UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 24,2022
CREATIVE LEARNING CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
000-52883 (Commission File Number) |
20-4456503 (IRS Employer Identification No.) |
14 Kings Highway
Haddonfield, NJ 08033
(Address of principal executive office) (Zip Code)
(904) 824-3133
(Registrants’ telephone number, including area code)
1637 S. Main St.
Milpitas, CA 95035
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| None | None | None |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
Effective February 24, 2022, Creative Learning Corporation (the “Company”) entered into a Securities Purchase Agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”), and issued a Promissory Note in the principal amount of $750,000 (the “AJB Note”) to AJB in a private transaction for a purchase price of $675,000 (after giving effect to a 10% original issue discount). In connection with the sale of the AJB Note, the Company also paid certain fees and due diligence costs of AJB and brokerage fees to J.H. Darbie & Co., a registered broker-dealer. After payment of the fees and costs, the net proceeds to the Company were $641,250, which will be used for working capital and other general corporate purposes.
The maturity date of the AJB Note is August 24, 2022, but it may be extended for six months upon the consent of AJB and the Company. The AJB Note bears interest at 10% per year, and principal and accrued interest is due on the maturity date. The Company may prepay the AJB Note at any time without penalty. Under the terms of the AJB Note, the Company may not sell a significant portion of its assets without the approval of AJB, may not issue additional debt that is not subordinate to AJB, must comply with the Company’s reporting requirements under the Securities Exchange Act of 1934, and must maintain the listing of the Company’s common stock on the OTC Market or other exchange, among other restrictions and requirements. The Company’s failure to make required payments under the AJB Note or to comply with any of these covenants, among other matters, would constitute an event of default. Upon an event of default under the SPA or AJB Note, the AJB Note will bear interest at 18%, AJB may immediately accelerate the AJB Note due date, AJB may convert the amount outstanding under the AJB Note into shares of Company common stock at a discount to the market price of the stock, and AJB will be entitled to its costs of collection, among other penalties and remedies.
The Company provided various representations, warranties, and covenants to AJB in the SPA. The Company’s breach of any representation or warranty, or failure to comply with the covenants would constitute an event of default. Also pursuant to the SPA, the Company paid AJB a commitment fee of 4,000,000 unregistered shares of the Company’s common stock (the “Commitment Fee Shares”). If, after the sixth month anniversary of closing and before the thirty-sixth month anniversary of closing, AJB has been unable to sell the Commitment Fee Shares for $400,000, then the Company may be required to issue additional shares or pay cash in the amount of the shortfall. However, if the Company pays the AJB Note off before August 24, 2022, then the Company may redeem 2,000,000 of the Commitment Fee Shares for one dollar. Pursuant to the SPA, the Company also issued to AJB a common stock purchase warrant (the “warrant”) to purchase 1,000,000 shares of the Company’s common stock for $0.30 per share. The warrant expires on February 24, 2027. The warrant also includes various covenants of the Company for the benefit of the warrant holder and includes a beneficial ownership limitation on the holder that, in certain circumstances, may serve to restrict the holder’s right to exercise the warrant.
The offer and sale of the AJB Note, the warrant and the Commitment Fee Shares was made in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), in reliance on exemptions afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On December 7, 2021, Company, DriveItAway, Inc., a Delaware corporation (“DIA”), and the existing shareholders of DIA executed an Agreement and Plan of Share Exchange (the “Share Exchange Agreement”), under which the Company would acquire all of the issued and outstanding common stock of DIA by issuing one share of Series A Convertible Preferred Stock (the “Series A Preferred”) of the Company for each outstanding share of DIA common stock (the “Share Exchange”). On February 24, 2022, closing of the Share Exchange occurred.
Each share of Series A Preferred is convertible into 33.94971 shares of common stock of the Company, which entitles the holders thereof to 85% of the Company’s common stock upon a conversion of all shares of Series A Preferred, determined on a fully-diluted basis, but prior to any shares issued or issuable as a result of the Financing (as defined below). In addition, each share of Series A Preferred is entitled to dividends and voting rights on an “as converted” basis with the common stockholders.
Upon closing of the Share Exchange, all of the existing members of the board of directors (the “Board”) of the Company resigned, except that Rod Whiton’s resignation will not be effective until ten days after an information statement pursuant to Rule 14f-1 is mailed to shareholders. John Possumato, Adam Potash and Paul Patrizio were appointed to the Company’s Board, provided that the appointments of Messrs. Potash and Patrizio will not be effective until ten days after an information statement pursuant to Rule 14f-1 is mailed to shareholders. Upon closing of the Share Exchange, Christopher Rego and Rod Whiton resigned as officers, and John Possumato was appointed chief executive officer and Adam Potash was appointed chief operating officer. Mike Elkin agreed to remain as chief financial officer of the Company.
DIA is the first national dealer focused mobility platform that enables car dealers to sell more vehicles in a seamless way through eCommerce, with its exclusive “Pay as You Go” app-based subscription program. DIA provides a comprehensive turn-key, solutions driven program with proprietary mobile technology and driver app, insurance coverages and training to get dealerships up and running quickly and profitably in emerging online sales opportunities. The company is planning to soon to expand its easy and transparent consumer app ‘subscription to ownership’ platform to enable entry level consumers to drive and acquire new Electric Vehicles. For further information, please see www.driveitaway.com.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 is incorporated herein by reference.
Section 3 – Securities and Trading Markets
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Items 1.01 and 2.01 are incorporated herein by reference.
Item 5.01 Changes in Control of Registrant.
(a)(1)-(7) As described in Item 2.01, on February 24, 2022, the Company consummated the Share Exchange, which resulted in the Company issuing 2,592,791 shares of Series A Preferred to acquire all of the issued and outstanding common stock of DIA. Each share of Series A Preferred is convertible into 33.94971 share of common stock. In addition, each share of Series A Preferred is entitled to dividends and voting rights on an “as converted” basis with the common stockholders. As a result, prior holders of DIA common stock own Series A Preferred that has approximately 85% of the voting rights on any matter submitted to shareholders for a vote.
The following table sets forth, as of February 24, 2022, and after giving effect to the change in directors that will occur ten days after the Company mails an information statement to its shareholders, certain information concerning the beneficial ownership of our common stock by (i) each person known by us to own beneficially five percent (5%) or more of the outstanding shares of common stock, (ii) each of our directors and named executive officers, and (iii) all of our executive officers and directors as a group. The number of shares beneficially owned by each 5% stockholder, director or executive officer is determined under the rules of the Securities and Exchange Commission, or SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power and also any shares that the individual or entity has the right to acquire within 60 days after February 24, 2022 through the exercise of any stock option, warrant or other right, or the conversion of any security. Unless otherwise indicated, each person or entity has sole voting and investment power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion in the table below of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares. Each person’s status as officer or director is determined as it will exist ten days after the mailing of this Information Statement, at which time Mr. Whiton’s resignation from the Board will become effective and Messrs. Potash and Patrizio’s appointment to the Board will become effective.
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class (1) | ||||||
| 5% Beneficial Owners: | ||||||||
| John Possumato (2) (7) | 36,841,508 | 73.0 | % | |||||
| Adam Potash (3) (7) | 36,591,095 | 72.8 | % | |||||
| Paul Patrizio (4) (7) | 10,184,912 | 42.7 | % | |||||
| Blake Furlow 2110 N. Westgate Drive Boise, ID 83704 | 1,771,110 | 13.0 | % | |||||
| Michelle Cote (5) 1600 San Carlos St. St. Augustine, FL 32080 | 1,420,000 | 10.4 | % | |||||
| Rod Whiton (6) (7) | 1,299,035 | 9.5 | % | |||||
| Named Executive Officers and Directors: | ||||||||
| John Possumato (2) (7) | 36,841,508 | 73.0 | % | |||||
| Adam Potash (3) (7) | 36,591,095 | 72.8 | % | |||||
| Paul Patrizio (4) (7) | 10,184,912 | 42.7 | % | |||||
| All Officers and Directors as a Group | 83,617,515 | 86.0 | % | |||||
| (1) | Based upon 13,650,941 shares of Common Stock issued and outstanding as of February 24, 2022, and 2,592,791 shares of Preferred Stock which are convertible into 88,024,493 shares of Common Stock. |
| (2) | Includes 56,250 shares of Preferred Stock owned by Mr. Possumato and 1,028,679 shares of Preferred Stock owned by DriveItAway LLC, which is controlled by Mr. Possumato, which are convertible into 33,949,706 shares of Common Stock at the option of the holders. |
| (3) | Includes 77,621 shares of Preferred Stock owned by Mr. Potash and 1,000,000 shares of Preferred Stock owned by Minds’ Eye Innovation, Inc., which is controlled by Mr. Potash, which are convertible into 36,770,423 shares of Common Stock at the option of the holders. |
| (4) | Includes 300,000 shares of Preferred Stock owned by AEP Holdings LLC, which is controlled by Mr. Patrizio, which are convertible into 10,184,912 shares of Common Stock at the option of the holder. |
| (5) | All shares held by Cote Trading, LLC, an entity controlled by Ms. Cote. |
| (6) | Includes 6,067 shares held in UTMA accounts for Mr. Whiton’s children, over which Mr. Whiton has voting and dispositive power. |
| (7) | The address for the shareholder is c/o DriveItAway, Inc., 14 Kings Highway, Haddonfield, NJ 08033. |
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) On February 24, 2022, Rod Whiton resigned as President and Christopher Rego resigned as Chief Executive Officer. Mike Elkin remains as Chief Financial Officer.
On February 24, 2022, Rod Whiton, Christopher Rego, Gary Zell and John Simento resigned as directors, provided that Mr. Whiton’s resignation is not effective until ten days after an information statement pursuant to Rule 14f-1 is mailed to shareholders. The resignations occurred as a result of the Share Exchange described in Item 2.01, which is incorporated herein by reference.
(c) On February 24, 2022, John Possumato was appointed Chief Executive Officer and Adam Potash was appointed Chief Operating Officer. The resignations occurred as a result of the Share Exchange described in Item 2.01, which is incorporated herein by reference. Biographical information on the new officers is set forth below:
John Possumato is a noted consultant, author and speaker in the automotive industry, is the Founder and CEO of DIA since 2018. A serial entrepreneur and a franchise car dealership owner veteran, Possumato has over 35 years of leadership experience fostering and growing start-up companies. Also known by vehicle manufacturers, Possumato helped create the dealer focused commercial fleet programs for Ford, General Motors, and Jaguar. Possumato conceived of DriveItAway in 2017, while at Automotive Mobile Solutions LLC, a technology company he founded and led as CEO in 2012, to adapt new mobile marketing innovations to automotive retailers. He is also an attorney, a graduate of the Law School at the University of Pennsylvania (J.D.) and the Wharton School of Business (B.S.), is a member of the Bar of the State of Pennsylvania, was a Wharton School Entrepreneur in Residence, University City Science Center OnRamp Founder in Residence, a founding Board member of the International Automotive Remarketers Alliance, and past Counsel to the Board of Directors of the Automotive Fleet and Leasing Association. He most recently helped create the Drive For Freedom Foundation, a 501(c)(3) nonprofit created to alleviate the “Poverty of the Carless.”
Adam Potash began his career in a start-up engaging in passenger transportation and has been involved in mobility-based start-ups ever since. In 2011, he founded and became CEO of Minds’ Eye Innovations, which provided ride sharing software to taxi companies to compete against Uber and Lyft. He grew the company to service over 70 taxi companies processing 10,000+ orders per day. Mr. Potash later joined a ride share start-up called Leap that was assembled by former management members of Gett Taxi (3rd largest ride share company in NYC) and became the CTO helping the team bring to market a new ride share concept. In 2019, Potash became COO of DIA, helping DIA launch its “Pay As You Go” car ownership program, where he continues to lead product development and operations. He is a graduate of Villanova University.
There are no plans, contracts or arrangements under which the Company has agreed to compensate any of the new officers at this time.
(d) On February 24, 2022, by written consent of the Board, John Possumato, Adam Potash and Paul Patrizio were appointed directors, provided that the appointments of Messrs. Potash and Patrizio are not effective until ten days after an information statement pursuant to Rule 14f-1 is mailed to shareholders. Biographical information about Messrs. Possumato and Potash is included in Item 5.02(c), which is incorporated herein by reference. Below is biographical information about Mr. Patrizio.
Paul Patrizio has been a corporate attorney, an investment banker, a venture capitalist, and a corporate executive, for both public and private companies over his more than 35-year career. Since 2015, he has been the Managing Partner of Apogee Partners LLC, a private investment company with equity interests in a diverse set of growth companies. He is also a Senior Partner at Patrizio & O’Leary LLP, a law firm in Princeton, NJ that specializes in representing both public and private companies as well as their investors in corporate transactions and general business matters. Mr. Patrizio has been a director of numerous public and private companies and from 2018-2020 was also Chairman and CEO of Arista Financial Corp., a publicly traded truck leasing company that ceased its operations due to the Covid crisis. Mr. Patrizio holds an L.L.M. in Corporation Law from N.Y.U. Law School, J.D. from New York Law School, an MBA in Finance from Pace University, and a B.A from St. Michael’s College and is admitted to practice law in New Jersey, New York, and Pennsylvania.
The directors were appointed in order to provide industry expertise and guidance in regard to the Company’s plan to enter DIA’s business, as described in Item 2.01 herein. There are no plans, contracts or arrangements under which the Company has agreed to compensate any of the new directors at this time.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
By a written consent dated February 24, 2022, the Company’s Board approved an amendment to its certificate of incorporation to designate a new series of preferred stock, which is known as the Series A Convertible Preferred Stock. Terms of the Series A Convertible Preferred Stock are described in Item 2.01, which is incorporated hereby by reference.
Item 7.01 Regulation FD Disclosure
The Company issued a press release on March 2, 2022. A copy of the press release is attached as Exhibit 99.1.
The information set forth in this Item 7.01 of Form 8-K is furnished pursuant to Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
| Exhibit No. | Description |
| 3.1 | Certificate of Designations, Rights and Preferences of Series A Convertible Preferred Stock. |
| 99.1 | Press Release dated March 2, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CREATIVE LEARNING CORPORATION | ||
| Dated: March 2, 2022 | By: | /s/ John Possumato |
| Name: | John Possumato | |
| Title: | Chief Executive Officer | |
EXHIBIT 3.1
CERTIFICATE OF DESIGNATIONS, RIGHTS AND PREFERENCES
OF
SERIES A CONVERTIBLE PREFERRED STOCK
OF
CREATIVE LEARNING CORP.
The undersigned, Rod Whiton, does hereby certify that:
1. He is the President of Creative Learning Corporation, a Delaware corporation (the “Corporation”).
2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, par value $0.0001 per share, in such series containing such rights, terms and preferences that the Board of Directors of the Corporation determines from time to time, and no series has been previously designated as of the date hereof.
3. The following resolutions were duly adopted by the Board of Directors:
WHEREAS, the Certificate of Incorporation of the Corporation provides for a class of its authorized stock known as preferred stock, comprised of 10,000,000 shares, $0.0001 par value, issuable from time to time in one or more series designated by the Board of Directors;
WHEREAS, the Board of Directors of the Corporation is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of undesignated stock and the number of shares constituting any series and the designation thereof, of any of them; and
WHEREAS, it is the desire of the Board of Directors of the Corporation, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to one series of preferred stock, which shall consist of 5,000,000 shares of Series A Convertible Preferred Stock, as follows:
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred stock as follows:
TERMS OF SERIES A PREFERRED STOCK
Section 1. Designation and Number of Shares. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a series of preferred stock designated as the “Series A Convertible Preferred Stock” (hereinafter, the “Series A Preferred Stock”) The number of shares constituting the Series A Preferred Stock shall be Five Million (5,000,000).
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Section 2. Rank. The Series A Preferred Stock shall rank: (i) senior to the Company’s Common Stock, $0.0001 par value per share (“Common Stock”) and (ii) any subsequent series of Preferred Stock which is designated by the Company as subordinate or junior to the Series A Preferred Stock (“Junior Securities”), as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (all such distributions being referred to collectively as “Distributions”).
Section 3. Dividends. Each share of Series A Preferred Stock shall be entitled to receive, when, if and as declared by the Board, out of funds legally available therefore, non-cumulative dividends equal to the amount of dividends that holder of such share would have received if such share were converted into shares of Common Stock under the circumstances described in Section 6 hereof immediately prior to the record date of the dividend declared on the Common Stock.
Section 4. Voting Rights. Except as set forth specifically below, the holder of each share of the Series A Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which such share of Series A Preferred Stock would be convertible under the circumstances described in Section 6 hereof on the record date for the vote or consent of shareholders, and shall otherwise have voting rights and powers equal to the voting rights and powers of the Common Stock. Each holder of a share of the Series A Preferred Stock shall be entitled to receive the same prior notice of any shareholders’ meeting as provided to the holders of Common Stock in accordance with the Bylaws of the Corporation, as well as prior notice of all shareholder actions to be taken by legally available means in lieu of meeting, and shall vote with holders of the Common Stock upon any matter submitted to a vote of shareholders, except those matters required by law, or by the terms hereof, to be submitted to a class vote of the holders of Series A Preferred Stock.
Section 5. Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation (any such event being hereinafter referred to as a “Liquidation”), before any distribution of assets of the Corporation shall be made to or set apart for the holders of any Junior Security, the holders of Series A Preferred Stock shall be entitled to receive payment out of such assets of the Corporation in an amount equal to $0.01 per share of Series A Preferred Stock (such amount being referred to as the “Liquidation Preference” for the Series A Preferred Stock), plus any unpaid dividends (if declared) on the Series A Preferred Stock.
Section 6. Conversion of Preferred Shares to Common. The Series A Preferred Stock shall be convertible into shares of Common Stock as follows:
| (a) | Voluntary Conversion. Each share of Series A Preferred Stock shall be convertible at any time by the holder thereof at the office of the transfer agent for the Common Stock (the “Transfer Agent”), and at such other place or places, if any, as the board of directors of the Corporation may designate, into that number of fully paid and non-assessable shares (calculated as to each conversion to the nearest l/100th of a share) of Common Stock equal to the number of shares of Series A Preferred Stock to be converted times the Conversion Factor. The “Conversion Factor” shall initially be 33.94971 per share, provided that the Conversion Factor shall be subject to adjustment from time to time in certain instances as hereinafter provided. |
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| (b) | Delivery of Certificates. Before any holder of shares of the Series A Preferred Stock shall be entitled to convert the same into Common Stock, the holder shall surrender the certificate or certificates therefor, duly endorsed to the Corporation or in blank, at the office of the Transfer Agent or at such other place or places, if any, as the board of directors of the Corporation has designated, and shall give written notice to the Corporation at said office or place on the form of Notice of Conversion attached hereto as Exhibit I that it elects to convey the same and shall state in writing therein the name or names (with addresses) in which it wishes the certificate or certificates for Common Stock to be issued. The Corporation will, as soon as practicable thereafter, issue and deliver at said office or place to such holder of shares of the Series A Preferred Stock, or to its nominee or nominees, certificates for the number of full shares of Common Stock to which it shall be entitled as aforesaid. Shares of the Series A Preferred Stock shall be deemed to have been converted as of the close of business on the date of the surrender of such shares for conversion as provided above, and the person or persons entitled to receive the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock as of the close of business on such date. |
| (c) | No Fractional Shares. If any conversion of the Series A Preferred Stock would create a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon conversion, in the aggregate, shall be rounded to the nearest whole share. |
| (d) | Adjustment to Conversion Factor. The Conversion Factor in effect at any time shall be subject to adjustment as follows: |
| (i) | In case the Corporation shall (A) declare a dividend on its Common Stock in shares of its capital stock, (B) subdivide its outstanding shares of Common Stock, (C) combine its outstanding shares of Common Stock into a smaller number of shares, or (D) issue by reclassification of its Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing corporation) any shares of its capital stock, the Conversion Factor in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification shall be proportionately adjusted so that the holder of any share of the Series A Preferred Stock surrendered for conversion after such time shall be entitled to receive the kind and amount of shares which it would have owned or have been entitled to receive had such share of the Series A Preferred Stock been converted immediately prior to such time. Such adjustment shall be made successively whenever any event listed above shall occur. |
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| (ii) | In case the Corporation shall distribute to all holders of its Common Stock (including any such distribution made in connection with a consolidation or merger in which the Corporation is the continuing corporation) evidences of its indebtedness or assets (excluding dividends or other distributions paid out of earned surplus), the Conversion Factor shall be adjusted so that the same shall equal to the amount determined by multiplying the Conversion Factor in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by a fraction (A) of which the numerator shall be the Current Market Price per share of the Common Stock on the date fixed for such determination and (B) the denominator shall be the Current Market Price per share of the Common Stock on the date fixed for such determination less the fair market value (as determined by the board of directors of the Corporation, whose determination shall be conclusive and described in a Board Resolution of the Corporation filed with the Transfer Agent) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Common Stock, such adjustment to become effective immediately prior to the opening of business of the day following the date fixed for the determination of stockholders entitled to receive such distribution. |
| (iii) | For the purpose of any computation under this Section 6(d), the “Current Market Price” on any date shall be deemed to be the average of the daily closing prices per share of Common Stock for 20 consecutive business days selected by the Corporation commencing 35 business days before such date. The closing price for each day shall be the last sale price or, in case no such sale takes place on such day, the average of the closing bid and asked prices, in either case on the New York Stock Exchange, or, if the Common Stock is not listed or admitted to trading on such exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if it is not listed or admitted to trading on any national securities exchange, the average of the closing bid and asked prices as furnished by any member of the National Association of Securities Sealers, Inc., selected from time to time by the Corporation for that purpose. |
| (iv) | All calculations under this Section 6(d) shall be made to the nearest one-hundredth of a cent or the nearest l/100th of a share, as the case may be. |
| (v) | In case of any consolidation or merger of the Corporation with or into any other corporation (other than a consolidation or merger in which the Corporation is the continuing corporation), or in case of any sale or transfer of all or substantially all of the assets of the Corporation, the holder of each share of Series A Preferred Stock shall after such consolidation, merger, sale or transfer have the right to convert such share of the Series A Preferred Stock into the kind and amount of shares of stock and other securities and property which such holder would have been entitled to receive upon such consolidation, merger, sale or transfer if he had held the Common Stock issuable upon the conversion of such share of the Series A Preferred Stock immediately prior to such consolidation, merger, sale or transfer. |
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| (vi) | In the event that at any time, as a result of an adjustment made pursuant to paragraph (i) above, the holder of any share of Series A Preferred Stock surrendered for conversion shall become entitled to receive any securities other than shares of Common Stock, thereafter the amount of such other securities so receivable upon conversion of any share of the Series A Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in paragraphs (i) to (v), inclusive, above, and the provisions of this Section 6(d) with respect to the Common Stock shall apply on like terms to any such other securities. |
| (vii) | No adjustment in the Conversion Factor shall be required unless such adjustment would require a change of at least l % in the Conversion Factor; provided, however, that any adjustments which by reason of this paragraph (vii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. |
| (e) | Notice of Adjustment. Whenever the Conversion Factor is adjustable as herein provided: |
| (i) | the Corporation shall promptly file with the Transfer Agent for the Series A Preferred Stock a certificate of the treasurer of the Corporation setting forth the adjusted Conversion Factor and showing in reasonable detail the facts upon which such adjustment is based, including a statement of the consideration received or to be received by the Corporation for any shares of Common Stock issued or deemed to have been issued; and |
| (ii) | a notice stating that the Conversion Factor has been adjusted and setting forth the adjusted Conversion Factor, and within ten (10) business days after it is required, said notice shall be mailed to all holders of Series A Preferred Stock determined as of the date the notice was first required, and upon the mailing of such notice no other notice need be given of that adjustment in the Conversion Factor. |
| (f) | Reservation of Shares. The Company shall at all times reserve and keep available or make provision to increase, reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the Series A Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding Series A Preferred Stock into Common Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Series A Preferred Stock, the Company will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. |
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| (g) | Taxes. The issue of the stock certificates upon conversion of the Series A Preferred Stock shall be made without charge to the converting holder for any transfer tax in respect of such issue; provide, however, that the Corporation shall be entitled to withhold any applicable withholding taxes with respect to such issue, if any. The Corporation shall not however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares in any name other than that of the holder of any of the Series A Preferred Stock converted, and the Corporation shall not be required to issue or deliver any such stock certificated unless and until the person on persons requesting the issue thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. |
| (h) | Mandatory Conversion. The Corporation may, at its election and without any action on the part of the Holder, convert all outstanding shares of Series A Preferred Stock into that number of shares of Common Stock determined by multiplying the Conversion Amount by the number of shares of Series A Preferred Stock being converted, which conversion shall be effective on the date the Corporation sends notice of the conversion to the Holder(s) (a “Mandatory Conversion Date”), notwithstanding that the Holder may not receive such notice until after the Mandatory Conversion Date, in the event the number of shares of Series A Preferred Stock that are outstanding is less than 200,000 shares. On the Mandatory Conversion Date, the outstanding shares of Series A Preferred Stock shall be converted automatically without any further action by the Holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that each Holder shall surrender the certificate(s) representing such shares of Series A Preferred Stock to the Corporation promptly following receipt of notice of the Mandatory Conversion Date. |
Section 7. Lost or Stolen Certificates. Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of any certificate representing shares of Series A Preferred Stock, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Company, and upon surrender and cancellation of the certificate, if mutilated, the Company shall execute and deliver new certificate representing the shares of Series A Preferred Stock of like tenor and date. However, the Company shall not be obligated to re-issue such lost or stolen certificates if Holder contemporaneously requests the Company to convert such Series A Preferred Stock into Common Stock.
Section 8. Status of Converted Stock. In the event any shares of Series A Preferred Stock shall be converted pursuant to Section 6 hereof, the shares so converted shall be cancelled, and shall return to the status of authorized but unissued Preferred Stock of no designated series, and shall not be issuable by the Company as Series A Preferred Stock.
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Section 9. Preference Rights. Nothing contained herein shall be construed to prevent the Board of Directors of the Company from designating and issuing one (1) or more series of Preferred Stock with dividend and/or liquidation preferences senior to the dividend and liquidation preferences of the Series A Preferred Stock.
Section 10. Notices. All notices, requests, consents and other communication hereunder shall be in writing, shall be mailed (A) if within the United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, by facsimile or e-mail (if agreed to by the Investor), or (B) if delivered from outside the United States, by international express courier, facsimile or e-mail (if agreed to by a holder or Series A Preferred Stock), and shall be deemed given (i) if delivered by first-class registered or certified mail, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed, (iv) if delivered by facsimile or e-mail, upon electronic confirmation of receipt and shall be delivered as addressed as follows:
| (a) | if to the Company, to: |
Creative Learning Corporation
14 Kings Highway
Haddonfield, NJ 08033
Attn: Chief Executive Officer
| (b) | if to a holder of Series A Preferred Stock, to the address, facsimile number or e-mail address appearing in the Corporation’s stockholder records or, in either case, to such other address, facsimile number or e-mail address as the Corporation or a holder of Series A Preferred Stock may provide to the other in accordance with this Section. |
IN WITNESS WHEROF, the undersigned being a duly authorized officer of the Corporation, does file this Certificate of Designation, Rights and Preferences, hereby declaring and certifying that the facts stated herein are true and accordingly has hereunto set his hand this 24th day of February, 2022.
CREATIVE LEARNING CORPORATION
| By: | /s/ Rod Whiton | |
| Name: | Rod Whiton | |
| Title: | President |
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EXHIBIT 1
FORM OF CONVERSION NOTICE
(To be executed by the registered holder in order to convert shares of Series A Preferred Stock)
The undersigned hereby irrevocably elects to convert the number of shares of Series A Convertible Preferred Stock (the “Series A Preferred Stock”) indicated below into shares of common stock, par value $0.0001 per share (the “Common Stock”), of Creative Learning Corporation, a Delaware corporation (the “Corporation”), according to the Certificate of Designations, Rights and Preferences of the Series A Preferred Stock and the conditions hereof, as of the date written below. The undersigned hereby requests that certificates for the shares of Common Stock to be issued to the undersigned. The undersigned will pay all transfer taxes and fees payable with respect thereto. A copy of the certificate representing the Series A Preferred Stock being converted is attached hereto, the original of which will be delivered to the Corporation promptly following the date hereof.
| Date of Conversion (Date of Notice) |
| Number of shares of Series A Preferred Stock owned prior to Conversion |
| Number of shares of Series A Preferred Stock to be Converted |
| Stated Value of Series A Preferred Stock to be Converted |
| Amount of unpaid dividends (if any) on shares of Series A Preferred Stock to be Converted |
| Number of shares of Common Stock to be Issued (including conversion of unpaid dividends on shares of Series A Preferred Stock to be Converted) |
| Applicable Conversion Value |
| Number of shares of Series A Preferred Stock owned subsequent to Conversion |
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Conversion Information: [NAME OF HOLDER]
| Address of Holder: | |
| Name of Holder |
| By: | ||
| Name: | ||
| Title: |
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
DriveItAway Consummates theShare Exchange with Creative Learning Corporation to Lead the Company in Enabling EV Subscription to Ownership for Entry Level and Credit Challenged Consumers
Haddonfield, NJ March 2, 2022: DriveItAway, Inc. (OTCQB: CLCN), a Delaware corporation (“DIA”), an industry leader in new mobility platforms for automobile dealers, announced today that it has completed the Plan of Share Exchange with Creative Learning Corporation (OTCQB:CLCN), under which CLCN acquired all of the issued and outstanding common stock of DIA by issuing one share of Series A Convertible Preferred Stock (the “Series A Preferred”) of CLCN for each outstanding share of DIA common stock (the “Share Exchange”). As a result of the Share Exchange, DIA became a wholly-owned subsidiary of CLCN with shareholders of DriveItAway, Inc. the beneficial owners of approximately 85% of the CLCN’s common stock .
DriveItAway’s CEO John F. Possumato is now CEO of the Company, and the DriveItAway team has taken over management control, as the company will now focus exclusively on automotive mobility technologies and programs, with a new focus on the growth of enabling entry level consumer access to electric vehicles, with its unique “pay as you go” subscription to ownership program.
“With this exciting new development of being a public company, we can now fulfill two long time goals,” says John F. Possumato, CEO of Creative Learning/DriveItAway.
“The first is to add more national visibility and growth to our unique and inclusive platform and program, which enables those that are cash or credit challenged the ability to buy the vehicle of choice, from any car dealer chosen, in an app driven transparent, easy and risk free “subscription to ownership” way, building equity with every payment, now focused on providing new EV vehicle choices to consumers who, heretofore, have been shut out of experiencing the benefits of owning an EV.”
Adds Possumato, “The second goal this merger fulfills is to allow more people to share in our success as a mission driven, ESG, focused automotive company, to eliminate the transportation problems that entry level employees have in getting to work, in conjunction with major employers around the country, and in this way improve the economic conditions for many Americans.”
Continues Possumato, “Studies have shown that the number one impediment to successful entry level employment is the lack of personal transportation, there is a chronic labor shortage in the US today, and we have found many want to help. All together we can build a better, sustainable future for everyone.”
About John F. Possumato
John F. Possumato, is a noted consultant, author and speaker in the automotive industry, and is the Founder and CEO of DriveItAway Inc, which provides a turn-key cloud platform/consumer app enabling dealers to offer new mobility solutions, including subscription-to-purchase options. A serial automotive industry entrepreneur and a dealership owner veteran, Possumato has over 30 years of car industry leadership experience. He is also an attorney, a graduate of the Law School at the University of Pennsylvania (J.D.) and the Wharton School of Business (B.S.), is a member of the Bar of the State of Pennsylvania, was a founding Board member of the International Automotive Remarketers Alliance, and past Counsel to the Board of Directors of the Automotive Fleet and Leasing Association. He most recently helped create the Drive For Freedom Foundation, a nonprofit created to alleviate the “Poverty of the Carless.
About DriveItAway
DIA is the first national dealer focused mobility platform that enables car dealers to sell more vehicles in a seamless way through eCommerce, with its exclusive “Pay as You Go” app-based subscription program. DIA provides a comprehensive turn-key, solutions driven program with proprietary mobile technology and driver app, insurance coverages and training to get dealerships up and running quickly and profitably in emerging online sales opportunities. The company is planning to soon expand its easy and transparent consumer app ‘subscription to ownership’ platform to enable entry level consumers to drive and acquire new Electric Vehicles. For further information, please see www.driveitaway.com. For more information please see our 8k (add link)
Cautionary Statement Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond our control, and may cause actual results to differ significantly from those expressed in any forward-looking statement. Factors that might cause such a difference include, without limitation, whether Creative will complete the exchange within the timeframe anticipated or at all, whether Creative will realize any of the anticipated benefits from the exchange, and other risks and uncertainties, including those detailed in Creative’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020, Quarterly Reports on Form 10-Q for the quarters ended December 31, 2020, March 31, 2021, and June 30, 2021, and its other reports filed from time to time with the U.S. Securities and Exchange Commission (“SEC”). All forward-looking statements reflect Creative’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Creative cautions investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the date of this press release. Creative is under no duty to update any of these forward-looking statements after the date of this press release, nor to conform prior statements to actual results or revised expectations, and Creative does not intend to do so.
CONTACT INFORMATION:
DriveItAway Inc,
fka Creative Learning Corporation
Robyn Ewing
Executive Director of Marketing and Technology
rewing@creativelearningcorp.com
www.creativelearningcorp.com