Filed pursuant to Rule 424(b)(3)

Registration No. 333-224161

 

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 5.

 

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 November 16, 2018.

 

 
     

 

Table of Contents
   
  Page Number
About This Prospectus 3
Prospectus Summary 3
Risk Factors 5
General Cryptocurrency Risks 5
Risks Related to Our Business 9
Risks Related to Our Common Stock 12
Forward-Looking Statements 13
Use of Proceeds 14
Private Placements 14
Selling Stockholders 16
Plan of Distribution 42
Description of Securities 43
Experts and Counsel 46
Interest of Named Experts and Counsel 46
Information with respect to Our Company 46
Description of Business 50
Description of Property 57
Legal Proceedings 57
Market Price of and Dividends on Our Common Equity and Related Stockholder Matters 57
Financial Statements F-1
Management’s Discussion and Analysis of Financial Condition and Results of Operations 59
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 65
Directors and Executive Officers 66
Executive Compensation 70
Security Ownership of Certain Beneficial Owners and Management 74
Transactions with Related Persons, Promoters and Certain Control Persons and Corporate Governance 75
Where You Can Find More Information 76

 

  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, ICOx USA, Inc. (formerly 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.

 

Our first client, Ryde Holding Inc., a related party to our company, has engaged us to build out its business model, technology strategy, market entry strategy and capital structure, which includes a blockchain platform launch. We have another client, BitRail, LLC, which has engaged us to develop a blockchain-based payment processing application allowing the purchase and sale of cryptocurrencies to be operated by BitRail Holdings, Inc., a company to be formed by BitRail, LLC. While we have several potential clients in our sales pipeline, there can be no assurance that we will engage additional clients. If our clients discontinue their businesses with us, or if our clients modify the terms of their businesses with us on less favorable terms, the effect on our business, operating results and financial condition may become adverse.

 

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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 $3,678,028 as at September 30, 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.

 

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

 

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 November 16, 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 nine months ended September 30, 2018 and September 30, 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 60 of this prospectus.

 

Statements of Operations Data   Nine Months Ended
September 30, 2018
    Nine Months Ended
September 30, 2017
    Year Ended
December 31, 2017
    Year Ended
December 31, 2016
 
Revenue   $ -     $ -     $ 500,000     $ -  
Total Operating Expenses   $ 2,941,079     $ 102,166     $ 932,843     $ 74,183  
Net Loss   $ (2,985,020 )   $ (123,695 )   $ (467,058 )   $ (88,196 )

 

Balance Sheets Data   As of
September 30, 2018
   

As of

December 31, 2017

   

As of

December 31, 2016

 
Cash and Cash Equivalents   $ 1,555,071     $ 214,993     $ 56,050  
Working Capital   $ 3,181,072     $ 697,847     $ 7,037  
Total Assets   $ 3,504,247     $ 880,803     $ 56,050  
Total Liabilities   $ 924,324     $ 736,193     $ 212,283  
Accumulated Deficit   $ (3,678,028 )   $ (693,008 )   $ (225,950 )
Total Stockholders’ Equity (Deficit)   $ 2,579,923     $ (144,610 )   $ (156,233 )

 

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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.

 

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.

 

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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.

 

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.

 

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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.

 

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.

 

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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.

 

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.

 

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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.

 

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.

 

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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.

 

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.

 

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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 $1,555,071 and working capital of $3,181,072 as of September 30, 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 two clients, one of which is a related party to our company.

 

Our first client, Ryde Holding Inc., a related party to our company, has engaged us to build out its business model, technology strategy, market entry strategy and capital structure, which includes a blockchain platform launch. We have another client, BitRail, LLC, which has engaged us to develop a blockchain-based payment processing application allowing the purchase and sale of cryptocurrencies to be operated by BitRail Holdings, Inc., a company to be formed by BitRail, LLC. While we have several potential clients in our sales pipeline, there can be no assurance that we will engage additional clients. If our clients discontinue their businesses with us, or if our clients modify the terms of their businesses with us on less favorable terms, the effect on our business, operating results and financial condition may become adverse.

 

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.

 

  11  
 

 

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 outstanding voting stock, they have the ability to influence matters affecting our stockholders.

 

Our directors and officers control approximately 18.0% of our outstanding 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 November 16, 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.

 

  12  
 

 

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.

 

  13  
 

 

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.

 

  14  
 

 

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.

 

  15  
 

 

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 November 16, 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.

 

Name of Selling

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

 

  16  
 

 

Name of Selling

  Shares Owned by the Selling Stockholder before the     Total Shares Offered in     Number of Shares to Be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares (1)  
 Stockholder    Offering (1)      the Offering     # of Shares (2)     % of Class (2), (3)  
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       *  
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       *  

 

  17  
 

 

Name of Selling   Shares Owned by the Selling Stockholder before the     Total Shares Offered in     Number of Shares to Be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares (1)  
 Stockholder   Offering (1)       the Offering      # of Shares (2)     % of Class (2),(3)  
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       *  
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       *  

 

  18  
 

 

Name of Selling   Shares Owned by the Selling Stockholder before the     Total Shares Offered in the     Number of Shares to Be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares (1)  
Stockholder    Offering (1)     Offering      # of Shares (2)      % of Class (2),(3)  
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       *  
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       *  

 

  19  
 

 

Name of Selling   Shares Owned by the Selling Stockholder before the     Total Shares Offered in     Number of Shares to Be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares (1)  
Stockholder   Offering (1)     the Offering     # of Shares (2)     % of Class (2),(3)  
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       *  
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       *  

 

  20  
 

 

Name of Selling   Shares Owned by the Selling Stockholder before the     Total Shares Offered in the     Number of Shares to Be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares (1)  
Stockholder   Offering (1)     Offering     # of Shares (2)     % of Class (2),(3)  
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       *  
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       *  

 

  21  
 

 

Name of Selling   Shares Owned by the Selling Stockholder before the     Total Shares Offered in     Number of Shares to Be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares (1)  
Stockholder   Offering (1)       the Offering      # of Shares (2)     % of Class (2),(3)  
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       *  
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       *  

 

  22  
 

 

Name of Selling   Shares Owned by the Selling Stockholder before the     Total Shares Offered in     Number of Shares to Be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares (1)  
Stockholder   Offering (1)     the Offering     # of Shares (2)     % of Class (2),(3)  
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       *  
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       *  

 

  23  
 

 

Name of Selling   Shares Owned by the Selling Stockholder before the     Total Shares Offered in     Number of Shares to Be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares (1)  
 Stockholder   Offering (1)       the Offering     # of Shares (2)     % of Class (2),(3)  
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       *  
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       *  

 

  24  
 

 

Name of Selling   Shares Owned by the Selling Stockholder before the     Total Shares Offered in     Number of Shares to Be Owned by Selling Stockholder After the Offering and Percent of Total Issued and Outstanding Shares (1)  
Stockholder   Offering (1)       the Offering      # of Shares (2)     % of Class (2),(3)  
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)