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Note
9: Subsequent event
Between
the quarter ended October 31, 2016 and the filing of this report, the holders of Series B Preferred Stock converted 48,916 Series
B Preferred shares into 326,106 shares of common stock. The converted value for each Series B Preferred share is approximately
$12.20 or $596,763.
On
November 28, 2016, the Company, Acquisition Sub, U.S. Gold Corp. and Copper King, amended and restated the Merger Agreement, as
amended, to adjust certain aspects of the Merger Consideration and revise other covenants of the Merger Agreement, as amended
(the “Third Amended and Restated Agreement”).
The
Third Amended and Restated Agreement among other things:
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Increased the Merger
Consideration for U.S. Gold holders of record, in the aggregate and on an “as converted” and fully diluted basis,
to 48,616,089 shares of common stock and equivalents from 46,241,868 shares of common stock and equivalents. This includes: |
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Reducing the number
of shares issuable to holders of U.S. Gold’s Series C Preferred Stock issued in connection with U.S. Gold’s private
placement (the “Financing”) to 18,094,362 from 18,181,817; |
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Increasing the maximum
number of warrants to purchase the Company’s common stock issuable to the placement agent in the Financing to 1,809,436
five-year cashless warrants from 400,000 warrants; |
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Adding a provision
to issue 925,833 five-year options which vest 1/24 each month over the 2 years from the original date of issue to the holders
of options issued in connection with the closing of the Keystone Acquisition (as defined in the Merger Agreement); |
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Eliminated a covenant
that certain officers and directors of the Company be issued an aggregate of 820,000 shares of restricted stock pursuant to
a shareholder approved equity incentive plan, subject to the execution of a two year lockup agreement; and |
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Reduced the maximum
number of shares the Company shall have outstanding at the closing of the merger, on a fully diluted basis, to 4,945,182 shares
of common stock and equivalents from 5,579,031 shares of common stock and equivalents. |
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