Optionee may be a party or by which the Optionee is or may be bound;

 

(o) the Optionee is purchasing the Securities for its own account for investment purposes only and not for the account of any other person and not for distribution, assignment or resale to others, and no other person has a direct or indirect beneficial interest is such Securities, and the Optionee has not subdivided his interest in the Securities with any other person;

 

(p) the Optionee is not an underwriter of, or dealer in, the shares of the Company’s common stock, nor is the Optionee participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities;

 

(q) the Optionee understands and agrees that the Company and others will rely upon the truth and accuracy of the acknowledgements, representations, statements, answers and agreements contained in this Agreement, and agrees that if any of such acknowledgements, representations, statements, answers and agreements are no longer accurate or have been breached, the Optionee shall promptly notify the Company;

 

(r) the Optionee has made an independent examination and investigation of an investment in the Securities and the Company and has depended on the advice of its legal and financial advisors and agrees that the Company will not be responsible in anyway whatsoever for the Optionee’s decision to acquire the Securities;

 

     
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(s) the Optionee is not aware of any advertisement of any of the Securities and is not acquiring the Securities as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising;

 

(t) the Optionee has either (a) a pre-existing personal or business relationship with the Company or any of its partners, officers, directors, or controlling persons consisting of personal or business contacts of a nature and duration which enable the Optionee to be aware of the character, business acumen and general business and financial circumstances of the Company or any such partner, officer, director, or controlling person with whom such relationship exists or (b) such business or financial expertise as to be able to protect the Otpionee’s own interests in connection with the acquisition of the Securities; and

 

(u) no person has made to the Optionee any written or oral representations:

 

(i) that any person will resell or repurchase any of the Securities,

 

(ii) that any person will refund the purchase price of any of the Securities,

 

(iii) as to the future price or value of any of the Securities, or

 

(iv) that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities of the Company on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the shares of the Company’s common stock on the OTC Pink.

 

DATED as of ______ day of ______________, 20____.

 

     
    Print Name of Optionee
     
     
    Signature
     
     
    Social Security/Tax I.D. No.

 

     
     

 

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (“ Agreement ”), dated as of June 22, 2018, is by and between ICOX INNOVATIONS INC. , a Nevada corporation (the “ Company ”) and Alphonso Jackson (the “ Indemnitee ”).

 

WHEREAS:

 

A.       The Indemnitee is a director and/or an officer of the Company;

 

B.       Both the Company and the Indemnitee recognize the increased risk of litigation and other claims being asserted against directors and officers of public companies;

 

C.       The board of directors of the Company (the “ Board ”) has determined that enhancing the ability of the Company to retain and attract as directors and officers the most capable persons is in the best interests of the Company and that the Company therefore should seek to assure such persons that indemnification and insurance coverage is available; and

 

D.       In recognition of the need to provide the Indemnitee with substantial protection against personal liability, in order to procure the Indemnitee’s continued service as a director and/or officer of the Company and to enhance the Indemnitee’s ability to serve the Company in an effective manner, and in order to provide such protection pursuant to express contract rights (intended to be enforceable irrespective of, among other things, any amendment to the Company’s articles of incorporation or bylaws (collectively, the “ Constituent Documents ”), any change in the composition of the Board or any change in control or business combination transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of, and the advancement of Expenses (as defined in Section 1(f) below) to, Indemnitee as set forth in this Agreement and to the extent insurance is maintained for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies.

 

NOW, THEREFORE, in consideration of the foregoing and the Indemnitee’s agreement to continue to provide services to the Company, the parties agree as follows:

 

1. Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

 

  (a) Beneficial Owner ” has the meaning given to the term “beneficial owner” in Rule 13d-3 under the Securities Exchange Act of 1934 , as amended (the “ Exchange Act ”).
     
  (b) Change in Control ” means the occurrence after the date of this Agreement of any of the following events:

 

     
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  (i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the Company’s then outstanding Voting Securities unless the change in relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors;
     
  (ii) the consummation of a reorganization, merger or consolidation, unless immediately following such reorganization, merger or consolidation, all of the Beneficial Owners of the Voting Securities of the Company immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the combined voting power of the outstanding Voting Securities of the entity resulting from such transaction;
     
  (iii) during any period of two consecutive years, not including any period prior to the execution of this Agreement, individuals who at the beginning of such period constituted the Board (including for this purpose any new directors whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board; or
     
  (iv) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

 

  (c) Claim ” means:

 

  (i) any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, arbitrative, investigative or other, and whether made pursuant to federal, state or other law; or
     
  (ii) any inquiry, hearing or investigation that the Indemnitee determines might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism.

 

  (d) Court ” shall have the meaning ascribed to it in Section 9(e) below.
     
  (e) Disinterested Director ” means a director of the Company who is not and was not a party to the Claim in respect of which indemnification is sought by Indemnitee.

 

     
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  (f) Expenses ” means any and all expenses, including reasonable attorneys’ and experts’ fees, court costs, transcript costs, travel expenses, duplicating, printing and binding costs, telephone charges, and all other costs and expenses incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Claim. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Claim, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 5 only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
     
  (g) Expense Advance ” means any payment of Expenses advanced to Indemnitee by the Company pursuant to Section 4 or Section 5 hereof.
     
  (h) Indemnifiable Event ” means any event or occurrence, whether occurring before, on or after the date of this Agreement, related to the fact that Indemnitee is or was a director, officer, employee or agent of the Company or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, member, manager, trustee or agent of any other corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise (collectively with the Company, “ Enterprise ”) or by reason of an action or inaction by Indemnitee in any such capacity (whether or not serving in such capacity at the time any Loss is incurred for which indemnification can be provided under this Agreement).
     
  (i) Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently performs, nor in the past two (2) years has performed, services for either: (i) the Company or Indemnitee (other than in connection with matters concerning Indemnitee under this Agreement or of other indemnitees under similar agreements) or (ii) any other party to the Claim giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.
     
  (j) Losses ” means any and all Expenses, damages, losses, liabilities, judgments, fines, penalties (whether civil, criminal or other), ERISA excise taxes, amounts paid or payable in settlement, including any interest, assessments, any federal, state, local or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement and all other charges paid or payable in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness or participate in, any Claim.
     
  (k) Person ” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, governmental entity or other entity and includes the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act.

 

     
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  (l) Standard of Conduct Determination ” shall have the meaning ascribed to it in Section 9(b) below.
     
  (m) Voting Securities ” means any securities of the Company that vote generally in the election of directors.

 

2. Services to the Company . The Indemnitee agrees to continue to serve as a director or officer of the Company for so long as the Indemnitee is duly elected or appointed or until the Indemnitee tenders his resignation or is no longer serving in such capacity. This Agreement shall not be deemed an employment agreement between the Company (or any of its subsidiaries or Enterprise) and the Indemnitee. The Indemnitee specifically acknowledges that his employment with or service to the Company or any of its subsidiaries or Enterprise, as applicable, is at will and the Indemnitee may be discharged at any time for any reason, with or without cause, except as may be otherwise provided in any written employment agreement between the Indemnitee and the Company (or any of its subsidiaries or Enterprise), other applicable formal severance policies duly adopted by the Board or, with respect to service as a director or officer of the Company, by the Company’s Constituent Documents or Nevada law. This Agreement shall continue in force after the Indemnitee has ceased to serve as a director or officer of the Company or, at the request of the Company, of any of its subsidiaries or Enterprise, as provided in Section 12 hereof.
   
3. Indemnification . Subject to Section 9 and Section 10 of this Agreement, the Company shall indemnify the Indemnitee, to the fullest extent permitted by the laws of the State of Nevada in effect on the date hereof, or as such laws may from time to time hereafter be amended to increase the scope of such permitted indemnification, against any and all Losses if the Indemnitee was or is or becomes a party to or participant in, or is threatened to be made a party to or participant in, any Claim by reason of or arising in part out of an Indemnifiable Event, including, without limitation, Claims brought by or in the right of the Company, Claims brought by third parties, and Claims in which the Indemnitee is solely a witness.
   
4. Advancement of Expenses . The Indemnitee shall have the right to advancement by the Company, prior to the final disposition of any Claim by final adjudication to which there are no further rights of appeal, of any and all Expenses actually and reasonably paid or incurred by the Indemnitee in connection with any Claim arising out of an Indemnifiable Event. The Indemnitee’s right to such advancement is not subject to the satisfaction of any standard of conduct. Without limiting the generality or effect of the foregoing, within 60 days after any request by the Indemnitee, the Company shall, in accordance with such request, (a) pay such Expenses on behalf of the Indemnitee, (b) advance to the Indemnitee funds in an amount sufficient to pay such Expenses, or (c) reimburse the Indemnitee for such Expenses. In connection with any request for Expense Advances, the Indemnitee shall not be required to provide any documentation or information to the extent that the provision thereof would undermine or otherwise jeopardize attorney-client privilege. In connection with any request for Expense Advances, the Indemnitee shall execute and deliver to the Company an undertaking (which shall be accepted without reference to the Indemnitee’s ability to repay the Expense Advances) to repay any amounts paid, advanced, or reimbursed by the Company for such Expenses to the extent that it is ultimately determined, following the final disposition of such Claim, that the Indemnitee is not entitled to indemnification hereunder. The Indemnitee’s obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon.

 

     
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5. Indemnification for Expenses in Enforcing Rights . To the fullest extent allowable under applicable law, the Company shall also indemnify against, and, if requested by the Indemnitee, shall advance to the Indemnitee subject to and in accordance with Section 4, any Expenses actually and reasonably paid or incurred by the Indemnitee in connection with any action or proceeding by the Indemnitee for (a) indemnification or reimbursement or advance payment of Expenses by the Company under any provision of this Agreement, or under any other agreement or provision of the Constituent Documents now or hereafter in effect relating to Claims relating to Indemnifiable Events, and/or (b) recovery under any directors’ and officers’ liability insurance policies maintained by the Company. However, in the event that the Indemnitee is ultimately determined not to be entitled to such indemnification or insurance recovery, as the case may be, then all amounts advanced under this Section 5 shall be repaid. The Indemnitee shall be required to reimburse the Company in the event that a final judicial determination is made that such action brought by the Indemnitee was frivolous or not made in good faith.
   
6. Partial Indemnity . If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of any Losses in respect of a Claim related to an Indemnifiable Event but not for the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled.
   
7. Notification and Defense of Claims .

 

  (a) Notification of Claims . The Indemnitee shall notify the Company in writing as soon as practicable of any Claim which could relate to an Indemnifiable Event or for which the Indemnitee could seek Expense Advances, including a brief description (based upon information then available to the Indemnitee) of the nature of, and the facts underlying, such Claim. The failure by the Indemnitee to timely notify the Company hereunder shall not relieve the Company from any liability hereunder unless the Company’s ability to participate in the defense of such claim was materially and adversely affected by such failure/except that the Company shall not be liable to indemnify the Indemnitee under this Agreement with respect to any judicial award in a Claim related to an Indemnifiable Event if the Company was not given a reasonable and timely opportunity to participate at its expense in the defense of such action. If at the time of the receipt of such notice, the Company has directors’ and officers’ liability insurance in effect under which coverage for Claims related to Indemnifiable Events is potentially available, the Company shall give prompt written notice to the applicable insurers in accordance with the procedures set forth in the applicable policies. The Company shall provide to the Indemnitee a copy of such notice delivered to the applicable insurers, and copies of all subsequent correspondence between the Company and such insurers regarding the Claim, in each case substantially concurrently with the delivery or receipt thereof by the Company.

 

     
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  (b) Defense of Claims . The Company shall be entitled to participate in the defense of any Claim relating to an Indemnifiable Event at its own expense and, except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to the Indemnitee. After notice from the Company to the Indemnitee of its election to assume the defense of any such Claim, the Company shall not be liable to the Indemnitee under this Agreement or otherwise for any Expenses subsequently directly incurred by the Indemnitee in connection with the Indemnitee’s defense of such Claim other than reasonable costs of investigation or as otherwise provided below. The Indemnitee shall have the right to employ its own legal counsel in such Claim, but all Expenses related to such counsel incurred after notice from the Company of its assumption of the defense shall be at the Indemnitee’s own expense; provided, however, that if (i) the Indemnitee’s employment of its own legal counsel has been authorized by the Company, (ii) the Indemnitee has reasonably determined that there may be a conflict of interest between the Indemnitee and the Company in the defense of such Claim, (iii) after a Change in Control, the Indemnitee’s employment of its own counsel has been approved by the Independent Counsel or (iv) the Company shall not in fact have employed counsel to assume the defense of such Claim, then the Indemnitee shall be entitled to retain its own separate counsel (but not more than one law firm plus, if applicable, local counsel in respect of any such Claim) and all Expenses related to such separate counsel shall be borne by the Company.

 

8. Procedure upon Application for Indemnification . In order to obtain indemnification pursuant to this Agreement, the Indemnitee shall submit to the Company a written request therefor, including in such request such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification following the final disposition of the Claim, provided that documentation and information need not be so provided to the extent that the provision thereof would undermine or otherwise jeopardize attorney-client privilege. Indemnification shall be made insofar as the Company determines the Indemnitee is entitled to indemnification in accordance with Section 9 below.
   
9. Determination of Right to Indemnification .

 

  (a) Mandatory Indemnification; Indemnification as a Witness .

 

  (i) To the extent that the Indemnitee shall have been successful on the merits or otherwise in defense of any Claim relating to an Indemnifiable Event or any portion thereof or in defense of any issue or matter therein, including without limitation dismissal without prejudice, the Indemnitee shall be indemnified against all Losses relating to such Claim in accordance with Section 3 to the fullest extent allowable by law, and no Standard of Conduct Determination (as defined in Section 9(b)) shall be required.

 

     
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  (ii) To the extent that the Indemnitee’s involvement in a Claim relating to an Indemnifiable Event is to prepare to serve and serve as a witness, and not as a party, the Indemnitee shall be indemnified against all Losses incurred in connection therewith to the fullest extent allowable by law and no Standard of Conduct Determination (as defined in Section 9(b)) shall be required.

 

  (b) Standard of Conduct . To the extent that the provisions of Section 9(a) are inapplicable to a Claim related to an Indemnifiable Event that shall have been finally disposed of, any determination of whether the Indemnitee has satisfied any applicable standard of conduct under Nevada law that is a legally required condition to indemnification of the Indemnitee hereunder against Losses relating to such Claim and any determination that Expense Advances must be repaid to the Company (a “ Standard of Conduct Determination ”) shall be made as follows:

 

  (i) if no Change in Control has occurred, (A) by a majority vote of the Disinterested Directors, even if less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum or (C) if there are no such Disinterested Directors, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to the Indemnitee; and
     
  (ii) if a Change in Control shall have occurred, (A) if the Indemnitee so requests in writing, by a majority vote of the Disinterested Directors, even if less than a quorum of the Board or (B) otherwise, by Independent Counsel in a written opinion addressed to the Board, a copy of which shall be delivered to the Indemnitee.

 

The Company shall indemnify and hold harmless the Indemnitee against and, if requested by the Indemnitee, shall reimburse the Indemnitee for, or advance to the Indemnitee, within 60 days of such request, any and all Expenses incurred by the Indemnitee in cooperating with the person or persons making such Standard of Conduct Determination.

 

  (c) Making the Standard of Conduct Determination . The Company shall use its reasonable best efforts to cause any Standard of Conduct Determination required under Section 9(b) to be made as promptly as practicable. If the person or persons designated to make the Standard of Conduct Determination under Section 9(b) shall not have made a determination within 30 days after the later of (A) receipt by the Company of a written request from the Indemnitee for indemnification pursuant to Section 8 (the date of such receipt being the “ Notification Date ”) and (B) the selection of an Independent Counsel, if such determination is to be made by Independent Counsel, then the Indemnitee shall be deemed to have satisfied the applicable standard of conduct; provided that such 30-day period may be extended for a reasonable time, not to exceed an additional 30 days, if the person or persons making such determination in good faith requires such additional time to obtain or evaluate information relating thereto. Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement of the Indemnitee to indemnification under this Agreement shall be required to be made prior to the final disposition of any Claim.

 

     
   - 8 -  

 

  (d) Payment of Indemnification . If, in regard to any Losses:

 

  (i) the Indemnitee shall be entitled to indemnification pursuant to Section 9(a);
     
  (ii) no Standard Conduct Determination is legally required as a condition to indemnification of the Indemnitee hereunder; or
     
  (iii) the Indemnitee has been determined or deemed pursuant to Section 9(b) or Section 9(c) to have satisfied the Standard of Conduct Determination,

 

then the Company shall pay to the Indemnitee, within ten days after the later of (A) the Notification Date or (B) the earliest date on which the applicable criterion specified in clause (i), (ii) or (iii) is satisfied, an amount equal to such Losses.

 

  (e) Selection of Independent Counsel for Standard of Conduct Determination . If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 9(b)(i), the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to the Indemnitee advising him of the identity of the Independent Counsel so selected. If a Standard of Conduct Determination is to be made by Independent Counsel pursuant to Section 9(b)(ii), the Independent Counsel shall be selected by the Indemnitee, and the Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either case, the Indemnitee or the Company, as applicable, may, within five days after receiving written notice of selection from the other, deliver to the other a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not satisfy the criteria set forth in the definition of “ Independent Counsel ” in Section 1(i), and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person or firm so selected shall act as Independent Counsel. If such written objection is properly and timely made and substantiated, (i) the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit; and (ii) the non-objecting party may, at its option, select an alternative Independent Counsel and give written notice to the other party advising such other party of the identity of the alternative Independent Counsel so selected, in which case the provisions of the two immediately preceding sentences, the introductory clause of this sentence and numbered clause (i) of this sentence shall apply to such subsequent selection and notice. If applicable, the provisions of clause (ii) of the immediately preceding sentence shall apply to successive alternative selections. If no Independent Counsel that is permitted under the foregoing provisions of this Section 9(e) to make the Standard of Conduct Determination shall have been selected within 20 days after the Company gives its initial notice pursuant to the first sentence of this Section 9(e) or the Indemnitee gives its initial notice pursuant to the second sentence of this Section 9(e), as the case may be, either the Company or the Indemnitee may petition a court in Nevada (the “ Court ”) to resolve any objection which shall have been made by the Company or the Indemnitee to the other’s selection of Independent Counsel and/or to appoint as Independent Counsel a person to be selected by the Court or such other person as the Court shall designate, and the person or firm with respect to whom all objections are so resolved or the person or firm so appointed will act as Independent Counsel. In all events, the Company shall pay all of the reasonable fees and expenses of the Independent Counsel incurred in connection with the Independent Counsel’s determination pursuant to Section 9(b).

 

     
   - 9 -  

 

  (f) Presumptions and Defenses .

 

  (i) Indemnitee’s Entitlement to Indemnification . In making any Standard of Conduct Determination, the person or persons making such determination shall presume that the Indemnitee has satisfied the applicable standard of conduct and is entitled to indemnification, and the Company shall have the burden of proof to overcome that presumption and establish that the Indemnitee is not so entitled. Any Standard of Conduct Determination that is adverse to the Indemnitee may be challenged by the Indemnitee in the Court. No determination by the Company (including by its directors or any Independent Counsel) that the Indemnitee has not satisfied any applicable standard of conduct may be used as a defense to any legal proceedings brought by the Indemnitee to secure indemnification or reimbursement or advance payment of Expenses by the Company hereunder or create a presumption that the Indemnitee has not met any applicable standard of conduct.
     
  (ii) Reliance as a Safe Harbor . For purposes of this Agreement, and without creating any presumption as to a lack of good faith if the following circumstances do not exist, the Indemnitee shall be deemed to have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company if the Indemnitee’s actions or omissions to act are taken in good faith reliance upon the records of the Company, including its financial statements, or upon information, opinions, reports or statements furnished to the Indemnitee by the officers or employees of the Company or any of its subsidiaries in the course of their duties, or by committees of the Board or by any other Person (including legal counsel, accountants and financial advisors) as to matters the Indemnitee reasonably believes are within such other Person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Company. In addition, the knowledge and/or actions, or failures to act, of any director, officer, agent or employee of the Company shall not be imputed to the Indemnitee for purposes of determining the right to indemnity hereunder.

 

     
   - 10 -  

 

  (iii) No Other Presumptions . For purposes of this Agreement, the termination of any Claim by judgment, order, settlement (whether with or without court approval) or conviction, or upon a plea of nolo contendere or its equivalent, will not create a presumption that the Indemnitee did not meet any applicable standard of conduct or have any particular belief, or that indemnification hereunder is otherwise not permitted.
     
  (iv) Defense to Indemnification and Burden of Proof . It shall be a defense to any action brought by the Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Losses incurred in defending against a Claim related to an Indemnifiable Event in advance of its final disposition) that it is not permissible under applicable law for the Company to indemnify the Indemnitee for the amount claimed. In connection with any such action or any related Standard of Conduct Determination, the burden of proving such a defense or that the Indemnitee did not satisfy the applicable standard of conduct shall be on the Company.
     
  (v) Resolution of Claims . The Company acknowledges that a settlement or other disposition short of final judgment may be successful on the merits or otherwise for purposes of Section 9(a)(i) if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Claim relating to an Indemnifiable Event to which the Indemnitee is a party is resolved in any manner other than by adverse judgment against the Indemnitee (including, without limitation, settlement of such action, claim or proceeding with our without payment of money or other consideration) it shall be presumed that the Indemnitee has been successful on the merits or otherwise for purposes of Section 9(a)(i). The Company shall have the burden of proof to overcome this presumption.

 

10. Exclusions from Indemnification . Notwithstanding anything in this Agreement to the contrary, the Company shall not be obligated to:

 

  (a) indemnify or advance funds to the Indemnitee for Expenses or Losses with respect to proceedings initiated by the Indemnitee, including any proceedings against the Company or its directors, officers, employees or other indemnitees and not by way of defense, except:

 

  (i) proceedings referenced in Section 5 above (unless a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such proceeding was not made in good faith or was frivolous); or
     
  (ii) where the Company has joined in or the Board has consented to the initiation of such proceedings;

 

     
   - 11 -  

 

  (b) indemnify the Indemnitee if a final decision by a court of competent jurisdiction determines that such indemnification is prohibited by applicable law;
     
  (c) indemnify the Indemnitee for the disgorgement of profits arising from the purchase or sale by the Indemnitee of securities of the Company in violation of Section 16(b) of the Exchange Act, or any similar successor statute; and
     
  (d) indemnify or advance funds to the Indemnitee for the Indemnitee’s reimbursement to the Company of any bonus or other incentive-based or equity-based compensation previously received by the Indemnitee or payment of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements under Section 304 of the Sarbanes-Oxley Act of 2002 in connection with an accounting restatement of the Company or the payment to the Company of profits arising from the purchase or sale by the Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act ).

 

11. Settlement of Claims . The Company shall not be liable to the Indemnitee under this Agreement for any amounts paid in settlement of any threatened or pending Claim related to an Indemnifiable Event effected without the Company’s prior written consent, which shall not be unreasonably withheld; provided, however, that if a Change in Control has occurred, the Company shall be liable for indemnification of the Indemnitee for amounts paid in settlement if an Independent Counsel has approved the settlement. The Company shall not settle any Claim related to an Indemnifiable Event in any manner that would impose any Losses on the Indemnitee without the Indemnitee’s prior written consent.
   
12. Duration . All agreements and obligations of the Company contained herein shall continue during the period that the Indemnitee is a director or officer of the Company (or is serving at the request of the Company as a director, officer, employee, member, trustee or agent of another Enterprise) and shall continue thereafter (i) so long as the Indemnitee may be subject to any possible Claim relating to an Indemnifiable Event (including any rights of appeal thereto) and (ii) throughout the pendency of any proceeding (including any rights of appeal thereto) commenced by the Indemnitee to enforce or interpret his or her rights under this Agreement, even if, in either case, he or she may have ceased to serve in such capacity at the time of any such Claim or proceeding.

 

     
   - 12 -  

 

13. Non-Exclusivity . The rights of the Indemnitee hereunder will be in addition to any other rights the Indemnitee may have under the Constituent Documents, the general corporate law of the State of Nevada, any other contract or otherwise (collectively, “ Other Indemnity Provisions ”); provided, however, that (a) to the extent that the Indemnitee otherwise would have any greater right to indemnification under any Other Indemnity Provision, the Indemnitee will be deemed to have such greater right hereunder and (b) to the extent that any change is made to any Other Indemnity Provision which permits any greater right to indemnification than that provided under this Agreement as of the date hereof, the Indemnitee will be deemed to have such greater right hereunder. The Company will not adopt any amendment to any of the Constituent Documents the effect of which would be to deny, diminish or encumber the Indemnitee’s right to indemnification under this Agreement or any Other Indemnity Provision.
   
14. Liability Insurance . For the duration of the Indemnitee’s service as a director and/or officer of the Company, and thereafter for so long as the Indemnitee shall be subject to any pending Claim relating to an Indemnifiable Event, the Company shall use commercially reasonable efforts (taking into account the scope and amount of coverage available relative to the cost thereof) to continue to maintain in effect policies of directors’ and officers’ liability insurance providing coverage that is at least substantially comparable in scope and amount to that provided by the Company’s current policies of directors’ and officers’ liability insurance. In all policies of directors’ and officers’ liability insurance maintained by the Company, the Indemnitee shall be named as an insured in such a manner as to provide the Indemnitee the same rights and benefits as are provided to the most favorably insured of the Company’s directors, if the Indemnitee is a director, or of the Company’s officers, if the Indemnitee is an officer (and not a director) by such policy. Upon request, the Company will provide to the Indemnitee copies of all directors’ and officers’ liability insurance applications, binders, policies, declarations, endorsements and other related materials.
   
15. No Duplication of Payments . The Company shall not be liable under this Agreement to make any payment to the Indemnitee in respect of any Losses to the extent the Indemnitee has otherwise received payment under any insurance policy, the Constituent Documents, Other Indemnity Provisions or otherwise of the amounts otherwise indemnifiable by the Company hereunder.
   
16. Subrogation . In the event of payment to the Indemnitee under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee. The Indemnitee shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
   
17. Amendments . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.

 

     
   - 13 -  

 

18. Binding Effect . This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part of the business and/or assets of the Company, by written agreement in form and substances satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
   
19. Severability . The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any portion thereof) are held by a court of competent jurisdiction to be invalid, illegal, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
   
20. Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, by postage prepaid, certified or registered mail:

 

  (a) if to the Indemnitee, to the address set forth on the signature page hereto.
     
  (b) if to the Company, to:

 

ICOX Innovations Inc.
4101 Redwood Ave., Building F
Los Angeles, CA 90066

 

  Attention: Michael Blum
  Email: michael.blum@icoxinnovations.com

 

Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing.

 

21. Governing Law and Forum . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Nevada applicable to contracts made and to be performed in such state without giving effect to its principles of conflicts of laws.
   
22. Headings . The headings of the sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction or interpretation thereof.

 

     
   - 14 -  

 

23. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

ICOX INNOVATIONS INC.  
     
Per: /s/ Michael Blum  
Name: Michael Blum  
Title: CFO  

 

INDEMNITEE

 

/s/ Alphonso Jackson  
Name: Alphonso Jackson  

 

Address: 1411 Key Blvd., Unit 601  
  Arlington, VA 22209  

 

     
     

 

 

 

 

 

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the use in this Amendment to the Registration Statement on Form S-1 of ICOX Innovations Inc. of our report dated April 2, 2018 relating to our audits of the December 31, 2017 and 2016 consolidated financial statements, which appears in the Annual Report on Form 10-K of ICOX Innovations Inc. for the year ended December 31, 2017, appearing in the Prospectus, which is part of this Amendment to the Registration Statement.

 

We also consent to the reference to our firm under the caption “Experts” in such Prospectus.

 

 

Haynie & Company

Salt Lake City, UT

July 17, 2018