Filed pursuant to Rule 424(b)(3)
Registration No. 333-205416
PROSPECTUS
700,000 Units
We are offering to sell 700,000 units (each a “Unit”
and collectively, the “Units”), with each Unit consisting of one share of our Class B Common Stock and a warrant to
purchase our Class B Common Stock (each a “Warrant” and collectively, the “Warrants”). Each
Warrant entitles the holder to purchase one share of Class B Common Stock at an initial exercise price of $12.50. The Warrants
are exercisable immediately and will expire five years from the date of issuance. There is no established public trading market
for the Warrants, and we do not expect a market to develop. In addition, we do not intend to apply for a listing of the warrants.
Our Units are being offered by our executives on a best-efforts
basis, which means there is no commitment on the part of anyone to purchase any of the Units. No sales commissions will be paid
to our executive officers in connection with this offering. In the event that executive officers are unable to raise the full
amount of the offering from potential investors, we may decide to engage FINRA members in order to assist us in raising any remaining
capital under the offering. In the event we engage FINRA members, we expect to pay sales commissions of up to 10% of the gross
offering proceeds from their sale of the offered Units.
Any funds received as a part of this offering will be immediately
deposited into our bank account and be available for our use. We have not made any arrangements to place funds in an escrow, trust
or similar account for general business purposes. If we fail to raise enough capital to meet our business objectives, investors
may lose their entire investment and will not be entitled to a refund.
The offering shall terminate on the earlier of (i) the date
when the sale of all Units registered under the Registration Statement of which this Prospectus is part is completed, (ii) when
the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of
the sale of all Units, or (iii) December 31, 2015.
Our Class B Common Stock is currently quoted on the OTCQB
under the symbol “RMRI”. No shares of our Class B Common Stock have publicly traded on the OTCQB to date and there
is no public market for our Units. The offering price of the Units will be $10.00 per Unit. For factors considered in determining
the public offering price of the Units offered hereby, see “Determination of Offering Price.”
As of September 4, 2015, the Company effected a one
for twenty reverse split of all of its authorized and issued and outstanding shares of Class B Common Stock. The information
presented in this prospectus, including the number of units offered hereby, takes into account the aforementioned reverse
split.
We are an “emerging growth company” under applicable
Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements.
Investing in our Units involves a high degree of
risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors”
beginning on page 8 of this prospectus and under similar headings in the other documents that are incorporated by reference
into this prospectus.
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Proceeds to Company
after Expenses ($) |
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Offering
Price
($) |
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Expenses(1) |
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If 10% of
Units are
sold |
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If 50% of
Units are
sold |
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If 75% of
Units are
sold |
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If 100% of
Units are
sold |
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Per Unit |
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Total |
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7,000,000 |
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155,000 |
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545,000 |
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3,345,000 |
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5,095,000 |
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6,845,000 |
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(1) Expenses include legal and accounting fees in connection
with this offering.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus.
Any representation to the contrary is a criminal offense.
The date of this prospectus is October 30,
2015.
Table of
Contents
You should rely only on the information
contained or incorporated by reference in this prospectus and in any free writing prospectus that we have authorized for use in
connection with this offering. We have not authorized any other person to provide you with additional or different information.
If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell
these securities in any jurisdiction where an offer or sale is not permitted. Our business, financial condition, results of operations
and prospects may have changed since that date.
Some of the industry and market
data contained in or incorporated by reference in this prospectus are based on independent industry publications or other publicly
available information, while other information is based on our internal sources. Although we believe that each source is reliable
as of its respective date, the information contained in such sources has not been independently verified, and neither we nor the
underwriters can assure you as to the accuracy or completeness of this information.
As used throughout this prospectus, the terms “the
Company”, “RMRI”, or “we,” “our” and “us” means RMR Industrials Inc. and
its wholly-owned subsidiaries, RMR IP Inc., and United States Talc and Minerals, Inc., unless the context otherwise requires.
All trade names used in this
prospectus are either our registered trademarks or trademarks of their respective holders. Throughout this prospectus, we refer
to various trademarks, service marks and trade names that we use in our business. We also have a number of other registered trademarks,
service marks and pending applications relating to our products. Other trademarks and service marks appearing in this prospectus
are the property of their respective holders.
SUMMARY
This summary highlights certain information contained
elsewhere in this prospectus or incorporated by reference herein. This summary does not contain all of the information that
you should consider before investing in our Units. You should read the entire prospectus carefully, including the risks
related to our business and investing in our Units discussed under “Risk Factors” beginning on page 8 and the
other information and documents incorporated by reference into this prospectus, including our consolidated financial
statements and related notes thereto.
Overview
We are a development stage company currently focusing on
developing, and commercializing key intellectual property rights across industrial and natural resource related assets. Our business
operations focus on developing potential licensing opportunities, joint ventures and strategic alliances which leverage our management
team’s industrial operations experience.
Current Operations
We have acquired proprietary intellectual property rights,
including patents to increase oil and gas production. This package of intellectual property, licensed from Colorado School of
Mines, which specializes in minerals technology innovation, occurs through modified injection processes. Our active operations
have primarily focused on developing commercial opportunities and product line extensions for this industrial based intellectual
property. The enhanced oil recovery process patents include multiple configurations varying the cycles of low-salinity water,
carbon dioxide and pumping pressure. Our rights correspond to issued US patent 7,662,275 and US patent applications 61/946062,
61/941869 and 61/950500.
Our current intellectual property portfolio is focused on
industrial mineral advancement. Specifically, the extraction of hydrocarbons from reservoirs. Our current sales and marketing
effort is dedicated to multiple leading industry operators and service providers, such as oilfield and well completion providers,
through licensing and joint venture efforts. Our business methodology is that the academic and corporate cultures provide an environment
to source appealing technological and process improvements but lack the teams to properly implement and monetize. Further, we
believe our affiliations, capabilities and strong relationships within the academic, corporate and industrial sectors is an advantage
to complement our current development plans. Our management team has over 15 years of experience licensing intellectual property
from leading universities and corporations.
Our strategy is to develop and commercialize the intellectual
property rights we currently hold which we believe as a stand-alone strategy provides meaningful business opportunity. We also
endeavor to own, operate, produce and distribute certain industrial minerals, including but are not limited to: feldspar, talc,
mica, bentonite, vermiculite, frac sand, aggregates, antimony, barite, silica, ball clays, graphite, sulfur and zeolite. In addition,
we also plan to own, operate, produce and distribute ocertain chemicals, including but not limited to: glycols, ethanol mines,
methanol, antifreeze, biocides, corrosion inhibitors, demulsifiers, desalting compounds and dispersants. The experienced
management team of RMR Industrials Inc. brings a multi-cycle successful track record of developing and licensing key intellectual
property rights and discovering, financing and operating off-market natural resource businesses. Our current intellectual property
portfolio provides significant synergies in this growth strategy.
Our wholly-owned subsidiary, RMR IP Inc. (“RMR IP”)
was incorporated on October 15, 2014 as a Nevada corporation and was formed to acquire and consolidate complimentary industrial
commodity assets through capitalizing on the volatile oil market, down cycles in commodity markets, and other ancillary opportunities.
On November 17, 2014, Rocky Mountain
Resource Holdings, Inc. (the “RMRH”) became our majority shareholder by acquiring 5,200,000 shares of our common stock
(the “Shares”), or 69.06% of the issued and outstanding shares of our common stock, pursuant to stock purchase agreements
with Messrs. El Maraana and Salah Blal, our former officers and directors. The Shares were acquired for an aggregate purchase
price of $357,670.
On December 8, 2014, we changed
our name to “RMR Industrials, Inc.” in connection with the change in our business plan.
On February 26, 2015, we
amended and restated our articles of incorporation to authorize the issuance of 2,100,000,000 common shares,
2,000,000,000 shares of which shall be Class A Common Stock, par value $0.001 per share, 100,000,000 (post reverse split)
shares of which shall be Class B Common Stock, par value $0.001 per share, and 50,000,000 shares of which shall be Preferred
Stock, par value $.001 per share.
On February
27, 2015, we entered into and consummated a merger transaction pursuant to an Agreement and Plan of Merger (the “Merger
Agreement”) by and among the Company, OLYB Acquisition Corporation, a Nevada corporation and wholly-owned subsidiary of
the Company (“Merger Sub”) and RMR IP. In accordance with the terms of Merger Agreement, on the Closing Date, Merger
Sub merged with and into RMR IP (the “Merger”), with RMR IP surviving the Merger as our wholly-owned subsidiary.
As
of September 4, 2015, the Company effected a one for twenty reverse split of all of its authorized and issued and outstanding
shares of Class B Common Stock.
In October 2015, we received
$1.4 million in shareholder advances for payment of anticipated expenses associated with our offering.
Target Markets
We plan to develop, acquire and consolidate complementary
industrial commodity assets and intellectual property through capitalizing on the volatile oil markets, down cycles in commodity
markets, and other ancillary opportunities. Our expertise in developing and commercializing intellectual property rights will
focus on academic and university partnerships. Typically these assets are the core manufacturer and supplier of specific bulk
commodity minerals, chemicals and petrochemicals distributed to the global manufacturing industry.
Potential Competitive Strengths
We believe our process to discover, finance, develop and
operate unique natural resources, intellectual property and industrial assets provides us a competitive advantage to achieve critical
mass through the development and acquisition of high-growth assets. Our principals have extensive experience in investing in and
operating natural resource assets. We believe our potential competitive strengths to be the following:
| · | Application
of Intellectual Property. We have a background in engineering, operations,
finance and general management all within the natural resource sectors. |
| · | Public
Company Status - Our status as a public company will make us an attractive
business partner to other natural resource related companies, and will provide greater
access to capital and an increased company profile. |
| · | Management
Operating and Investing Experience - The members of our management team have
developed a broad international network of contacts and corporate relationships which
we believe will serve as a useful source of investment opportunities. |
Growth Strategy
We plan to organically develop multiple intellectual property
assets within our fields’ of expertise. We believe the natural resource sectors have ample gaps in operations, optimization,
and personnel management and the intellectual property we develop will help enable potential licensees to better execute in those
areas providing key cost savings or revenue growth. We intend to purchase and develop our own proprietary assets to monetize our
own physical resource assets but also license them to producers and industrial consumers in the relevant sectors.
In furtherance of seeking assets to complement our development
plan, on June 26, 2015, our wholly-owned subsidiary, United States Talc and Minerals Inc. (“USTM”), entered into a
non-binding financing arrangement with Auramet International LLC (“Auramet”), whereby subject to certain conditions,
including but not limited to, the approval of a satisfactory acquisition candidate, technical due diligence and an executable
acquisition purchase agreement, Auramet will loan USTM the principal amount of $12,000,000. The maturity date of such note
will be on the second anniversary of the closing and such note will accrue interest at a rate of 15% annually. The note
shall be secured by a first priority lien on all the assets of USTM. We have also entered into a non-binding mezzanine financing
arrangement with Auramet, whereby subject to meeting certain conditions, Auramet will loan USTM an additional principal amount
of $5,000,000. The maturity date of such note will be on the second anniversary of the closing and such note will accrue interest
at a rate of 15% annually. The note shall be secured by a second priority lien on certain assets of USTM. There are no assurances
that USTM will enter into binding loan agreements with Auramet, and upon terms that are ultimately satisfactory to us. Any such
failure will result in USTM and us having to seek financing from other potential sources.
Our asset acquisition strategy focuses on the formation,
development and growth of scalable natural resource enterprises through leveraging our deep industry relationships to facilitate
off-market acquisitions of private assets, including family-owned assets, in the midst of both assets and generational transitions.
We plan to create consistent and predictable cash flows from our various businesses alongside new and accretive areas of growth,
the combination of which we believe creates a lower risk environment.
To seek further growth, we will develop and license technology
enablers, which we believe can result in exponential growth in markets with linear growth patterns tied to cyclical demands for
products and services. Technology enablers include advances in enterprise systems in information technology, optimization of equipment
and man hours and new applications and/or modification of materials for new material applications. The robustness of today’s
information technology systems permit a reasonable capital expense to manage dynamic sales channels while simultaneously introducing
our product and service offerings into the supply chains of the world’s top industrial companies. We intend to capture market
share and provide services to the largest customers in the global manufacturing and supply industries. With the use of these technological
advances, our goal is to eliminate unplanned down time at customer facilities, therefore increasing efficiency and profit margins.
Summary
of Risk Factors
Our business is subject to numerous risks, which are described
in the section entitled “Risk Factors” immediately following this prospectus summary on page 8. You should carefully
consider these risks before making an investment. In particular, the following considerations, among others, may offset our potential
competitive strengths or have a negative effect on our growth strategy, which could cause a decline in the price of our Units
and result in a loss of all or a portion of your investment:
| · | We
have incurred losses in prior periods and may incur losses in the future. |
| · | Our
future is dependent upon our ability to obtain financing. If we do not obtain such financing,
we may have to cease our activities and investors could lose their entire investment. |
| · | Our
cash flows and capital resources may be insufficient to make required payments under
the management services agreement with Industrial Management LLC. |
| · | Because
we may never earn revenues from our operations, our business may fail and investors may
lose all of their investment in our Company. |
| · | Our
limited operating history makes evaluating our business and future prospects difficult,
and may increase the risk of your investment. |
| · | If
we are unable to identify, fund and execute new acquisitions, we will not be able to
execute a key element of our business strategy. |
| · | Loss
of key members of our management could disrupt our business. |
| · | The
industries in which we compete are highly competitive, and we may not be able to compete
effectively with our competitors that have greater financial resources, which could have
a material adverse effect on our business, results of operations and financial condition. |
| · | Increases
in the price of our primary raw materials may decrease our profitability and adversely
affect our liquidity, cash flow, financial condition and results of operations. |
| · | The
Company will operate in a global, competitive environment which gives rise to operating
and market risk exposure. |
| · | Disruptions
in production at our manufacturing facilities, both planned and unplanned, may have a
material impact on our business, results of operations and/or financial condition. |
| · | We
will expend large amounts of money for environmental compliance in connection with our
operations. |
| · | We
are subject to environmental clean-up costs, fines, penalties and damage claims that
have been and continue to be costly. |
| · | Increased
concerns regarding the safe use of chemicals in commerce and their potential impact on
the environment have resulted in more restrictive regulations from local, state and federal
governments and could lead to new regulations. |
| · | We
work with dangerous materials that can injure our employees, damage our facilities and
disrupt our operations. |
| · | We
may be subject to claims of infringement of the intellectual property rights of others,
which could hurt our business. |
Company Information
Our principal executive offices
are currently located at RMR Industrials Inc., 9595 Wilshire Blvd., Suite 310, Beverly Hills, California 90212, and our telephone
number is (310) 409-4113. Information regarding RMR Industrials’ operations may be found at www.rmrholdings.com.
Information contained in or accessible through this website does not constitute part of this prospectus.
We are an emerging growth company,
as that term is defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For so long as we are an emerging
growth company, we will not be required to:
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have an auditor report on our internal controls over financial
reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; |
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comply with new or revised accounting standards until they would apply to
private companies, although we are choosing to “opt out” of this exemption and will comply with such standards
as required when they are adopted; |
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comply with any requirement that may be adopted by the Public Company Accounting
Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional
information about the audit and the financial statements (i.e., an auditor discussion and analysis); |
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submit certain executive compensation matters to shareholder advisory votes,
such as “say-on-pay”, “say-on-frequency” and “say-on-golden parachute;” and |
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disclose certain executive compensation related items such as the correlation
between executive compensation and performance and comparisons of the Chief Executive’s compensation to median employee
compensation. |
We will remain an “emerging
growth company” until the last day of our fiscal year following the fifth anniversary of the date of our first sale of common
equity securities pursuant to an effective registration under the Securities Act, or until the earliest of (i) the last day of
the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large
accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value
of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed
second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding
three year period.
We also qualify as a “smaller
reporting company,” as defined by Regulation S-K under the Securities Act of 1933, as amended, or the “Securities
Act.” As such, we also are exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and
also are subject to less extensive disclosure requirements regarding executive compensation in our periodic reports and proxy
statements. We will continue to be deemed a smaller reporting company until our public float exceeds $75,000,000 on the last day
of our second fiscal quarter in any fiscal year.
Summary of
the Offering
The offering: |
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Self-underwritten, best-efforts offering
with no minimum subscription requirement.
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Securities we are offering: |
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700,000 Units, with each Unit consisting
of one share of Class B Common Stock and one warrant to purchase one share of Class B Common Stock.
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Class B Common Stock outstanding immediately
after the offering:
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1,533,459 |
Warrants outstanding immediately after
the offering:
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700,000 Warrants included as part of the
Units offered hereby.
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Price per Unit: |
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$10.00
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Duration of Offering: |
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The offering shall terminate on
the earlier of (i) the date when the sale of all Units registered under the Registration Statement of which this Prospectus
is part is completed, (ii) when the Board of Directors decides that it is in the best interest of the Company to terminate
the offering prior the completion of the sale of all Units, or (iii) December 31, 2015. |
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Terms of Warrants issued as a part
of the offering: |
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Exercise price – $12.50
Exercisability – each Warrant is
exercisable for one share of Class B Common Stock, subject to adjustment as described herein.
Exercise period – each Warrant will
be immediately exercisable on the date of issuance and will expire five years thereafter or earlier upon redemption.
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Redemption of Warrants issued as
a part of the offering: |
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We may call the Warrants for redemption
at a price of $0.01 for each Warrant at any time while the Warrants are exercisable, provided, however, that (a) (i) the last
reported sales price of the Class B Common Stock is equal to or greater than 125% of the then applicable exercise price on
the third business day prior to the notice of redemption, and (ii) the Class B Common Stock is quoted on or listed for trading
on either The New York Stock Exchange, The Nasdaq Global Market, The NASDAQ Capital Market, The Nasdaq Global Select Market
or the NYSE MKT, or (b) the last reported sales price of the Class B Common Stock has been equal to or greater than 125% of
the then applicable exercise price for each trading day in the 20-trading-day period ending on the third business day prior
to the notice of redemption to the registered holders, and in each case, there is an effective registration statement covering
the shares of Class B Common Stock issuable upon exercise of the Warrants current and available. |
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If the foregoing conditions are satisfied
and we call the Warrants for redemption, each Warrant holder will then be entitled to exercise his or her Warrant prior
to the date scheduled for redemption. However, there can be no assurance that the price of the Class B Common Stock will
exceed the call price or the Warrant exercise price after the redemption call is made.
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Risk Factors: |
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See “Risk Factors”
beginning on page 8 of this prospectus and under similar headings in the other documents that are incorporated by reference
into this prospectus for a discussion of factors you should consider before investing in our Units. |
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OTCQB symbol: |
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“RMRI” (Class
B Common Stock) |
Summary Financial Data
The following tables set forth our summary financial data
for the periods presented and should be read together with “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and our financial statements and related notes appearing elsewhere in this prospectus. The summary
financial data for the period from October 15, 2014 (inception) through January 31, 2015 was derived from our audited financial
statements included elsewhere in this prospectus. We have also included data from our unaudited financial statements for the three
months ended June 30, 2015. Our historical results presented below are not necessarily indicative of the financial results that
may be achieved in any future period.
Summary of Statement of Operations | |
October 15,
2014 (inception)
through January
31, 2015 | | |
Three Months
Ended June
30, 2015 | |
Revenues | |
$ | - | | |
$ | - | |
Cost of Goods Sold | |
$ | - | | |
$ | - | |
Selling, General and Administrative Expenses | |
$ | 407,521 | | |
$ | 537,248 | |
Total Other income (expense) | |
$ | - | | |
$ | - | |
Net loss | |
$ | (407,521 | ) | |
$ | (537,248 | ) |
Net loss per common share (basic and diluted) | |
$ | (0.50 | ) | |
$ | (0.01 | ) |
Weighted average number of shares outstanding | |
| 822,222 | | |
| 51,930,000 | |
Summary of Financial Position | |
October 15,
2014 (inception)
Through January
31, 2015 | | |
Three Months
Ended June
30, 2015 (Actual) | |
Cash | |
$ | 1,767 | | |
$ | 4,798 | |
Total current assets | |
$ | 1,767 | | |
$ | 4,798 | |
Total assets | |
$ | 14,230 | | |
$ | 6,287 | |
Total current liabilities | |
$ | 419,984 | | |
$ | 1,387,944 | |
Stockholders’ equity (deficit) | |
$ | (405,754 | ) | |
$ | (1,381,657 | ) |
Total liabilities and stockholders’ deficit | |
$ | 14,230 | | |
$ | 6,287 | |
RISK FACTORS
Investing in our securities involves risks. Before making
an investment in our Company, you should carefully consider the risk factors set forth below, which contain important information
about us and our business. You should also consider any other information included in this prospectus and any prospectus supplement
and any other information that we have incorporated by reference. Any of these risks, as well as other risks and uncertainties
not known to us or that we believe to be immaterial, could harm our financial condition, results of operations or cash flows.
We cannot assure you of a profit or protect you against a loss on the shares of our common stock that you purchase in our company.
Risks Related to Our Business
and Industry
We have incurred losses in prior
periods and may incur losses in the future.
We cannot be assured that we can
achieve or sustain profitability on a quarterly or annual basis in the future. Our operations are subject to the risks and competition
inherent in the establishment of a business enterprise. There can be no assurance that future operations will be profitable. We
may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us.
Our future is dependent upon
our ability to obtain financing. If we do not obtain such financing, we may have to cease our activities and investors could lose
their entire investment.
There is no assurance that we will
operate profitably or generate positive cash flow in the future. We will require additional financing in order to proceed with
our business plan and acquire existing businesses that manufacture and distribute chemicals and minerals. We will also require
additional financing to sustain our business operations if we are not successful in earning revenues. We may not be able to obtain
financing on commercially reasonable terms or terms that are acceptable to us when it is required. Our future is dependent upon
our ability to obtain financing, such as the financial arrangements we are negotiating with Auramet. If we do not obtain such
financing, our business could fail and investors could lose their entire investment.
Because we may never earn revenues
from our operations, our business may fail and investors may lose all of their investment in our Company.
We are a company with a limited
operating history and our future profitability is uncertain. We have yet to generate positive earnings and there can be no assurance
that we will ever operate profitably. If our business plan is not successful and we are not able to operate profitably, then our
stock may become worthless and investors may lose all of their investment in our Company.
Prior to obtaining a large market
share for our products, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore
expect to incur significant losses into the foreseeable future. We recognize that, if we are unable to generate significant revenues
from the sale of our products in the future, we will not be able to earn profits or continue operations. There is no history upon
which to base any assumption as to the likelihood that we will prove successful, and we can provide no assurance that we will
generate any revenues or ever achieve profitability. If we are unsuccessful in addressing these risks, our business will fail
and investors may lose all of their investment in our Company.
Our limited operating history
makes evaluating our business and future prospects difficult, and may increase the risk of your investment.
Our limited operating history may
not provide a meaningful basis on which to evaluate our business. We will continue to encounter risks and difficulties frequently
experienced by companies at a similar stage of development, including our potential failure to:
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expand our product offerings and maintain
the high quality of products offered; |
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manage our expanding operations, including
the integration of any future acquisitions; |
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obtain sufficient working capital to support our
expansion and to fill customers’ orders on time; |
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maintain adequate control of our expenses; |
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implement our product development, marketing,
sales, and acquisition strategies and adapt and modify them as needed; and |
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anticipate and adapt to changing conditions in
the markets in which we operate as well as the impact of any changes in government regulation, mergers and acquisitions involving
our competitors, technological developments, and other significant competitive and market dynamics. |
If we are not successful in addressing
any or all of these risks, then our business may be materially and adversely affected.
If we are unable to identify,
fund and execute new acquisitions, we will not be able to execute a key element of our business strategy.
Our strategy is to grow primarily
by acquiring additional businesses and product lines. We cannot give any assurance that we will be able to identify, acquire or
profitably manage additional businesses and product lines. Financing for acquisitions may not be available, or may be available
only at a cost or on terms and conditions that are unacceptable to us. Further, acquisitions may involve a number of special risks
or effects, including diversion of management’s attention, failure to retain key acquired personnel, unanticipated events
or circumstances, legal liabilities, impairment of acquired intangible assets and other one-time or ongoing acquisition-related
expenses. Some or all of these special risks or effects could have a material adverse effect on our financial and operating results.
In addition, we cannot assure you that acquired businesses or product lines, if any, will achieve anticipated revenues and earnings.
In addition, we may not be able
to successfully or profitably integrate, operate, maintain and manage our newly acquired operations or their employees. We may
not be able to maintain uniform standards, controls, procedures and policies, which may lead to operational inefficiencies.
Loss of key members of our management
could disrupt our business.
We depend on the continued employment
and performance of our senior executives and other key members of management. If any of these individuals resigns or becomes unable
to continue in his or her present role and is not adequately replaced, our business operations and our ability to implement our
growth strategies could be materially disrupted. We generally do not have employment agreements with, and we do not maintain any
"key person" life insurance for, any of our executive officers.
The industries in which we compete
are highly competitive, and we may not be able to compete effectively with our competitors that have greater financial resources,
which could have a material adverse effect on our business, results of operations and financial condition.
The industries in which we operate
are highly competitive. Among our competitors are some of the world's largest chemical companies that have their own raw material
resources. Changes in the competitive landscape could make it difficult for us to retain our leadership position in various products
and markets throughout the world. In addition, some of the companies with whom we compete may be able to produce products more
economically than we can. Furthermore, most of our competitors have greater financial resources, which may enable them to invest
significant capital into their businesses, including expenditures for research and development. Some of our competitors are owned
or partially owned by foreign governments which may provide a competitive advantage to those competitors.
Increases in the price of our
primary raw materials may decrease our profitability and adversely affect our liquidity, cash flow, financial condition and results
of operations.
The prices we pay for raw materials
in our businesses may increase significantly, and we may not always be able to pass those increases through to our customers fully
and timely. In the future, we may be unable to pass on increases in our raw material costs, and raw material price increases may
erode the profitability of our products by reducing our gross profit. Price increases for raw materials may also increase our
working capital needs, which could adversely affect our liquidity and cash flow. For these reasons, we cannot assure you that
raw material cost increases in our businesses would not have a material adverse effect on our financial condition and results
of operations.
The Company will operate in a
global, competitive environment which gives rise to operating and market risk exposure.
The Company expects to sell a broad
range of products and services in a competitive, global environment, and to compete worldwide for sales on the basis of product
quality, price, technology and customer service. Increased levels of competition could result in lower prices or lower sales volume,
which could have a negative impact on the Company's results of operations.
Economic conditions around the world,
and in certain industries in which the Company does business also impact sales prices and volume. As a result, market uncertainty
or an economic downturn in the geographic areas or industries in which we sells our products could reduce demand for these products
and result in decreased sales volume, which could have a negative impact on our results of operations.
In addition, volatility and disruption
of financial markets could limit customers' ability to obtain adequate financing to maintain operations, which could result in
a decrease in sales volume and have a negative impact on our results of operations. The Company's global business operations may
also give rise to market risk exposure related to changes in foreign exchange rates, interest rates, commodity prices and other
market factors such as equity prices.
Disruptions in production at
our manufacturing facilities, both planned and unplanned, may have a material impact on our business, results of operations and/or
financial condition.
Manufacturing facilities in our
industry are subject to planned and unplanned production shutdowns, turnarounds and outages. Unplanned production disruptions
may occur for external reasons including natural disasters, weather, disease, strikes, transportation interruption, government
regulation, political unrest or terrorism, or internal reasons, such as fire, unplanned maintenance or other manufacturing problems.
Alternative facilities with sufficient capacity may not be available, may cost substantially more or may take a significant time
to increase production or qualify with our customers, each of which could negatively impact our business, results of operations
and/or financial condition. Long-term production disruptions may cause our customers to seek alternative supply which could further
adversely affect our profitability.
We will expend large amounts
of money for environmental compliance in connection with our operations.
When we become a manufacturer and
distributor of minerals and chemicals, we will be subject to stringent regulations under numerous U.S. federal, state, local and
foreign environmental, health and safety laws and regulations relating to the generation, storage, handling, discharge, disposition
and stewardship of hazardous wastes and other materials. We will expend substantial funds to comply with such laws and regulations
and have established a policy to minimize our emissions to the environment. Nevertheless, legislative, regulatory and economic
uncertainties (including existing and potential laws and regulations pertaining to climate change) make it difficult for us to
project future spending for these purposes and if there is an acceleration in new regulatory requirements, we may be required
to expend substantial additional funds to remain in compliance.
We are subject to environmental
clean-up costs, fines, penalties and damage claims that have been and continue to be costly.
We are subject to lawsuits and regulatory
actions, in connection with current and former operations (including divested businesses), for breaches of environmental laws
that seek clean-up or other remedies. We are also subject to lawsuits and investigations by public and private parties under various
environmental laws in connection with our current and former operations in various states, including with respect to off-site
disposal at facilities where we have been identified as a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, commonly referred to as CERCLA. We are also subject to similar risks
outside of the U.S.
Increased concerns regarding
the safe use of chemicals in commerce and their potential impact on the environment have resulted in more restrictive regulations
from local, state and federal governments and could lead to new regulations.
Concerns regarding the safe use
of chemicals in commerce and their potential impact on health and the environment reflect a growing trend in societal demands
for increasing levels of product safety and environmental protection. These concerns could manifest themselves in stockholder
proposals, preferred purchasing and continued pressure for more stringent regulatory intervention. These concerns could also influence
public perceptions, the viability of the Company's products, the Company's reputation and the cost to comply with regulations.
In addition, terrorist attacks and natural disasters have increased concerns about the security and safety of chemical production
and distribution. These concerns could have a negative impact on the Company's results of operations.
Local, state and federal governments
continue to propose new regulations related to the security of chemical plant locations and the transportation of hazardous chemicals,
which could result in higher operating costs.
We work with dangerous materials
that can injure our employees, damage our facilities and disrupt our operations.
Some of our operations involve the
handling of hazardous materials that may pose the risk of fire, explosion, or the release of hazardous substances. Such events
could result from terrorist attacks, natural disasters, or operational failures, and might cause injury or loss of life to our
employees and others, environmental contamination, and property damage. These events might cause a temporary shutdown of an affected
plant, or portion thereof, and we could be subject to penalties or claims as a result. A disruption of our operations caused by
these or other events could have a material adverse effect on our results of operations.
We may be subject to claims of
infringement of the intellectual property rights of others, which could hurt our business.
From time to time, we expect to
face infringement claims from our competitors or others alleging that our processes or products infringe on their proprietary
technologies. Any claims that our products or processes infringe the intellectual property rights of others, regardless of the
merit or resolution of the claims, could cause us to incur significant costs in responding to, defending and resolving the claims,
and may divert the efforts and attention of our management and technical personnel from our business. If we are found to be infringing
on the proprietary technology of others, we may be liable for damages, and we may be required to change our processes, redesign
our products, pay others to use the technology or stop using the technology or producing the infringing product. Even if we ultimately
prevail, the existence of the lawsuit could prompt our customers to switch to products that are not the subject of infringement
suits.
We are engaged in advanced negotiations in
connection with two potential acquisitions. If we do not complete these transactions, our business and stock price may suffer.
We are engaged in advanced negotiations
in connection with the potential acquisition of a producer and supplier of industrial mineral products for the ceramic, paint,
plastic, roofing, composite wood and agricultural industries and a company that formulates production, drilling and specialty
chemicals while also providing contract blending and reclamation services to the oil and gas industry.
Completion of these transactions
is subject to the drafting, negotiation and consummation of definitive transaction agreements which will include extensive representations,
warranties, covenants, indemnities and certain conditions to the closing of such transactions, including obtaining the relevant
regulatory approvals and having sufficient financing in place. We cannot assure you that we will be able to complete the proposed
transactions on the proposed terms, if at all.
The proposed transactions are part
of our ongoing efforts to implement our business plan by acquiring industrial commodity businesses. However, if we do not complete
the proposed acquisitions, we may not achieve the returns that we seek from the proceeds of this offering to the extent, if any,
that we intend to use any net proceeds to acquire such assets or companies. We also cannot predict how the announcement of the potential
acquisitions, or the completion or non-completion of the transactions on the contemplated terms, will affect the trading price
of our common stock.
Risks Relating To Our Common
Stock and Our Status as a Public Company
Shares of our common stock that
have not been registered under the Securities Act of 1933, as amended, regardless of whether such shares are restricted or unrestricted,
are subject to resale restrictions imposed by Rule 144, including those set forth in Rule 144(i) which apply to a “shell
company.” In addition, any shares of our common stock that are held by affiliates, including any received in a registered
offering, will be subject to the resale restrictions of Rule 144(i).
Pursuant to Rule 144 of the Securities
Act of 1933, as amended (“Rule 144”), a “shell company” is defined as a company that has no or nominal
operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any
amount of cash and cash equivalents and nominal other assets. As such, we may be deemed a “shell company” pursuant
to Rule 144 prior to the Merger, and as such, sales of our securities pursuant to Rule 144 are not able to be made until a period
of at least twelve months has elapsed from the date on which our Current Report on Form 8-K is filed with the Commission reflecting
our status as a non- “shell company.” Therefore, any restricted securities we sell in the future or issue to consultants
or employees, in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities
are registered with the Commission and/or until a year after the date of the filing of our Current Report on Form 8-K and we have
otherwise complied with the other requirements of Rule 144. As a result, it may be harder for us to fund our operations and pay
our employees and consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through
the sale of debt or equity securities unless we agree to register such securities with the Commission, which could cause us to
expend additional resources in the future. Our previous status as a “shell company” could prevent us from raising
additional funds, engaging employees and consultants, and using our securities to pay for any acquisitions, which could cause
the value of our securities, if any, to decline in value or become worthless. Lastly, any shares held by affiliates, including
shares received in any registered offering, will be subject to the resale restrictions of Rule 144(i).
We will be required to incur
significant costs and require significant management resources to evaluate our internal control over financial reporting as required
under Section 404 of the Sarbanes-Oxley Act, and any failure to comply or any adverse result from such evaluation may have an
adverse effect on our stock price.
As a smaller reporting company as
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, we are required to evaluate our internal control
over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Section 404 requires
us to include an internal control report with the Annual Report on Form 10-K. This report must include management’s assessment
of the effectiveness of our internal control over financial reporting as of the end of the fiscal year. This report must also
include disclosure of any material weaknesses in internal control over financial reporting that we have identified. Failure to
comply, or any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and
have an adverse effect on the trading price of our equity securities. Management believes that its internal controls and procedures
are currently effective to detect the inappropriate application of U.S. GAAP rules.
Achieving continued compliance with
Section 404 may require us to incur significant costs and expend significant time and management resources. We cannot assure you
that we will be able to fully comply with Section 404 or that we and our independent registered public accounting firm would be
able to conclude that our internal control over financial reporting is effective at fiscal year end. As a result, investors could
lose confidence in our reported financial information, which could have an adverse effect on the trading price of our securities,
as well as subject us to civil or criminal investigations and penalties. In addition, our independent registered public accounting
firm may not agree with our management’s assessment or conclude that our internal control over financial reporting is operating
effectively.
Our
founders, who also comprise a majority of the Company’s management team, have and will have after this offering significant
ownership of the Company, including a majority of our voting stock giving them the ability to control most, if not all, Company
decisions.
Assuming the maximum amount of Units offered hereunder are
sold in this offering, our directors and executive officers will still own, directly or indirectly, approximately 21% of the Company’s
aggregate outstanding capital stock and approximately 57% of the Company Class A Common Stock (the Company’s voting capital
stock) on their own, effectively giving them voting control on most, if not all, decisions . The voting rights represented
by these share holdings provide our management with a sufficient number of voting rights for all practical purposes to effectively
control the election of our directors, cause us to engage in transactions with affiliated entities, cause or restrict the sale
or merger of the Company, and effect such other matters as may be presented for a vote of our shareholders. Such concentration
of ownership and control could have the effect of delaying, deferring or preventing a change in control of the Company even when
such a change of control would be in the best interests of the Company’s other shareholders. Accordingly, investors in this
offering will have little voice in our management decisions and will exercise very little control over us. In addition, the applicable
sections of the Nevada Revised Statutes provide that certain actions must be approved by a specified percentage of shareholders.
In the event that the requisite approval of shareholders is obtained, dissenting shareholders would be bound by such vote. Accordingly,
no persons should purchase any Units unless they are willing to entrust all aspects of control to our management.
The existence of indemnification
rights to our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits
against our directors, officers and employees.
The indemnification obligations
provided in our articles of incorporation and our bylaws to our directors and officers could result in the Company incurring substantial
expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup.
These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for
breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against
our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.
Our stock is categorized as a
penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations which may limit a shareholder’s
ability to buy and sell our stock.
Our stock is categorized as 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) less than US$ 5.00 per share or an exercise price of less than US$ 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 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.
FINRA sales practice requirements
may also limit a shareholder’s ability to buy and sell our stock.
In addition to the “penny
stock” rules described above, 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. The 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 and have an adverse effect on the market for our shares.
To date, we have not paid any
cash dividends and no cash dividends will be paid in the foreseeable future.
We do not anticipate paying cash
dividends on our common stock in the foreseeable future and we may not have sufficient funds legally available to pay dividends.
Even if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends. We presently intend
to retain all earnings for our operations.
If we issue additional shares
in the future, it will result in the dilution of our existing shareholders.
Our articles of incorporation authorize the issuance of
up 2,150,000,000 shares, 2,000,000,000 shares of which are Class A Common Stock, par value $0.001 per share, 100,000,000 shares
of which are Class B Common Stock, par value $0.001 per share, and 50,000,000 shares of which are Preferred Stock, par value $0.001
per share. Our Board of Directors may choose to issue some or all of such shares to acquire one or more companies or properties
and to fund our overhead and general operating requirements. The issuance of any such shares may reduce the book value per share
and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional
shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance
may result in a change of control of our corporation.
We may not qualify to meet listing
standards to list our stock on an exchange.
The SEC approved listing standards
for companies using reverse acquisitions to list on an exchange may limit our ability to become listed on an exchange. We would
be considered a reverse acquisition company (i.e., an operating company that becomes an Exchange Act reporting company by combining
with a shell Exchange Act reporting company) that cannot apply to list on NYSE, NYSE Amex or Nasdaq until our stock has traded
for at least one year on the U.S. OTC market, a regulated foreign exchange or another U.S. national securities market following
the filing with the SEC or other regulatory authority of all required information about the merger, including audited financial
statements. We would be required to maintain a minimum $4 share price ($2 or $3 for Amex) for at least thirty (30) of the sixty
(60) trading days before our application and the exchange’s decision to list. We would be required to have timely filed
all required reports with the SEC (or other regulatory authority), including at least one annual report with audited financials
for a full fiscal year commencing after filing of the above information. Although there is an exception for a firm underwritten
IPO with proceeds of at least $40 million, we do not anticipate being in a position to conduct an IPO in the foreseeable future.
To the extent that we cannot qualify for a listing on an exchange, our ability to raise capital will be diminished.
We are an “emerging growth
company” under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging
growth companies will make our common stock less attractive to investors.
We are an “emerging growth
company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements
of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common
stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result,
there may be a less active trading market for our common stock and our stock price may be more volatile.
In addition, Section 107 of the
JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private
companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.
As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.
We will remain an “emerging
growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we
issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is
held by non-affiliates exceeds $700 million as of any May 30.
Our status as an “emerging
growth company” under the JOBS Act of 2012 may make it more difficult to raise capital as and when we need it.
Because of the exemptions from various
reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition
period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be
difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other
companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry.
If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be
materially and adversely affected.
You should carefully evaluate all
the information in this prospectus, including the risks described in this section and throughout this prospectus. You should rely
only on the information contained in this prospectus in making your investment decision.
If our involvement with the press
release were held by a court to be a violation of the Securities Act of 1933, we could be required to repurchase the shares sold
to purchasers in this offering at the original purchase price, plus statutory interest from the date of purchase, for a period
of one year following the date of the violation.
Risks Associated with this
Offering
There is not now an active market for our securities.
An active trading market for our securities may not develop and the market price for our Class B Common Stock may decline below
the offering price of our Units in this offering.
Although our securities are quoted on the OTCQB, an over-the-counter
quotation system, there has been no public trading of our securities. If a trading market does not develop, purchasers of our
securities may have difficulty selling their shares of Class B Common Stock.
The offering price for our Units in this offering may not
be indicative of prices that will prevail in the open market after this offering. Consequently, you may be unable to sell your
shares of Class B Common Stock at prices equal to or greater than the prices you paid for them, if at all.
If a public trading market for our securities does develop,
the prices at which our securities may trade may be volatile and we expect that they may fluctuate significantly in response to
various factors, many of which are beyond our control. The stock market in general, and securities of small-cap or micro-cap companies,
has experienced extreme price and volume fluctuations in recent years. Continued market fluctuations could result in volatility
in the price at which our securities may trade, which could cause its value to decline. To the extent we seek to raise capital
in the future through the issuance of equity, those efforts could be limited or hindered by low and/or volatile market prices
for our securities.
We do not now, and are not expected
to in the foreseeable future, meet the initial listing standards of the Nasdaq Stock Market or any other national securities exchange.
We presently anticipate that our Class B Common Stock will continue to be quoted on the OTCQB or another over-the-counter quotation
system. In those venues, our stockholders may find it difficult to obtain accurate quotations as to the market value of their
shares of our Class B Common Stock and may find few buyers to purchase their stock and few market makers to support their prices.
An active market for our securities may never develop. As
a result, investors must bear the economic risk of holding their shares of our securities for an indefinite period of time.
Investors
in the offering will realize immediate and substantial dilution.
If
you purchase Units in this offering, you will pay more for your shares than the amounts paid by existing stockholders for
their shares. After giving effect to the sale by us of the 700,000 Units in this offering at a public offering price of
$10.00 per Unit, less sales commissions and estimated offering expenses payable by us, our as adjusted net tangible book
value as of June 30, 2015 would have been approximately $1.66 per share. This represents an immediate increase in net
tangible book value of $6,845,000 per share to existing stockholders and an immediate dilution in the net tangible book value
of $8.34 per share to purchasers in the Units offered in this offering. This will result in a 83.4% dilution for purchasers of
Units in this offering. For a further description of the dilution that purchasers will experience immediately after this
offering, see “Dilution”.
Investors may never receive cash
distributions, which could result in an investor receiving little or no return on his or her investment.
Distributions are payable at the
sole discretion of our board of directors. We do not know the amount of cash that we will generate, if any, once we have more
productive operations. Cash distributions are not assured, and we may never be in a position to make distributions.
There may be additional risks
because the business of RMR Industrials, Inc. became public by means of a reverse merger transaction.
Additional risks may exist because
the business of the Company became a public company through a “reverse merger” transaction. Securities analysts of
major brokerage firms may not provide coverage of the Company following the Merger because there may be little incentive to brokerage
firms to recommend the purchase of our Class B Common Stock. There may also be increased scrutiny by the SEC and other government
agencies and holders of our securities prior to the Merger due to the nature of the transaction, as there has been increased focus
on transactions such as the Merger in recent years.
The sale or availability for sale of substantial amounts
of our Class B Common Stock could adversely affect the market price of our shares of Class B Common Stock.
Sales of substantial amounts of shares of our Class B Common
Stock after the completion of the offering, or the perception that these sales could occur, could adversely affect the market
price of our Class B Common Stock and could impair our future ability to raise capital through common stock offerings.
Additional dilution may result from
the issuance of shares of our capital stock in connection with acquisitions or in connection with other financing efforts. Any
issuance of our Class B Common Stock that is not made solely to then-existing stockholders proportionate to their interests, such
as in the case of a stock dividend or stock split, will result in dilution to each stockholder.
If equity research analysts do
not publish research or reports about our business, or if they issue unfavorable commentary or downgrade our common stock, the
market price of our Class B Common Stock will likely decline.
The trading market for our Class
B Common Stock will rely in part on the research and reports that equity research analysts, over whom we have no control, publish
about us and our business. We may never obtain research coverage by securities and industry analysts. If no securities or industry
analysts commence coverage of our Company, the market price for our Class B Common Stock could decline. In the event we obtain
securities or industry analyst coverage, the market price of our Class B Common Stock could decline if one or more equity analysts
downgrade our common stock or if those analysts issue unfavorable commentary, even if it is inaccurate, or cease publishing reports
about us or our business.
We may choose to redeem our outstanding
Warrants at a time that is disadvantageous to our Warrant holders.
Subject to there being a current
prospectus under the Securities Act with respect to the Warrant Shares, we may redeem the Warrants at any time after the Warrants
become exercisable in whole and not in part, at a price of $0.01 per Warrant, provided, however, that (a) (i) the last reported
sales price of the Class B Common Stock is equal to or greater than 125% of the then applicable exercise price on the third business
day prior to the notice of redemption, and (ii) the Class B Common Stock is quoted on or listed for trading on either The New
York Stock Exchange, The Nasdaq Global Market, The NASDAQ Capital Market, The Nasdaq Global Select Market or the NYSE MKT, or
(b) the last reported sales price of the Class B Common Stock has been equal to or greater than 125% of the then applicable exercise
price for each trading day in the 20-trading-day period ending on the third business day prior to the notice of redemption to
the registered holders.
In addition, we may not redeem
the Warrants unless the Warrant Shares are covered by an effective registration statement from the beginning of the measurement
period through the date fixed for the redemption. Redemption of the Warrants could force the Warrant holders to (i) exercise
the Warrants and pay the exercise price at a time when it may be disadvantageous for the holders to do so, or (ii) accept
the nominal redemption price which, at the time the Warrants are called for redemption, is likely to be substantially less than
the market value of the Warrants.
The Warrants may not have any
value.
The Warrants sold in this offering
will have an exercise price of $12.50 per share and will expire on the fifth anniversary of the date they first become
exercisable. In the event our Class B Common Stock price does not exceed the exercise price of the Warrants during the period
when the warrants are exercisable, the warrants may not have any value.
Holders of our Warrants will
have no rights as a stockholder until they acquire our Class B Common Stock.
Until you acquire shares of our Class B Common Stock upon exercise of your Warrants, you will have
no rights with respect to Warrant Shares. Upon exercise of your Warrants, you will be entitled to exercise the rights of a stockholder
only as to matters for which the record date occurs after the exercise date.
USE OF PROCEEDS
Our net proceeds from the sale of the 700,000 Units we are
offering will be approximately $6,845,000, after deducting the estimated sales commissions and estimated offering expenses payable
by us, and assuming none of the Warrants are exercised for cash.
The following table sets forth the uses of proceeds assuming
the sale of 25%, 50%, 75% and 100%, respectively, of the Units by the Company. Each individual use of proceeds is disclosed
in the order of priority in which any such proceeds will be used. The offering scenarios presented are for illustrative purposes
only, the actual amount of proceeds, if any, may differ. There is no assurance that we will raise the full $7,000,000 as anticipated.
|
|
25% of
Proceeds |
|
|
50% of
Proceeds |
|
|
75%
of
Proceeds |
|
|
100% of
Proceeds |
|
Gross proceeds |
|
$ |
1,750,000 |
|
|
$ |
3,500,000 |
|
|
$ |
5,250,000 |
|
|
$ |
7,000,000 |
|
Registration Costs |
|
$ |
155,000 |
|
|
$ |
155,000 |
|
|
$ |
155,000 |
|
|
$ |
155,000 |
|
Net proceeds |
|
$ |
1,595,000 |
|
|
$ |
3,345,000 |
|
|
$ |
5,095,000 |
|
|
$ |
6,845,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Use of Proceeds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions |
|
$ |
1,355,750 |
|
|
$ |
2,843,250 |
|
|
$ |
4,330,750 |
|
|
$ |
5,818,250 |
|
General Working Capital |
|
$ |
239,250 |
|
|
$ |
501,750 |
|
|
$ |
764,250 |
|
|
$ |
1,026,750 |
|
MARKET FOR
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our Class B Common Stock is currently quoted on the OTCQB
under the symbol “RMRI”. No shares of Class B Common Stock have traded on the OTCQB to date. We do not intend to apply
for a listing of either the Units or the Warrants.
Holders
As of October 7, 2015, there were 50 holders of record of
our Class B Common Stock, not including any shareholders holding shares in nominee or “street name” and 3 holders
of record of our Class A Common Stock.
Securities Authorized for Issuance Under Equity Compensation
Plans
On February 26, 2015, our Board of Directors and our stockholders
approved and adopted the RMR Industrials Inc. 2015 Equity Incentive Plan (the “Plan”).
The Plan permits us to grant a variety of forms of awards, including
stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other
stock based awards, to allow us to adapt our incentive compensation program to meet our needs. The number of shares of our common
stock that may be issued under the Plan to employees, directors and/or consultants in such awards is currently 778,950 shares.
Our Board of Directors currently serves as the administrator of the Plan. As of June 30, 2015, no securities have been issued under
the Plan.
DETERMINATION
OF OFFERING PRICE
Before this offering, no Units have publicly traded. The
public offering price of the Units has been determined arbitrarily by us. In determining the number of Units to be offered
and the offering price, we took into consideration our cash on hand and the amount of money we would need to implement our business
plan. Accordingly, the offering price should not be considered an indication of the actual value of the securities.
Such prices are subject to change as a result of market conditions and other factors, and we cannot assure you that the Units
can be resold at or above their public offering prices.
DIVIDEND
POLICY
We plan to retain any earnings for
the foreseeable future for our operations. We have never paid any dividends on our common stock and do not anticipate paying any
cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board
of directors and will depend on our financial condition, operating results, capital requirements and such other factors as our
board of directors deems relevant.
CAPITALIZATION
The following table sets forth our cash and cash equivalents
and capitalization as of June 30, 2015 on:
|
• |
an actual basis; and |
|
• |
an as-adjusted basis to also give effect to the sale by us of (i) 700,000 of our Units in this offering
stock at an offering price of $10.00, after deducting the estimated sales commissions and estimated offering expenses payable by
us. |
The information in this table should
be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and our financial statements and related notes thereto included elsewhere in this prospectus.
| |
Actual | | |
As Adjusted | |
Cash and cash equivalents | |
$ | 4,798 | | |
$ | 6,849,798 | |
Stockholders’ equity: | |
| | | |
| | |
Preferred stock, par value $0.001 per
share: authorized 50,000,000; none issued and outstanding | |
| — | | |
| — | |
Class A common stock, par value $0.001
per share: authorized 2,000,000,000; issued and outstanding 35,785,858 | |
| 35,786 | | |
| 35,786 | |
Class B common stock, par value $0.001
per share: authorized 100,000,000; issued and outstanding 807,207 actual; authorized 100,000,000; issued and outstanding
1,533,459, as adjusted | |
| 807 | | |
| 1,533 | |
Additional paid-in capital | |
| (32,538 | ) | |
| 6,811,736 | |
Accumulated deficit | |
| (1,385,712 | ) | |
| (1,385,712 | ) |
Total stockholders’ equity | |
| (1,381,657 | ) | |
| 5,463,343 | |
Total capitalization | |
$ | (1,381,657 | ) | |
$ | 5,463,343 | |
The table above does not include 778,950 shares of common
stock reserved for future issuance under our 2015 Equity Incentive Plan.
DILUTION
If you invest in our Units, your ownership
interest will be diluted to the extent of the difference between the public offering price per Units and the as adjusted net
tangible book value per share after this offering. Net tangible book value per share represents the amount of our total
tangible assets less total liabilities, divided by the number of shares of Class A and Class B common stock outstanding.
Dilution in the as adjusted net tangible book value per share represents the difference between the amount per Unit paid by
purchasers of our Units in this offering and the as adjusted net tangible book value per share of common stock immediately
after the consummation of this offering.
Assumed
public offering price per Unit |
|
| |
|
|
$ | 10.00 |
|
Historical
net tangible book value per share as of June 30, 2015 |
|
$ | (0.53 | )
|
|
|
|
|
As
adjusted increase in net tangible book value per share attributable to new investors in this offering |
|
| 2.19 |
|
|
|
|
|
As
adjusted net tangible book value per share after this offering |
|
| 1.66 |
|
|
|
|
|
Dilution
of as adjusted net tangible book value per share to new investors |
|
|
|
|
|
$ | 8.34 |
|
Dilution
to new investors (%) |
|
|
|
|
|
| 83.4 | %
|
As of June 30, 2015, our historical net tangible book value
was approximately ($1,383,146) or ($0.53) per share. After giving effect to the sale by us of the 700,000 Units in this offering
at a public offering price of $10.00 per Unit, less sales commissions and estimated offering expenses payable by us, our as adjusted
net tangible book value as of June 30, 2015 would have been approximately $5,461,854, or approximately $1.66 per share. This represents
an immediate increase in net tangible book value of $6,845,000 per share to existing stockholders and an immediate dilution in
net tangible book value of $8.34 per share to investors in the Units offered in this offering. This will result in a 83.4% dilution
for the new investors in this offering.
A $0.50 increase (decrease) in the public offering price
of $10.00 per unit would increase (decrease) our as adjusted net tangible book value after this offering by approximately $350,000,
or $0.11 per share, assuming no
change to the number of Units offered by us as set forth on the cover page of this prospectus, and after deducting underwriting
discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares
we are offering. A 0.5 million decrease in the number of Units would decrease our as adjusted net tangible book value after this
offering to $0.17 per share, at a public offering price of $10.00 per
share. The dilution of as adjusted net tangible book value per share to new investors in this offering would be $9.33 per share for the decrease after deducting sales commissions and estimated
offering expenses payable by us. The as adjusted information discussed above is illustrative only.
The discussion and table above excludes the 778,950 shares
of Class B Common Stock reserved for future issuance under our 2015 Equity Incentive Plan
PLAN OF DISTRIBUTION
We are offering to sell 700,000 Units, with each Unit consisting
of one share of our Class B Common Stock and one Warrant. Each Warrant entitles the holder to purchase one share of Class
B Common Stock at an initial exercise price of $12.50. The Warrants are exercisable immediately and will expire five years
from the date of issuance.
Our Units are being offered by our executives on a best-efforts
basis, which means there is no commitment on the part of anyone to purchase any of the Units. No sales commissions will be paid
to our executive officers in connection with this offering. In the event that an executive officers are unable to raise the full
amount of the offering from potential investors, we may decide to engage FINRA members in order to assist us in raising any remaining
capital under the offering. In the event we engage FINRA members or foreign broker-dealers, we expect to pay sales commissions of up to 10%
of the gross offering proceeds from their sale of the offered Units.
In connection with the Company’s selling efforts in
the offering, Gregory M. Dangler and Chad Brownstein will not register as broker-dealers pursuant to Section 15 of the Exchange
Act, but rather will rely upon the “safe harbor” provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer
registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer’s
securities. Neither Mr. Dangler or Mr. Brownstein are subject to any statutory disqualification, as that term is defined in Section
3(a)(39) of the Exchange Act. Mr. Dangler and Mr. Brownstein will not be compensated in connection with their participation in
the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities.
Mr. Dangler and Mr. Brownstein are not, nor have been within the past 12 months, a broker or dealer, and they are not, nor have
been within the past 12 months, an associated person of a broker or dealer. At the end of the offering, Mr. Dangler and Mr. Brownstein
will continue to primarily perform substantial duties for the Company or on its behalf otherwise than in connection with transactions
in securities. Mr. Dangler and Mr. Brownstein will not and have not participated in the selling of any securities for any issuer
more than once every twelve months.
We will receive all proceeds from the sale of the 700,000
Units being offered. The price per Unit is fixed at $10.00 for the duration of this offering. Our Class B Common Stock
is listed on OTCQB.
In order to comply with the applicable securities laws of
certain states, the securities will be offered or sold in those only if they have been registered or qualified for sale; an exemption
from such registration or if qualification requirement is available and with which the Company has complied.
In addition and without limiting the foregoing, the Company
will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to security transactions during
the period of time when this Registration Statement is effective.
Our shares of common stock are subject to the “penny
stock” rules of the Securities and Exchange Commission. The SEC has adopted rules that regulate broker-dealer
practices in connection with transactions in "penny stocks”. Penny stocks generally are equity securities with a price
of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system,
provided that current price and volume information with respect to transactions in such securities is provided by the exchange
or system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those
rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks
and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and
offer quotations for the penny stock, the compensation of the broker-dealer, and sales person in the transaction, and monthly
account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock
rules require that, prior to a transaction in a penny stock not otherwise exempt from those 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 trading activity in the secondary
market for stock that becomes subject to those penny stock rules.
We will pay all expenses incidental to the registration
of the shares (including registration pursuant to the securities laws of certain states) which we expect to be $155,000.
Offering Period and Expiration Date
This offering will start on the date that this registration
statement is declared effective by the SEC and terminate on the earlier of (i) the date when the sale of all 700,000 Units is
completed, (ii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior
the completion of the sale of all 700,000 Units registered under the Registration Statement of which this Prospectus is part or
(iii) December 31, 2015. We will not accept any money until this registration statement is declared effective by the SEC.
Procedures for Subscribing
If you decide to subscribe for any Units in this offering,
you must
- execute and deliver a
subscription agreement; and
- deliver payment via wire
transfer to us for acceptance or rejection.
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or in part, for any reason or for no
reason. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours after we receive them.
DESCRIPTION
OF SECURITIES TO BE REGISTERED
Common Stock
We are authorized to issue up to 2,100,000,000 shares of
common stock at a par value of $0.001 per share. As of September 10, 2015, there were 35,785,858 shares and 833,459 shares of
Class A and Class B common stock outstanding, respectively. The holders of Class A common stock will have the right to vote on
all matters on which stockholders have the right to vote. The holders of Class B common stock will have the right to vote solely
on matters where the vote of such holders is explicitly required under Nevada law, such as an approval of a plan of merger, exchange
or conversion, an increase or decrease in the number of authorized shares of a class or series of stock in certain circumstances,
and other situations as required by Nevada law where the rights, preferences or limitations of such holders are adversely impacted.
On matters which the applicable class of stockholders have the right to vote, each Class A common stock and Class B common stock
shall be entitled to one vote per share.
The holders of Class A Common Stock
and Class B Common Stock will have equal distribution rights, provided that distributions in securities shall be made in either
identical securities or securities with similar voting characteristics. The holders of Class A Common Stock and Class B Common
Stock will be entitled to receive identical per-share consideration upon a merger, conversion or exchange of the Company with
another entity, and will have equal rights upon dissolutions, liquidation or winding-up.
The rights, preferences and privileges
of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of any series of preferred
stock, which may be designated solely by action of the Board of Directors and issued in the future. All outstanding shares of
common stock are duly authorized, validly issued, fully paid and non-assessable.
Units
Each Unit consists of one share of Class B Common Stock and one Warrant.
Warrants
In connection with the purchase of each Unit, each investor
will receive a Warrant to purchase one share of Class B Common Stock at an initial exercise price of $12.50. The Warrants allow
for cash or cash-less exercise. The Warrants will expire five years from the date of issuance. We may call the Warrants for redemption
as follows:
| • | at a price of $0.01 for each Warrant at any time while
the Warrants are exercisable, so long as a registration statement relating to the Class
B Common Stock issuable upon exercise of the Warrants is effective and current; |
| • | upon not less than 30 days prior written notice of redemption
to each Warrant holder; and |
| • | if the reported last sale price of the Class B Common
Stock is equal to or greater than 125% of the then applicable exercise price of the Warrant
on the third business day prior to the notice of redemption to the Warrant holders, and
the Class B Common Stock is quoted on or listed for trading on either The New York Stock
Exchange, The Nasdaq Global Market, The NASDAQ Capital Market, The Nasdaq Global Select
Market or the NYSE MKT; or |
| • | if the last reported sales price of the Class B Common
Stock has been equal to or greater 125% of the then applicable exercise price for the
20-trading-day period ending on the third business day prior to the notice of redemption
to Warrant holders. |
If the foregoing conditions are satisfied and we call the
Warrants for redemption, each Warrant holder will then be entitled to exercise his or her Warrant prior to the date scheduled
for redemption. However, there can be no assurance that the price of the Class B Common Stock will exceed the call price or the
Warrant exercise price after the redemption call is made.
The exercise price and number of shares of Class B Common
Stock issuable on exercise of the Warrants may be adjusted in certain circumstances, including but not limited to in the event
of a reclassifications, exchange, substitution or stock dividend. However, the Warrants will not be adjusted for the issuances
of common stock or securities convertible or exercisable into common stock at a price below the then current exercise price of
the Warrants.
The Warrants may be exercised upon surrender of the Warrant
on or prior to the expiration date at the offices of the Company, with the exercise form attached to the Warrant completed and
executed as indicated, accompanied by full payment of the exercise price, by certified check payable to us or by wire transfer
of immediately available funds to an account designated by us, or by indicating a cash-less exercise, for the number of Warrants
being exercised. The Warrant holders do not have the rights or privileges of holders of common stock and any voting rights until
they exercise their Warrants and received Class B Common Stock. After issuance of Class B Common Stock upon exercise of the Warrants,
each holder will be entitled to one vote for each Class B Common Stock held of record on all matters that may be voted on by such
holders.
Transfer Agent
The transfer agent for our common
stock is Corporate Stock Transfer, Inc., 3200 Cherry Creek South Drive, Suite 430, Denver, Colorado 80209.
LEGAL MATTERS
The validity of the securities offered by this prospectus
will be passed upon for us by Greenberg Traurig, LLP, Sacramento, California.
EXPERTS
The audited financial statements
of RMR Industrials, Inc. included herein and elsewhere in the Registration Statement, have been audited by Hein & Associates
LLP, an independent registered public accounting firm, for the periods and to the extent set forth in their report (which includes
an explanatory paragraph relating to the Company’s ability to continue as a going concern). Such financial statements have
been so included in reliance upon the report of such firm given upon the firm’s authority as an expert in accounting and
auditing.
INFORMATION
WITH RESPECT TO THE REGISTRANT
Overview
RMR Industrials, Inc. was incorporated on October 15, 2014
as a Nevada corporation. We are a development stage company currently focusing on developing and commercializing key intellectual
property rights across natural resource related assets. Our business operations focus on developing potential licensing opportunities,
joint ventures and strategic alliances, which leverage our management team’s industrial operations experience.
We have acquired proprietary intellectual property rights,
including patents to increase oil and gas production. This package of intellectual property, licensed from Colorado School of
Mines, which specializes in minerals technology innovation, occurs through modified injection processes. Our active operations
have primarily focused on developing commercial opportunities and product line extensions for this industrial based intellectual
property. The enhanced oil recovery process patents include multiple configurations varying the cycles of low-salinity water,
carbon dioxide and pumping pressure. Our rights correspond to issued US patent 7,662,275 and US patent applications 61/946062,
61/941869 and 61/950500.
Our current intellectual property portfolio is focused on
industrial mineral advancement. Specifically, the extraction of hydrocarbons from reservoirs. Our current sales and marketing
effort is dedicated to multiple leading industry operators and service providers, such as oilfield and well completion providers,
through licensing and joint venture efforts. Our business methodology is that the academic and corporate cultures provide an environment
to source appealing technological and process improvements but lack the teams to properly implement and monetize. Further, we
believe our affiliations, capabilities, and key relationships within the academic, corporate and industrial sectors is an advantage
to complement our current development plans. Our management team has over 15 years of experience licensing intellectual property
from leading universities and corporations.
To complement our current development plans, we have a strategy
to own, operate, produce and distribute certain industrial minerals, including but are not limited to: feldspar, talc, mica, bentonite,
vermiculite, frac sand, aggregates, antimony, barite, silica, ball clays, graphite, sulfur and zeolite. In addition, we also plan
to own, operate, produce and distribute certain chemicals, including but not limited to: glycols, ethanolamines, methanol, antifreeze,
biocides, corrosion inhibitors, demulsifiers, desalting compounds and dispersants. The experienced management team of RMR
Industrials Inc. brings a multi-cycle successful track record of developing and licensing key intellectual property rights and
discovering, financing and operating off-market natural resource businesses.
We plan to develop, acquire and consolidate complementary
industrial commodity assets and intellectual property through capitalizing on the volatile oil markets, down cycles in commodity
markets, and other ancillary opportunities. Typically these assets are the core manufacturer and supplier of specific bulk commodity
minerals, chemicals and petrochemicals distributed to the global manufacturing industry. Part of our strategy is to assemble a
portfolio of mature and value-add industrial commodities businesses to generate scalable enterprises with a large portfolio of
products and services addressing a common and stable customer base.
We do not have any current plans, arrangements, discussions or intentions to engage in a merger or
acquisition with any entities or persons to be used as vehicle for a private company to become a publicly reporting company.
Strategy
We plan to organically develop multiple intellectual property
assets within our fields’ of expertise. We believe the industrial and natural resource sectors have ample gaps in operations,
optimization, and personnel management and the intellectual property we develop will help enable potential licensees to better
execute in those areas providing key cost savings or revenue growth. We intend to purchase and develop our own proprietary assets
to monetize our own physical resource assets but also license them to producers and industrial consumers in the relevant sectors.
We have been in active discussions with multiple drilling
service providers and larger independent energy companies to potentially license our intellectual property. In the current global
energy climate, low oil prices require operators and service providers to significantly cut costs and show greater returns on
extraction capital. We believe our technology provides that operational advantage to our target customers. For example, low-salinity
water injected into carbonate reservoirs, which have undergone sea-water injection for water flooding, can produce additional
oil more economically if a low-concentration non-ionic surfactant is added to the low-salinity water and injected as chase fluid.
This process can be implemented as low-salinity water flooding – alternating - surfactant augmented in low-salinity water
flooding scheme as well. The reasons are:
| i. | Full field low salinity water injection is expensive because
it has to displace the already injected seawater to be beneficial. This takes a long
time to reach the beneficial effects. |
| ii. | Surfactant flooding is effective only in low-salinity
environment. |
| iii. | This process can be implemented as an alternating low-salinity-surfactant
system to improve economics. |
Our strategy is to evolve from providing primarily patent
licenses to providing additional technology, products and services while creating and leveraging strategic synergies to increase
revenue. One of our goals is to supplement our patent licensing business with additional licensing opportunities for our
technologies, products and services to be incorporated into our customers’ products and/or systems. Our technology
licenses are designed to support the implementation and adoption of our technology into our customers’ products or services.
Under technology licenses, our customers typically receive licenses to our patents necessary to implement these solutions in their
products with specific rights and restrictions to the applicable patents elaborated in their individual contracts with us.
When implementing our asset acquisition strategy, our due
diligence process begins with outlining a framework for each prospective asset’s position within the vision of our consolidation
strategy. In defining this framework, we seek to identify the key drivers of the business and industry, as well as the risks associated
with each transaction. With our team of management and finance professionals, its board of advisors, and leading industry consultants,
our due diligence process includes a full examination of each target’s managerial, operational, financial, legal, and environmental
components in relation to how each facet impacts our broader strategy. Our process, while instrumental in identifying the risk
level of each transaction, seeks to also identify hidden value-add opportunities within each business and for our broader portfolio.
We believe that the cash flows generated by the diverse business segments that we operate will provide
us with the ability to pursue further development and growth acquisitions in order to build on our existing segments, or to establish
a new business platform for future growth. To further supplement our capital requirements for future potential acquisitions, we
intend to utilize a combination of debt and equity financings, including traditional loans from financial institutions. We will
utilize a disciplined approach to identify and evaluate potential acquisitions, only pursuing those that meet our financial and
strategic criteria. Our primary criteria focus on accretive assets with positive cash flow in the industrial commodities sectors.
These assets should generate annual cash flow of $500,000 to $15,000,000 or annual revenues greater than $10,000,000. For
consolidating businesses within the same sector and business plan, our criteria will be focused on not only acquiring historical
cash flows but also incremental products, services, proprietary technology, regional access, new customers or unique advantages.
We have not yet completed the acquisition
of any industrial assets or entered into any types of asset purchase agreements, however, we are engaged in advanced negotiations
with two companies for which we established a preliminary purchase price and key terms. We believe the target audience has been
receptive due to adverse global economic factors in the energy sector, which lead us to anticipate closing on several acquisitions
during 2015. With macroeconomic uncertainty and the recent volatility in commodity prices, we believe many companies will be seeking
an exit strategy at attractive pricing. These favorable valuations may offer increased flexibility to finance potential acquisition
targets through debt or equity securities based on stable historical asset values and expectation of long-term cyclical appreciation
of industrial commodity prices.
We are in advanced negotiations
to acquire the assets and certain liabilities of a magnesium silicate producer and supplier for the ceramic, paint, plastic, roofing,
composite wood and agricultural industries in North America. Due diligence efforts are substantially completed and we have developed
a transition plan for post-acquisition integration activities. The purchase price for the potential acquisition would be $19,000,000,
plus the assumption of certain liabilities and subject to certain working capital and other post-closing adjustments. However,
to date we have not entered into any definitive or binding agreement with such company, and there are no assurances that we will
ultimately agree to definitive terms and consummate the acquisition.
Additionally, we are in advanced
negotiations with a company that formulates production, drilling and specialty chemicals while also providing contract blending
and reclamation services to the energy industry. The preliminary purchase price for the potential acquisition would be $7,500,000,
plus the assumption of certain liabilities and subject to certain working capital and other post-closing adjustments. However,
to date we have not entered into any definitive or binding agreement with such company, and there are no assurances that we will
ultimately agree to definitive terms and consummate the acquisition.
Intellectual Property
Pursuant to an option agreement with the Colorado School
of Mines (“CSM”), we have acquired the rights to certain intellectual property from CSM, including issued US patent
7,662,275 and US patent applications 61/946062, 61/941869 and 61/950500 through payment of an advance deposit of $2,500 to exercise
our rights in accordance with our option agreement with CSM in July 2015. US patent 7,662,275 is the main patent in which we aim
to commercialize our products and services. Our payment secures this intellectual property. The patent applications 61/946062,
61/941869 and 61/950500 are still pending approval with the US Patent and Trademark Office. We believe these applications are
complementary and effectively build on the core technology present in US patent 7,662,275. Regardless of the applications in process,
we will pursue our plans with the issued patent. We estimate an additional payment of $2,500 to $7,500 to secure the remaining
patent rights depending on approvals of the patent applications. These patents describe a process to increase oil and gas production
through modified injection processes. Our management views CSM as a highly respected institution which specializes in industrial
minerals technology research and believes that CSM could be a valuable technical resource for future intellectual property development.
We currently have the right to market and pursue licensing opportunities with these patents and patent applications. We continue
to have exclusive rights to negotiate and acquire rights to US patent applications 61/946062, 61/941869 and 61/950500from CSM
under our option agreement, which terminates on November 1, 2015 unless extended for an additional $3,000, not to extend past
November 25, 2015.
Our success depends in part upon our ability to protect
our core technology and intellectual property. To establish and protect our proprietary rights, we will rely on a combination
of patents, patent applications, trademarks, copyrights, trade secrets, including know-how, license agreements, confidentiality
procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements, and other contractual
rights. Many of the asset purchases under consideration include intellectual property which has been typically underutilized or
under-leveraged by their current owners. Our plans to maximize value from these assets through focused capital infusion and strategic
marketing implementation.
Potential Competitive Strengths
We believe our process to discover, finance, develop and
operate unique natural resource, intellectual property and industrial assets provides us a competitive advantage to achieve critical
mass through development and acquisition of under-performing assets. Our principals have extensive experience and also collaborated
in investing in and operating natural resource assets for many years. We believe our potential competitive strengths to be the
following:
Application of Intellectual Property. We have a background
in engineering, operations, finance and general management all within the natural resource sectors.
Proprietary Acquisition Sources . We have a
long-standing track record of discovering unique assets pertinent to our current business strategy. We will seek to capitalize
on the global network and investing and operating experience of our management team to identify, acquire and operate one or more
businesses or assets in the industrial minerals mining and processing industry, although we may pursue a business combination
in complementary industries, such as specialty chemicals and agriculture.
Status as a Public Company . Our
status as a public company will make us an attractive business partner to other natural resource related companies, and will provide
greater access to capital and an increased company profile.
Management Operating and Investing
Experience. Over the course of their careers, the members of our management team have developed a broad
international network of contacts and corporate relationships which we believe will serve as a useful source of investment opportunities.
Our executive officers are officers of our sponsor and Rocky Mountain Resources, a privately held natural resources operating
company. The management team has applied their deep understanding of historical precedents to the natural resources markets and
established a reputation as one of the thought leaders within the natural resources sector. The Management team has been working
together for the last ten years, over such time they have assembled a team of natural resources and investment professionals to
pursue investments across the industry.
Financing of Asset Acquisitions
In furtherance of seeking assets to complement our development
plan, on June 26, 2015, our wholly-owned subsidiary, United States Talc and Minerals Inc. (“USTM”), entered into a
non-binding financing arrangement with Auramet International LLC (“Auramet”), whereby subject to certain conditions,
including but not limited to, the approval of a satisfactory acquisition candidate, technical due diligence and an executable
acquisition purchase agreement, Auramet will loan USTM the principal amount of $12,000,000. The maturity date of such note
will be on the second anniversary of the closing and such note will accrue interest at a rate of 15% annually. The note
shall be secured by a first priority lien on all the assets of USTM. We have also entered into a non-binding mezzanine financing
arrangement with Auramet, whereby subject to meeting certain conditions, Auramet will loan USTM an additional principal amount
of $5,000,000. The maturity date of such note will be on the second anniversary of the closing and such note will accrue interest
at a rate of 15% annually. The note shall be secured by a second priority lien on certain assets of USTM. There are no assurances
that USTM will enter into binding loan agreements with Auramet, and upon terms that are ultimately satisfactory to us. Any such
failure will result in USTM and us having to seek financing from other potential sources.
Revenues and Customers
We do not currently generate any revenues. Future revenues will
be generated through licensing intellectual property, provision of services and the sale of commodity and industrial assets. We
plan to grow revenues by not only expanding sales to existing customers but also expanding customer acquisitions through improved
infrastructure. Our future customers are typically manufacturers of ceramics, paints, plastics, paper, rubber, food, cosmetics,
and many other consumer products. Customers of industrial chemicals include oil and gas producers and manufacturing facilities.
Industry and Competition
Industrial Minerals:
The industrial minerals sector encompasses a large variety of minerals including: chamottes, ball clay, talc, feldspar, graphite,
ground silica, kaolin, pegmatite, quartz, mica, bauxite, bentonite, metakaolins, zeolite, frac sand, aggregates and vermiculite.
Industrial minerals are used in a variety of end projects for a variety of purposes. These minerals are used in ceramics, paints,
plastics, paper, rubber, food, cosmetics, and many other products.
There are significant barriers to
entry into industrial mineral production due to the scarcity of economically viable resources from which to extract the minerals.
Geographical location of the resource drives a large portion of the competitive advantages or disadvantages of an operation. Large
companies in this sector include Imerys, W.R. Grace, and Minerals Technologies.
Talc
Talc is a mineral
composed of hydrated magnesium silicate. It is the softest known
mineral and listed as “1” on the Mohs hardness scale. Talc is practically insoluble in water and in weak acids and
alkalis. It is neither explosive nor flammable. Although it has very little chemical reactivity, talc does have a marked affinity
for certain organic chemicals.
Talc is used as a functional filler
in the manufacturing of ceramics, rubbers, plastics and paints/coatings. It is also used for pitch control in paper manufacturing
and it is used to coat seeds in the agriculture industry.
Based on 2013 United States Geological
Survey (“USGS”) data, sales of talc produced domestically were estimated to be 589,000 tons valued at $89 million.
Sales of imported talc were estimated at 240,000 tons. We believe the value of imported talc per ton is estimated to be above
$300 based on data collected in the market place. Compared to other pricing indices (such as the S&P 500 and Case-Schiller
index), talc has experienced less pricing volatility, and has averaged growth of 3.6% annually, over a 20 year span.
Montana was the
leading producer state, followed by Texas, Vermont, and Virginia. The top three companies accounted for more than 99% of the U.S.
talc production. The total estimated use of talc in the United
States, including imported talc, was plastics, 27%; ceramics, 18%; paint, 16%; paper, 15%; roofing, 6%; cosmetics, 5%; rubber,
3%; and other, 10%.
Vermiculite
Vermiculite is a hydrated magnesium-aluminum-iron
silicate. Raw vermiculite is mica-like in appearance, contains water molecules within its internal structure, and ranges in color
from black to various shades of brown to yellow. When vermiculite flakes are heated rapidly to a temperature of 900 °C or
higher, the intermolecular water flashes into steam, and the flakes expand into accordion-like particles, which are gold or bronze
in color. This expansion process is called exfoliation, and the resulting lightweight material is chemically inert, fire resistant,
and odorless.
Vermiculite has a wide range of
uses particularly in the agricultural and construction industries because of its various attributes including fire resistance,
low thermal conductivity, high liquid absorption capacity, inertness, and low density. In horticulture, vermiculite mixed with
peat or other composted materials, such as pine bark, produces a soil-like material well suited as a growing medium for plants.
Based on 2013 USGS data, the end
market of about 64,000 tons of exfoliated vermiculite sold or used by producers was valued at about $50.1 million. There are approximately
18 facilities in the US which process vermiculite. There are only two companies which mine vermiculite domestically. U.S. domestic
prices for vermiculite concentrate, ex-plant, largely dependent on grade sizing, ranged from $150 to $580 per metric ton in 2014.
Frac Sand
"Frac sand" is a high-purity
quartz sand with very durable and very round grains. It is a crush-resistant material produced for use by the petroleum industry.
It is used in the hydraulic fracturing process (known as "fracking") to produce petroleum fluids, such as oil, natural
gas and natural gas liquids from rock units that lack adequate pore space for these fluids to flow to a well. Most frac sand is
a natural material made from high purity sandstone. An alternative product is ceramic beads made from sintered bauxite or small
metal beads made from aluminum.
Frac sand is produced in a range
of sizes from as small as 0.1 millimeter in diameter to over 2 millimeters in diameter depending upon customer specifications.
Most of the frac sand consumed is between 0.4 and 0.8 millimeters in size. Until recently, producers in Wisconsin and Texas were
supplying much of the frac sand used by the oil and gas industry. However, a huge spike in demand caused by the natural gas and
shale oil boom has motivated many companies to provide this product.
Total industrial sand and gravel
production in the United States increased to 62.1 million metric tons (Mt) in 2013 from 50.6 Mt in 2012. Industrial sand production
increased by 23%, and industrial gravel production decreased by 20%, compared with that of 2012. The value of production in 2013
was $3.47 billion—a 30% increase from that of 2012 and a record-high value for industrial sand and gravel production. Estimated
world production of industrial sand and gravel in 2013 was 142 Mt, a 9% increase compared with 2012 production.
Aggregates
Aggregates are key material components used in the production of cement, ready-mixed concrete and asphalt paving mixes for the residential, nonresidential and public infrastructure markets and are also widely used for
various applications and products, such as road and building foundations, railroad ballast, erosion control, filtration,
roofing granules and in solutions for snow and ice control. Generally extracted from the earth using surface or
underground mining and products, such methods, aggregates are produced from natural deposits of various materials such as limestone, sand and gravel, granite and trap rock.
Markets are typically local due
to high transport costs and are generally fragmented, with numerous participants operating in localized markets. According to
the March 2014 U.S. Geological Survey, the U.S. market for these products was estimated at approximately 2.1 billion tons in 2013,
at a total market value of $18.6 billion. Relative to other construction materials, such as cement, aggregates consumption is
more heavily weighted towards public infrastructure and maintenance repair. However, the mix of end uses can vary widely by geographic
location, based on the nature of construction activity in each market. Typically, three to six competitors comprise the majority
market share of each local market because of the constraints around the availability of natural resources and transportation.
Industrial Chemicals:
Chemical distribution is a cyclical business dependent on industrial demand. The profitability of individual companies depends
on an efficient distribution system. Larger companies can offer more products and services. Local and regional distributors can
compete effectively through superior service or geographic focus.
Chemical products in the oil and
gas field segment includes iron sulfide, demulsifiers, corrosion inhibitor, emulsion breaker, paraffin solvent, biocides, methanol,
dispersant and scale inhibitor. Companies create proprietary blends of these chemicals based on regional production research to
solve and prevent production problems.
Other chemical products used in
the manufacturing, peroxide stabilization, surface refinishing and as catalysts include inorganic, organometallic, metal and acid
chemicals. This industry produces basic inorganic chemicals including titanium dioxide, chlor-alkali products and carbon black.
Inorganic chemicals are mineral based, while organic chemicals are carbon based. Inorganic chemicals are mainly used as inputs
in manufacturing and industrial processes. Inorganic chemicals used as pigments and dyes. Distribution networks are the primary
channel through which these chemicals are sold to manufacturers.
The U.S. industry is concentrated:
the largest 50 companies generate more than half of the revenue. Imports to the US of industrial chemicals and plastic resins,
largely from Canada, Germany, Japan, and China, are substantial. Many of these imports move through chemical distributors. Canada,
Mexico, China, Belgium, and Japan are the top recipients of US chemical exports. Major players in the global chemical market include:
DuPont, PPG, BASF, Dow, Bayer, and DSM.
Government Regulation
Our operations will be subject to
extensive federal, state and local laws, regulations and ordinances in the United States and abroad relating to the protection
of the environment and human health and to safety, including those pertaining to chemical manufacture and distribution, waste
generation, storage and disposal, discharges to waterways, and air emissions and various other health and safety matters. Governmental
authorities have the power to enforce compliance with their regulations, and violators may be subject to civil, criminal and administrative
penalties, injunctions or both. We will devote significant financial resources to ensure compliance, and we believe that we are
in substantial compliance with all the applicable laws and regulations.
We anticipate that the regulation
of our business operations under federal, state and local environmental laws in the United States and abroad will increase and
become more stringent over time. We cannot estimate the impact of increased and more stringent regulation on our operations, future
capital expenditure requirements or the cost of compliance.
United States Regulation.
Statutory programs relating to protection of the environment and human health and to safety in the United States include, among
others, the following.
CERCLA. The Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, also known as “CERCLA” and “Superfund”,
and comparable state laws generally impose joint and several liability for costs of investigation and remediation and for natural
resource damages, without regard to fault or the legality of the original conduct, on certain classes of persons with respect
to the release into the environment of specified substances, including under CERCLA those designated as “hazardous substances.”
These persons include the present and certain former owners or operators of the site where the release occurred and those that
disposed or arranged for the disposal of the hazardous substance at the site. These liabilities can arise in association with
the properties where operations were conducted, as well as disposal facilities where wastes were sent. Many states have adopted
comparable or more stringent state statutes. In the course of our operations, we generated materials that fall within CERCLA’s
definition of hazardous substances. We may be the owner or operator of sites on which hazardous substances have been released
and may have generated hazardous substances that have been transported to or otherwise released upon offsite facilities. We may
be responsible under CERCLA for all or part of the costs to clean up facilities at which such substances have been released by
previous owners or operators and offsite facilities to which our wastes were transported and for associated damages to natural
resources.
Resource Conservation and Recovery
Act. The federal Resource Conservation and Recovery Act, as amended (“RCRA”) and comparable state laws regulate
the treatment, storage, disposal, remediation and transportation of wastes, specifically under RCRA those designated as “hazardous
wastes.” The EPA and various state agencies have limited the disposal options for these wastes and impose numerous regulations
upon the treatment, storage, disposal, remediation and transportation of them. Our operations generate wastes that are subject
to RCRA and comparable state statutes. Furthermore, wastes generated by our operations that are currently exempt from treatment
as hazardous wastes may be designated in the future as hazardous wastes under RCRA or other applicable statutes and, therefore,
may be subject to more rigorous and costly treatment, storage and disposal requirements. Governmental agencies (and in the case
of civil suits, private parties in certain circumstances) can bring actions for failure to comply with RCRA requirements, seeking
administrative, civil, or criminal penalties and injunctive relief, to compel us to abate a solid or hazardous waste situation
that presents an imminent or substantial endangerment to health or the environment.
Clean Water Act. The federal
Clean Water Act imposes restrictions and strict controls regarding the discharge of wastes and fill materials into waters of the
United States. Under the Clean Water Act, and comparable state laws, the government (and in the case of civil suits, private parties
in certain circumstances) can bring actions for failure to comply with Clean Water Act requirements and enforce compliance through
civil, criminal and administrative penalties for unauthorized discharges of hazardous substances and of other pollutants. In the
event of an unauthorized discharge of wastes, we may be liable for penalties and subject to injunctive relief.
Clean Air Act . The federal
Clean Air Act (CAA), as amended and comparable state and local laws restrict the emission of air pollutants from many sources
and also impose various monitoring and reporting requirements. These laws may require us to obtain pre-approval for the construction
or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly
comply with air permit requirements or utilize specific equipment or technologies to control emissions. Governmental agencies
(and in the case of civil suits, private parties in certain circumstances) can bring actions for failure to strictly comply with
air pollution regulations or permits and generally enforce compliance through administrative, civil or criminal enforcement actions,
resulting in fines, injunctive relief (which could include requiring us to forego construction, modification or operation of sources
of air pollutants) and imprisonment. While we may be required to incur certain capital expenditures for air pollution control
equipment or other air emissions-related issues, we do not believe that such requirements will have a material adverse effect
on our operations.
Greenhouse Gas Regulation
. More stringent laws and regulations relating to climate change and greenhouse gases (GHGs) may be adopted in the future and
could cause us to incur material expenses in complying with them. The EPA has begun to regulate GHGs as pollutants under the CAA.
The EPA adopted rules to permit GHG emissions from stationary sources under the Prevention of Significant Deterioration and Title
V permitting programs including the “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule,”
requiring that the largest sources first obtain permits for GHG emissions. The United States Supreme Court, however, ruled that
the EPA did not have the authority to require permits for GHG emissions and also did not have the authority to adopt that rule.
The Court did hold that if a source required a permit under the program because of other pollutants, the EPA had the authority
to require that the source demonstrate that it would use the best available control technology to minimize GHG emissions that
exceeded a minimal amount.
Because of the lack of any comprehensive
legislation program addressing GHGs, the EPA is using its existing regulatory authority to promulgate regulations requiring reduction
in GHG emissions from various categories of sources, starting with fossil fuel-fired power plants. There is a great deal of uncertainty
as to how and when additional federal regulation of GHGs might take place. Some members of Congress have expressed the intention
to promote legislation to curb the EPA’s authority to regulate GHGs. In addition to federal regulation, a number of states,
individually and regionally, and localities also are considering implementing or have implemented GHG regulatory programs. These
regional and state initiatives may result in so–called cap–and–trade programs, under which overall GHG emissions
are limited and GHG emission “allowances” are then allocated and sold to and between persons subject to the program.
These and possibly other regulatory requirements could result in our incurring material expenses to comply, for example by being
required to purchase or to surrender allowances for GHGs resulting from other operations or otherwise being required to control
or reduce emissions.
Occupational Safety. Our
operations are also governed by laws and regulations relating to workplace safety and worker health, principally the Occupational
Safety and Health Act (OSHA) and its regulations. The OSHA hazard communication standard, the EPA’s community right-to-know
regulations and similar state programs may require us to organize and/or disclose information about hazardous materials used or
produced in our operations. We believe that we are in substantial compliance with these applicable requirements.
Foreign Regulation. We are
subject to various laws, regulations and ordinances to protect the environment, human health and safety promulgated by the governmental
authorities in Mexico, Europe, Singapore, and in other countries where we do business. Each country has laws and regulations concerning
waste treatment, storage and disposal, discharges to waterways, air emissions and workplace safety and worker health. Their respective
regulatory authorities are given broad authority to enforce compliance with environmental, health and safety laws and regulations,
and can require that operations be suspended pending completion of required remedial action.
Licenses, Permits and Product
Registrations. Certain licenses, permits and product registrations are required for our products and operations in the United
States, and in other countries where we do business. The licenses, permits and product registrations are subject to revocation,
modification and renewal by governmental authorities. In the United States in particular, producers and distributors of chemicals
such as penta and creosote are subject to registration and notification requirements under federal law (including under the Federal
Insecticide, Fungicide and Rodenticide Act (“FIFRA”) and the Toxic Substances Control Act, and comparable state law)
in order to sell those products in the United States. Compliance with these laws has had, and in the future will continue to have,
a material effect on our business, financial condition and results of operations. Under FIFRA, the law’s registration system
requires an ongoing submission to the EPA of substantial scientific research and testing data regarding the chemistry and toxicology
of pesticide products by manufacturers.
Employees
We currently have 2 full-time employees.
Description of Property
We currently own no real property
or equipment. The Company occupies office space at 9595 Wilshire Bl., Suite 310, Beverly Hills, California 90212. This office
space is provided at no charge by an affiliate of Rocky Mountain Resource Holdings, Inc., which is a shareholder of the Company.
The Company feels that this space is sufficient until the Company significantly expands operations.
Legal Proceedings
There are no material pending legal
proceedings to which we are a party or to which any of our property is subject, nor are there any such proceedings known to be
contemplated by governmental authorities. None of our directors, officers or affiliates is involved in a proceeding adverse to
our business or has a material interest adverse to our business.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The statements contained in all
parts of this document that are not historical facts are, or may be deemed to be, “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking
statements include, but are not limited to, those relating to the following: our ability to secure necessary financing; expected
growth; future operating expenses; future margins; fluctuations in interest rates; ability to continue to grow and implement growth,
and regarding future growth, cash needs, operations, business plans and financial results and any other statements that are not
historical facts.
When used in this document, the
words “anticipate,” “estimate,” “expect,” “may,” “plans,” “project,”
and similar expressions are intended to be among the statements that identify forward-looking statements. Our results may differ
significantly from the results discussed in the forward-looking statements. Such statements involve risks and uncertainties, including,
but not limited to, those relating to costs, delays and difficulties related to our dependence on our ability to attract and retain
skilled managers and other personnel; the intense competition within our industry; the uncertainty of our ability to manage and
continue our growth and implement our business strategy; our vulnerability to general economic conditions; accuracy of accounting
and other estimates; our future financial and operating results, cash needs and demand for services; and our ability to maintain
and comply with permits and licenses; as well as other risk factors described in this Registration Statement. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially
from those projected.
Overview
We were incorporated in the State
of Nevada on August 6, 2012 under the name “Online Yearbook” with the principal business objective of developing and
marketing online yearbooks for schools, companies and government agencies.
On November 17, 2014, Rocky Mountain
Resource Holdings, Inc. (the “RMRH”) became our majority shareholder by acquiring 5,200,000 shares of our common stock
(the “Shares”), or 69.06% of the issued and outstanding shares of our common stock, pursuant to stock purchase agreements
with Messrs. El Maraana and Salah Blal, our former officers and directors. The Shares were acquired for an aggregate purchase
price of $357,670.
On December 8, 2014, we changed
our name to “RMR Industrials, Inc.” in connection with the change in our business plan.
On February 27, 2015 (the “Closing
Date”), we entered into and consummated a merger transaction pursuant to an Agreement and Plan of Merger (the “Merger
Agreement”) by and among the Company, OLYB Acquisition Corporation, a Nevada corporation and wholly owned subsidiary of
the Company (“Merger Sub”) and RMR IP, Inc., a Nevada corporation (“RMR IP”). In accordance with the terms
of Merger Agreement, on the Closing Date, Merger Sub merged with and into RMR IP (the “Merger”), with RMR IP surviving
the Merger as our wholly owned subsidiary. Chad Brownstein and Gregory M. Dangler are directors of the Company and co-owners of
RMRH which was the majority shareholder of the Company prior to the Merger. Additionally, Messrs. Brownstein and Dangler were
indirect controlling shareholders and directors of RMR IP prior to the Merger. As such, the Merger was among entities under the
common control of Messrs. Brownstein and Dangler.
We have acquired the rights to certain intellectual property
from the Colorado School of Mines (“CSM”), including issued US patent 7,662,275 and US patent applications 61/946062,
61/941869 and 61/950500 through payment of an advance deposit in accordance with our option agreement with CSM in July 2015. We
currently have the right to market and pursue licensing opportunities with these patents. We will obtain full title and ownership
to the patent rights once we have paid the remaining balance under the option agreement, which terminates on November 1, 2015
unless extended for an additional $3,000 for each of two available three-month periods, not to extend past November 25, 2015.
These patents describe a process to increase oil and gas production through modified injection processes. Our management views
CSM as a highly respected institution which specializes in industrial minerals technology research and believes that CSM could
be a valuable technical resource for future intellectual property development
We plan to develop intellectual
property and acquire and consolidate complementary industrial assets. Typically these small to mid-sized assets are the
core manufacturer and supplier of specific bulk commodity minerals and chemicals distributed to the global manufacturer industry.
Our consolidation strategy is to assemble a portfolio of mature and value-add industrial commodities businesses to generate scalable
enterprises with a large portfolio of products and services addressing a common and stable customer base. We believe that smaller,
legacy-owned industrial companies will benefit from economies of scale and professional asset allocation. Our acquisition strategy
seeks to capitalize on the price differential between public company and private company valuations, while also providing the
platform to access capital markets and professional management oversight.
Results
of Operations
Three Months Ended June 30, 2015 and from October
15, 2014 (inception) to June 30, 2015
Revenues
We have a limited operational
history. From inception on October 15, 2014 to June 30, 2015, we did not generate any revenues.
Operating
Expenses
Our operating expenses for the three months ended June 30,
2015 was $537,248, and for the period from October 15, 2014 (inception) through June 30, 2015 was $1,385,712. Operating expenses
consisted of consulting services from related parties, public company costs and amortization of intangible assets.
Net Loss
During the three months ended June 30, 2015 and the period
from October 15, 2014 (inception) through June 30, 2015, we recognized net losses of $537,248 and $1,385,712, respectively.
Liquidity and Capital Resources
On June 30, 2015, we had current assets of $4,798, total
current liabilities of $1,387,944 and working capital deficit of $1,383,146. We have incurred an accumulated loss of $1,385,712
since inception. Our independent auditors have issued an audit opinion for our financial statements for the period ended January
31, 2015, which includes a statement expressing substantial doubt as to our ability to continue as a going concern due to our
limited liquidity and our lack of revenues.
During the period from inception to June 30, 2015, we raised
$4,798 through the issuance of common stock by subscription agreements.
On June 26, 2015, our wholly-owned
subsidiary, United States Talc and Minerals Inc. (“USTM”), entered into a non-binding financing arrangement with Auramet
International LLC (“Auramet”), whereby subject to certain conditions, including but not limited to, the approval of
a satisfactory acquisition candidate, technical due diligence and an executable acquisition purchase agreement, Auramet will loan
USTM the principal amount of $12,000,000. The maturity date of such note will be on the second anniversary of the closing
and such note will accrue interest at a rate of 15% annually. The note shall be secured by a first priority lien on all
the assets of USTM. We have also entered into a non-binding mezzanine financing arrangement with Auramet, whereby subject
to meeting certain conditions, Auramet will loan USTM an additional principal amount of $5,000,000. The maturity date of such
note will be on the second anniversary of the closing and such note will accrue interest at a rate of 15% annually. The note shall
be secured by a second priority lien on certain assets of USTM. There are no assurances that USTM will enter into binding loan
agreements with Auramet, and upon terms that are ultimately satisfactory to us. Any such failure will result in USTM and us having
to seek financing from other potential sources.
We will be seeking additional capital to execute our business
plan and reach positive cash flow from operations. Our base monthly expenses are $50,000 per month. In order to successfully execute
our business plan, the net proceeds of a $10-20 million offering will be required to finance our planned acquisition and for general
working capital purposes.
We do not internally generate adequate cash flows to support
our existing operations. Moreover, the historical and existing capital structure is not adequate to fund our planned growth. Our
current cash requirements are significant due to our business plan which will depend on future acquisitions. We anticipate generating
losses through 2015. We anticipate that we will be able to raise sufficient amounts of working capital in the near term through
debt or equity offerings as may be required to meet short-term obligations, including by issuing Units through a public offering.
On July 1, 2015, we filed with the Securities and Exchange Commission an initial registration statement for this public offering
of 700,000 Units at an offering price of $10.00 per Unit. In October 2015, we received $1.4 million
in shareholder advances for payment of anticipated expenses associated with our offering.
Other than as stated above, we currently
do not have any arrangements for additional financing and we may not be able to obtain financing when required. Our future is
dependent upon our ability to obtain financing, a successful marketing and promotion program and, further in the future, achieving
a profitable level of operations. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities
and future cash commitments. We will require additional funds to maintain our reporting status with the SEC and
remain in good standing with the state of Nevada. There are no assurances that we will be able to raise the required working capital
on terms favorable, or that such working capital will be available on any terms when needed. Any failure to secure additional
financing may force us to modify our business plan. In addition, we cannot be assured of profitability in the future.
Going Concern
We have incurred net losses since our
inception on October 15, 2014 through June 30, 2015 totaling $1,385,712 and have completed the preliminary stages of our business
plan. We anticipate incurring additional losses before realizing any revenues and will depend on additional financing
in order to meet our continuing obligations and ultimately, to attain profitability. Our ability to obtain additional
financing, whether through the issuance of additional equity or through the assumption of debt, is uncertain. Accordingly,
our independent auditors’ report on our financial statements for the year ended January 31, 2015 includes an explanatory
paragraph regarding concerns about our ability to continue as a going concern, including additional information contained in the
notes to our financial statements describing the circumstances leading to this disclosure. The financial statements
do not include any adjustments that might result from the uncertainty about our ability to continue our business.
Recently
Issued Accounting Pronouncements
We do not expect
the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial
position, or cash flows.
Off-Balance
Sheet Arrangements
We have no
off-balance sheet arrangements.
CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller
reporting company, the Company is not required to provide this disclosure.
DIRECTORS
AND EXECUTIVE OFFICERS
Set forth below are the names, ages
and present principal occupations or employment, and material occupations, positions, offices or employments of our current Directors
and executive officers.
Name |
|
Age |
|
Position |
Chad Brownstein |
|
42 |
|
Chief Executive Officer and Director |
Gregory M. Dangler |
|
33 |
|
President, Chief Financial Officer, Secretary and Director |
Andrew Peltz |
|
49 |
|
Director |
Biographies
Chad Brownstein is the Chief
Executive Officer of RMR IP, where he is responsible for the corporate strategy and board oversight for all investments. Since
2014, Mr. Brownstein has been the Chief Executive Officer and Director of RMR Industrials, Inc. (“RMRI”), an industrial
commodities company. Mr. Brownstein is responsible for assisting the corporate strategy and board oversight for all acquisition
opportunities at RMRI. Since 2008, Mr. Brownstein has been a partner at Rocky Mountain Resource Holdings and/or its predecessor
affiliates, a natural resources operating and investment company. Mr. Brownstein has been a member of the board of directors beginning
in 2009, and is currently lead independent director and the Vice Chairman of the Banc of California. Previously, from 2009 to
2012, Mr. Brownstein was a principal member of Crescent Capital Group, an investment firm (formerly Trust Company of the West
Leveraged Finance Group) focused on special situations. During 2008, Mr. Brownstein was a Senior Advisor at Knowledge Universe
Ltd., a global education company, where he focused on turnaround operations. From 2000 to 2007, he was a Partner at ITU Ventures,
a venture capital firm, making venture and growth investments with a specialization in corporate strategy. Mr. Brownstein began
his career in 1996 at Donaldson Lufkin & Jenrette in the Merchant and Investment Banking divisions. Mr. Brownstein is either
a current or past member of the Cedars Sinai Board of Governors, Los Angeles Conservation Corps, Prospect Global Resources, and
The Palisades Group LLC, a Banc of California Company. Mr. Brownstein attended Columbia Business School and received his B.A.
from Tulane University.
Gregory Dangler is the President
and Chief Financial Officer of RMR IP, where he is responsible for the day-to-day operations of all business units. Since 2014,
Mr. Dangler has been the President, Chief Financial Officer, and Director of RMRI, an industrial commodities company. Mr. Dangler
is responsible for the day-to-day operations and corporate financial strategy of RMRI. Since 2008, Mr. Dangler has been a partner
at Rocky Mountain Resource Holdings and/or its predecessor affiliates, a natural resources operating and investment company. Previously,
from 2012-present, Mr. Dangler has served in multiple capacities, including Chief Restructuring Officer of Prospect Global Resources,
a natural resource development company. Prior to that, in 2009, Mr. Dangler founded a venture-backed technology company. As the
Chief Executive, he raised institutional capital and expanded its global presence with operating interests in Africa and South
America. From 2006 to 2007, Mr. Dangler was an associate with ITU Ventures, a venture capital firm, making venture and growth
investments. While with ITU, Mr. Dangler executed private and public equity transactions, directed M&A activity, and provided
strategic support to portfolio companies. In 2000, Mr. Dangler began his career in the U.S. Air Force and by 2004 was managing
complex infrastructure projects. Mr. Dangler received a BS in Mechanical Engineering from the United States Air Force Academy
and an MBA from the University of Southern California’s Marshall School of Business.
Andrew Peltz is a Partner
at Peltz Capital Management (“PCM”). Prior to forming PCM in 2003, Mr. Peltz worked at Triarc Companies, Inc. from
1999 to 2003 where he held the titles of Vice President, Investment Services and as an Associate of Corporate Development. He
was primarily responsible for the day-to-day oversight of Triarc’s $650 million plus investment portfolio. Prior to Triarc,
Mr. Peltz was Senior Investment Banker at Credit Agricole Lazard Financial Products Bank from 1997 to 1998, which is a joint venture
between Lazard Freres & Co. and Credit Agricole, specializing in structured finance transactions. From 1996 to 1997, Mr. Peltz
also served as a marketing associate for Lazard Asset Management, a division of Lazard Freres & Co., where he marketed their
vast array of fixed income, equity and alternative investment products. Mr. Peltz holds a BFA from New York University.
The Company believes that Mr. Peltz’s
education and management and accounting experience make him a valuable member to the Company’s board of directors.
Board Composition
Our By-Laws provide that the Board
of Directors shall consist of not less than one nor more than fifteen directors. Each director of the Company serves until his
successor is elected and qualified, subject to removal by the Company's majority shareholders. Each officer shall hold their offices
for such terms and shall exercise such powers and perform such duties as shall be determined by the Board of Directors, and shall
hold his office until his successor is elected and qualified, or until his earlier resignation or removal.
Audit Committee
Our Board of Directors has not established
a separate audit committee within the meaning of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Instead, the entire Board of Directors acts as the audit committee within the meaning of Section 3(a)(58)(B) of the
Exchange Act and will continue to do so until such time as a separate audit committee has been established.
Code of Ethics
The Company has adopted a Code of
Ethics applicable to all Company directors, officers and employees which is available upon written request to the Company at c/o
RMR Industrials, Inc., 9595 Wilshire Blvd, Suite 310, Beverly Hills, CA 90212
Potential Conflicts of Interest
Since we do not have an audit or
compensation committee comprised of independent directors, the functions that would have been performed by such committees are
performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority
to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware
of any other conflicts of interest with any of our executives or directors.
Involvement in Certain Legal
Proceedings
No director, executive officer,
significant employee or control person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation
S-K in the past 10 years.
Compliance with Section 16(a)
Of the Exchange Act
Section 16(a) of the Exchange Act
requires our directors, executive officers, and shareholders holding more than 10% of our outstanding Class B Common Stock to
file with the SEC initial reports of ownership and reports of changes in beneficial ownership of our Class B Common Stock. Executive
officers, directors, and persons who own more than 10% of our Class B Common Stock are required by SEC regulations to furnish
us with copies of all Section 16(a) reports they file.
Based solely upon a review of Forms
3, 4, and 5 delivered to us as filed with the SEC during our most recent fiscal year, none of our executive officers and directors,
and persons who own more than 10% of our Class B Common Stock failed to timely file the reports required pursuant to Section 16(a)
of the Exchange Act.
Nominations to the Board of Directors
Our directors take a critical role
in guiding our strategic direction and oversee the management of the Company. Board candidates are considered based upon various
criteria, such as their broad-based business and professional skills and experiences, a global business and social perspective,
concern for the long-term interests of the shareholders, diversity, and personal integrity and judgment
In addition, directors must have
time available to devote to Board activities and to enhance their knowledge in the growing business. Accordingly, we seek to attract
and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to the
Company.
In carrying out its responsibilities,
the Board will consider candidates suggested by shareholders. If a shareholder wishes to formally place a candidate’s name
in nomination, however, he or she must do so in accordance with the provisions of the Company’s Bylaws. Suggestions for
candidates to be evaluated by the directors must be sent to the Board of Directors, c/o RMR Industrials, Inc., 9595 Wilshire Blvd,
Suite 310, Beverly Hills, CA 90212.
Board Leadership Structure and
Role on Risk Oversight
Gregory Dangler, Chad Brownstein,
and Andrew Peltz comprise our Board of Directors, with Mr. Brownstein serving as our Chief Executive Officer. We have determined
this leadership structure is appropriate for us due to our small size and limited operations and resources. The Board of
Directors will continue to evaluate our leadership structure and modify as appropriate based on our size, resources and operations.
Currently, our Board of Directors
is establishing procedures to determine an appropriate role for the Board of Directors in the Company’s risk oversight function.
Compensation Committee Interlocks
and Insider Participation
No interlocking relationship exists
between our board of directors and the board of directors or compensation committee of any other company, nor has any interlocking
relationship existed in the past.
Family Relationships
There are no family relationships
between or among the directors or executive officers.
EXECUTIVE
COMPENSATION
Summary Compensation
The following table sets forth information
concerning the annual and long-term compensation awarded to, earned by, or paid to the named executive officers and directors
for all services rendered in all capacities to our Company for the period from October 15, 2014 (inception) through January 31,
2015:
SUMMARY COMPENSATION
TABLE |
| |
| |
| | |
| | |
| | |
| | |
Non- | | |
| | |
| |
| |
| |
| | |
| | |
| | |
| | |
Equity | | |
| | |
| |
| |
| |
| | |
| | |
| | |
| | |
Incentive | | |
All | | |
| |
| |
| |
| | |
| | |
| | |
| | |
Plan | | |
Other | | |
| |
| |
| |
| | |
| | |
Stock | | |
Option | | |
Compensa- | | |
Compensa- | | |
| |
| |
| |
Salary | | |
Bonus | | |
Awards | | |
Awards | | |
tion | | |
tion | | |
Total | |
Name & Principal
Position | |
Year | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Chad Brownstein | |
2014 | |
| 122,500 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 122,500 | |
CEO & Director | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gregory Dangler | |
2014 | |
| 122,500 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 122,500 | |
CFO & Director | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
We have no pension, health, annuity,
bonus, insurance, stock options, profit sharing, or similar benefit plans. No stock options or stock appreciation rights have
been granted to any of our directors or executive officers; none of our directors or executive officers exercised any stock options
or stock appreciation rights; and none of them hold unexercised stock options. We have no long-term incentive plans.
Outstanding Equity Awards
Our directors and officers do not
have unexercised options, stock that has not vested, or equity incentive plan awards.
Compensation of Directors
Other than as disclosed in the compensation
table above, our directors do not receive compensation for their services as directors.
Potential Payments Upon Termination
or Change-in-Control
SEC regulations state that we must
disclose information regarding agreements, plans or arrangements that provide for payments or benefits to our named executive
officers in connection with any termination of employment or change in control of the Company. Please see the section entitled
“Employment Agreements” below for a discussion of management compensation in the event of a termination of employment
or change in control of the Company.
Employment Agreements
None.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth
certain information with respect to the beneficial ownership of our Class A Common Stock and Class B Common Stock (on a post reverse-split
basis) as of October 7, 2015, and as adjusted to reflect the sale of our Class B Common Stock included in the Units offered by
this prospectus (assuming none of the individuals listed purchase Units in this offering), for (i) each director and officer,
(ii) all of our directors and officers as a group, and (iii) each person known to us to own beneficially five percent (5%) or
more of the outstanding shares of our Class A Common Stock or Class B Common Stock. Unless otherwise specified below, the address
of each of the persons listed in the table below is c/o RMR Industrials, Inc., 9595 Wilshire Blvd. #310, Beverly Hills, CA 90212.
To our knowledge, except as indicated
in the footnotes to this table or pursuant to applicable community property laws, the persons named in the table have sole voting
and investment power with respect to the shares of common stock indicated.
Name and Address of
Beneficial Owner(1) |
|
Class of
Common
Stock(2) |
|
Shares
Beneficially
Owned Prior
to Offering |
|
|
Shares
Beneficially
Owned After
Offering |
|
|
Percentage
Beneficially
Owned Prior to
Offering(3) |
|
|
Percentage
Beneficially
Owned
After
Offering(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and Executive
Officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory M. Dangler |
|
Class A |
|
|
9,499,657 |
(5) |
|
|
9,499,657 |
(5) |
|
|
26.55 |
% |
|
|
26.55 |
% |
President, Chief Financial Officer,
Secretary and Director |
|
Class B |
|
|
260,000 |
(5) |
|
|
260,000 |
(5) |
|
|
32.21 |
% |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chad Brownstein |
|
Class A |
|
|
10,791,701 |
(6) |
|
|
10,791,701 |
(6) |
|
|
30.16 |
% |
|
|
30.16 |
% |
Chief Executive Officer, Director
|
|
Class B |
|
|
260,000 |
(6) |
|
|
260,000 |
(6) |
|
|
32.21 |
% |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Peltz |
|
Class B |
|
|
15,000 |
|
|
|
15,000 |
|
|
|
1.86 |
% |
|
|
|
% |
Director |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Officers and Directors as a Group
|
|
Class A |
|
|
20,291,358 |
|
|
|
20,291,358 |
|
|
|
56.70 |
% |
|
|
56.70 |
% |
|
|
Class B |
|
|
275,000 |
|
|
|
275,000 |
|
|
|
34.07 |
% |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5% Shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legado Del Rey, LLC |
|
Class A |
|
|
15,494,500 |
(7) |
|
|
15,494,500 |
(7) |
|
|
43.30 |
% |
|
|
43.30 |
% |
121 South Beverly Drive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beverly Hills, CA 90212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principio Management LLC |
|
Class A |
|
|
9,499,657 |
|
|
|
9,499,657 |
|
|
|
26.55 |
% |
|
|
26.55 |
% |
77727111, LLC |
|
Class A |
|
|
10,791,701 |
|
|
|
10,791,701 |
|
|
|
30.16 |
% |
|
|
30.16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rocky Mountain Resource Holdings,
Inc. |
|
Class B |
|
|
260,000 |
|
|
|
260,000 |
|
|
|
32.21 |
% |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Munitz Family Trust |
|
Class B |
|
|
150,000 |
(8) |
|
|
150,000 |
(8) |
|
|
18.58 |
% |
|
|
|
% |
9595 Wilshire Blvd. #310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beverly Hills, CA 90212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) | Beneficial ownership
has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to
the rules of the SEC, shares of common stock which an individual or group has a right
to acquire within 60 days pursuant to the exercise of options or warrants are deemed
to be outstanding for the purpose of computing the percentage ownership of such individual
or group, but are not deemed to be beneficially owned and outstanding for the purpose
of computing the percentage ownership of any other person shown in the table. |
| (2) | The
Company has Class A Common Stock and Class B Common Stock. The holders of Class A Common
Stock will have the right to vote on all matters on which stockholders have the right
to vote. The holders of Class B Common Stock will have the right to vote solely on matters
where the vote of such holders is explicitly required under Nevada law, such as an approval
of a plan of merger, exchange or conversion, an increase or decrease in the number of
authorized shares of a class or series of stock in certain circumstances, and other situations
as required by Nevada law where the rights, preferences or limitations of such holders
are adversely impacted. On matters which the applicable class of stockholders
have the right to vote, each Class A Common Stock and Class B Common Stock shall be entitled
to one vote per share. |
|
(3) |
Based on 35,785,858
shares of Class A Common Stock and 833,459 shares of Class B Common Stock outstanding as of October 7, 2015. |
|
(4) |
Assumes the sale of 700,000 Units
from this offering. |
|
(5) |
Mr.
Gregory M. Dangler is the indirect owner of 9,499,657 shares of Class A Common Stock, which are directly held by Principio
Management LLC (“Principio”). Mr. Dangler is the managing member owner of Principio and has sole voting and dispositive
power over the shares held by Principio. Mr. Gregory M. Dangler is also the indirect owner of 260,000 shares of Class B Common
Stock, which are directly held by RMRH, and has shared voting and dispositive power over the shares held by RMRH. Principio
and 77727111 have agreed to vote unanimously on all matters requiring the vote of shares of Class Common Stock pursuant to
a voting agreement. Upon conversion of the Class A Common Stock held by Principio, it would be entitled to 474,983 shares
of Class B Common Stock, on a post-reverse-split basis. |
| (6) | Mr. Chad
Brownstein is the indirect owner of 10,791,701 shares of common stock, which are directly
held by 77727111, LLC. Mr. Brownstein is the managing member of 77727111 LLC and has
sole voting and dispositive power over the shares held by 77727111 LLC. Mr. Chad Brownstein
is also the indirect owner of 260,000 shares of Class B Common Stock, which are directly
held by RMRH, and has shared voting and dispositive power over the shares held by RMRH. Principio
and 77727111 have agreed to vote unanimously on all matters requiring the vote of shares
of Class Common Stock pursuant to a voting agreement. Upon conversion of the
Class A Common Stock held by 7727111, LLC, it would be entitled to 539,585 shares of
Class B Common Stock, on a post-reverse-split basis. |
|
(7) |
Edward Czuker is the manager of Legado Del Rey, LLC and has sole
voting and dispositive power over the shares held by this entity. |
|
(8) |
Barry Munitz is the trustee of The Munitz Family Trust and has
sole voting and dispositive power over the shares held by this entity. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Certain Relationships and Transactions
On November 17, 2014, RMRH became the majority shareholder of the
Company by acquiring 5,200,000 shares of common stock of the Company (the “Shares”), or 69.06% of the issued and outstanding
shares of common stock, pursuant to certain stock purchase agreements with former stockholders of the Company. The Shares were
acquired for an aggregate purchase price of $357,670.50. RMRH was the source of the funds used to acquire the Shares. Mr. Brownstein
is the owner of 50% of the outstanding capital stock of RMRH and is the Chief Executive Officer and a director of RMRH. Mr. Dangler
is the owner of 33.5% of the outstanding capital stock of RMRH and is the President, Chief Financial Officer and a director of
RMRH.
Since inception, the Company accrued $978,120 in amounts
owed to related parties for services performed or reimbursement of costs on behalf of the Company.
On October 15, 2014, RMR, IP entered into consulting agreements
with each of Gregory Dangler, who is our current President, and Chad Brownstein, who is our current Chief Executive Officer, pursuant
to which each of Mr. Dangler and Brownstein would provide services related to their roles as executive officers of the Company.
The Company has accrued $805,000 for unpaid officers’ compensation expense in accordance with such consulting agreements.
Under the terms of each consulting agreement, each consultant shall serve as an executive officer to the Company and receive monthly
compensation of $35,000. The consulting agreements may be terminated by either party for breach or upon thirty days prior written
notice.
On October 15, 2014, RMR, IP entered into consulting agreements
with each of Principio Management LLC, which holds 9,499,657 shares of Class A Common Stock of the Company (26.55%), and 77727111,
LLC, is the owner of 10,791,701 shares of Class A Common Stock of the Company (30.16%), relating to certain services provided
by each of these entities. Mr. Dangler is the sole owner of Principio Management LLC and Mr. Brownstein is the sole owner of 77727111,
LLC.
On February 1, 2015, RMR, IP entered into a management services
agreement with Industrial Management LLC (“IM”), to provide services to RMR, IP and affiliated entities, which include
assistance in operational and administrative matters, identifying, analyzing, and structuring growth initiatives, and potential
strategic acquisitions. Chad Brownstein is a Manager of IM. As compensation for these services, RMR, IP will pay to IM an annual
cash management fee in an amount equal to the greater of 2% of the Company’s annual gross revenues or $1,000,000, and a
development fee with respect to any capital project incurred by RMR IP equal to 2% of total project costs. In addition, IM has
the option to be assigned all available royalties from RMR IP’s mineral holdings, leases or interests greater than 75% of
net revenue interests for all mineral rights or production of minerals. At IM’s sole discretion, it may choose to accept
a preferred convertible security with a 15% dividend accruing quarterly in lieu of cash for some or all of the annual management
fee, development fee and royalty assignments. Such preferred convertible securities shall be convertible into either Class A Common
Stock or Class B Common Stock (as applicable) at a conversion price equal to fifty percent of the market price of the applicable
Class B Common Stock on the day prior to the date of issuance. In addition, these preferred convertible securities are callable
for a cash, for a period of six months following the date of issuance; provided, however, that if called, IM shall have the option
to convert the called preferred stock into either Class A Common Stock or Class B Common Stock (as applicable) at a conversion
price equal to sixty-six and two thirds percent of the market price of the applicable Class B Common Stock on the business day
immediately preceding the issuance date of preferred stock, and will include a blocker provision. In connection with the management
services agreement with IM, RMR IP entered into a registration rights agreement which requires RMR IP to register for resale any
securities issued as consideration under the management services agreement. The registration rights agreements provides for both
demand and piggy back registration rights, and requires that IM not transfer any shares of RMR IP during a 90 day period following
the effective date of a registration statement. The registration rights agreement terminates when the shares held by IM become
eligible for resale pursuant to Rule 144.
Other
than as set forth above, none of our current officers or directors have been involved in any material proceeding adverse to the
Company or any transactions with the Company or any of its directors, executive officers, affiliates or associates that are required
to be disclosed pursuant to the rules and regulations of the SEC.
Review, Approval or Ratification of Transactions with Related
Persons
Although we have adopted a Code of Ethics, we also rely on our
Board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction
in light of the affiliations of the director, officer or employee and the affiliations of such person’s immediate family.
Transactions are presented to our Board for approval before they are entered into or, if this is not possible, for ratification
after the transaction has occurred. If our Board finds that a conflict of interest exists, then it will determine the appropriate
remedial action, if any. Our Board approves or ratifies a transaction if it determines that the transaction is consistent with
the best interests of the Company.
Director Independence
During the fiscal year ended September 30, 2014, we had no independent
directors on our board. We evaluate independence by the standards for director independence established by applicable laws, rules,
and listing standards including, without limitation, the standards for independent directors established by The New York Stock
Exchange, Inc., the NASDAQ National Market, and the Securities and Exchange Commission.
Subject to some exceptions, these standards generally provide that
a director will not be independent if (a) the director is, or in the past three years has been, an employee of ours; (b) a member
of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (c) the director
or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from us other
than for service as a director (or for a family member, as a non-executive employee); (d) the director or a member of the director’s
immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants,
or has worked for such firm in any capacity on our audit; (e) the director or a member of the director’s immediate family
is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers serves
on the compensation committee; or (f) the director or a member of the director’s immediate family is an executive officer
of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past
three years, exceeds the greater of $1,000,000 or two percent of that other company’s consolidated gross revenues.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1 under the Securities
Act with the SEC for the securities offered hereby. This prospectus, which constitutes a part of the registration statement, does
not contain all of the information set forth in the registration statement or the exhibits and schedules which are part of the
registration statement. For additional information about our securities, and us we refer you to the registration statement and
the accompanying exhibits and schedules. Statements contained in this prospectus regarding the contents of any contract or any
other documents to which we refer are not necessarily complete. In each instance, reference is made to the copy of the contract
or document filed as an exhibit to the registration statement, and each statement is qualified in all respects by that reference.
Copies of the registration statement and the accompanying exhibits and schedules may be inspected without charge (and copies may
be obtained at prescribed rates) at the public reference facility of the SEC at Room 1024, 100 F Street, N.E. Washington, D.C.
20549.
You can request copies of these documents upon payment of a duplicating
fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330 for further information on the operation of its public reference
rooms. Our filings, including the registration statement, will also be available to you on the Internet web site maintained by
the SEC at http://www.sec.gov.
RMR INDUSTRIALS,
INC.
INDEX TO UNAUDITED
FINANCIAL STATEMENT
FINANCIAL STATEMENTS
June 30, 2015
RMR Industrials,
Inc.
Consolidated Balance Sheet
| |
June
30, 2015 | |
| |
(Unaudited) | |
ASSETS | |
| | |
Current
assets | |
| | |
Cash | |
$ | 4,798 | |
Total
current assets | |
| 4,798 | |
| |
| | |
Intangible
asset, net | |
| 1,489 | |
Total
assets | |
$ | 6,287 | |
| |
| | |
LIABILITIES
AND STOCKHOLDERS' DEFICIT | |
| | |
Current
liabilities | |
| | |
Accounts payable | |
$ | 78,081 | |
Accounts payable, related
party | |
| 714,120 | |
Accrued
liabilities related party | |
| 595,743 | |
Total
liabilities | |
| 1,387,944 | |
| |
| | |
Stockholders'
Deficit | |
| | |
Preferred
stock, $0.001 par value, 50,000,000 shares authorized and none issued and outstanding | |
| - | |
Class A
common stock, $0.001 par value, 2,000,000,000 shares authorized, 35,785,858 shares issued and outstanding | |
| 35,786 | |
Class B
common stock, $0.001 par value, 2,000,000,000 shares authorized, 16,144,142 shares issued and outstanding | |
| 16,144 | |
Additional
paid-in capital | |
| (47,875 | ) |
Accumulated
deficit | |
| (1,385,712 | ) |
Total
stockholders’ deficit | |
$ | (1,381,657 | ) |
| |
| | |
Total
liabilities and stockholders’ deficit | |
$ | 6,287 | |
RMR Industrials,
Inc.
Consolidated Statements Of Operations
(Unaudited)
For the three months ended June 30,
2015 and October 15, 2014 (inception) through June 30, 2015
| |
For the three months ended
June 30, 2015 | | |
For the period October 15,
2014 (inception)
through June 30, 2015 | |
| |
(Unaudited) | | |
(Unaudited) | |
| |
| | |
| |
Operating
Expenses | |
| | | |
| | |
Selling, general
and administrative | |
$ | 537,248 | | |
$ | 1,385,712 | |
Loss
from operations | |
| (537,248 | ) | |
$ | (1,385,712 | ) |
Other income and expense | |
| - | | |
| - | |
Loss before income tax provision | |
| (537,248 | ) | |
| (1,385,712 | ) |
Income tax provision | |
| - | | |
| - | |
Net
loss | |
$ | (537,248 | ) | |
$ | (1,385,712 | ) |
| |
| | | |
| | |
Basic
and diluted loss per common share | |
$ | (0.01 | ) | |
$ | (0.05 | ) |
| |
| | | |
| | |
Weighted
average shares outstanding | |
| 51,930,000 | | |
| 29,748,024 | |
The accompanying notes are an integral
part of these consolidated financial statements.
RMR Industrials,
Inc.
Consolidated Statement Of Cash Flows
(Unaudited)
For the period from October 15, 2014
(inception) through June 30, 2015
| |
For the period
from October
15,
2014 (inception)
through June 30, 2015 | |
| |
(Unaudited) | |
Cash
flow from operating activities | |
| | |
Net loss | |
$ | (1,385,712 | ) |
Adjustments
to reconcile net loss to net cash used in operating activities | |
| | |
Amortization expense | |
| 22,886 | |
Changes in operating assets and liabilities | |
| | |
Accounts payable | |
| 78,081 | |
Accounts payable, related parties | |
| 689,745 | |
Accrued
liabilities, related parties | |
| 595,000 | |
Net
cash used in operating activities | |
| - | |
| |
| | |
Net
cash used in investing activities | |
| - | |
| |
| | |
Proceeds from issuance
of common stock | |
| 4,798 | |
Net
cash provided by financing activities | |
| 4,798 | |
| |
| | |
Net
increase in cash | |
| 4,798 | |
| |
| | |
Cash
at beginning of period | |
| - | |
Cash
at end of period | |
$ | 4,798 | |
| |
| | |
Supplemental
cash flow information | |
| | |
Cash paid for interest | |
$ | - | |
Cash paid for income taxes | |
$ | - | |
Supplemental disclosure of non-cash transactions:
During the period ended June 30, 2015, the Company issued
26,286,201 shares of Class A and 1,390,000 shares of Class B common stock under subscription agreements valued at $3,031.
During the period ended June 30, 2015, the Company acquired
an intangible asset from a related party, which has been accrued in accounts payable, related parties valued at $24,375
The accompanying notes are an integral
part of these consolidated financial statements.
RMR INDUSTRIALS,
INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2015
NOTE A – FORMATION, CORPORATE CHANGES AND
MATERIAL MERGERS AND ACQUISITIONS
Online Yearbook was incorporated in the State of Nevada
on August 6, 2012. Online Yearbook was a development stage company with the principal business objective of developing and marketing
an online yearbook.
On November 17, 2014, Rocky Mountain Resource Holdings LLC,
a Nevada limited liability company (the “Purchaser”) became the majority shareholder of Online Yearbook, by acquiring
5,200,000 shares of common stock of Online Yearbook (the “Shares”), or 69.06% of the issued and outstanding shares
of common stock, pursuant to stock purchase agreements with Messrs. El Maraana and Salah Blal. The Shares were acquired for an
aggregate purchase price of $357,670. The Purchaser was the source of the funds used to acquire the Shares. In connection with
Online Yearbook’s receipt of approval from the Financial Industry Regulatory Authority (“FINRA”), effective
December 8, 2014, Online Yearbook amended its Articles of Incorporation to change its name from “Online Yearbook”
to “RMR Industrials, Inc.”
RMR Industrials, Inc. (the “Company” or “RMRI”)
seeks to acquire and consolidate complimentary industrial assets. Typically these small to mid sized assets are the core manufacturer
and supplier of specific bulk commodity minerals and chemicals distributed to the global manufacturer industry. RMRI’s consolidation
strategy is to assemble a portfolio of mature and value-add industrial commodities businesses to generate scalable enterprises
with a vast portfolio of products and services addressing a common and stable customer base.
On February 27, 2015 (the “Closing Date”), the
Company entered into and consummated a merger transaction pursuant to an Agreement and Plan of Merger (the “Merger Agreement”)
by and among the Company, OLYB Acquisition Corporation, a Nevada corporation and wholly owned subsidiary of the Company (“Merger
Sub”) and RMR IP, Inc., a Nevada corporation (“RMR IP”). In accordance with the terms of Merger Agreement, on
the Closing Date, Merger Sub merged with and into RMR IP (the “Merger”), with RMR IP surviving the Merger as our wholly
owned subsidiary.
RMR IP was formed to acquire and consolidate complimentary
industrial commodity assets through capitalizing on the volatile oil markets, down cycles in commodity markets, and other ancillary
opportunities. RMR IP is focused on managing the supply chain in order to offer a large and diverse set of products and services.
The Merger Agreement includes customary representations,
warranties and covenants made by the Company, Merger Sub and RMR IP as of specific dates. The assertions embodied in those representations
and warranties were made solely for purposes of the Merger Agreement and are not intended to provide factual, business, or financial
information about the Company, Merger Sub and RMR IP. Moreover, some of those representations and warranties (i) may not be accurate
or complete as of any specified date, (ii) may be subject to a contractual standard of materiality different from those generally
applicable to shareholders or different from what a shareholder might view as material, (iii) may have been used for purposes
of allocating risk among the Company, Merger Sub and RMR IP, rather than establishing matters as facts, and/or (iv) may have been
qualified by certain disclosures not reflected in the Merger Agreement that were made to the other party in connection with the
negotiation of the Merger Agreement and generally were solely for the benefit of the parties to the Merger Agreement.
For financial reporting purposes, the Merger represents
a “reverse merger” rather than a business combination and RMR IP is deemed to be the accounting acquirer in the transaction.
Consequently, the assets and liabilities and the historical operations that will be reflected in the Company’s future financial
statements will be those of RMR IP. The Company’s assets, liabilities and results of operations will be consolidated with
the assets, liabilities and results of operations of RMR IP after consummation of the Merger, and the historical financial statements
of the Company before the Merger will be replaced with the historical financial statements of RMR IP before the Merger in all
future filings with the SEC.
On March 10, 2015, we formed United States Talc and Minerals
Inc. (“US Talc and Minerals”), incorporated in the State of Nevada as a wholly-owned subsidiary of the Company for
the purpose of facilitating future acquisitions.
Basis of Presentation and Consolidation
The accompanying unaudited consolidated financial statements
for the period ended June 30, 2015 have been prepared in accordance with accounting principles generally accepted in the United
States for interim financial information in accordance with Securities and Exchange Commission (SEC) Regulation S-X rule 8-03.
The unaudited consolidated financial statements include the financial condition and results of operations of our wholly-owned
subsidiary, US Talc and Minerals, where intercompany balances and transactions have been eliminated in consolidation. In the opinion
of management, the unaudited consolidated financial statements have been prepared on the same basis as the annual financial statements
and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position
as of June 30, 2015 and the results of operations and cash flows for the periods then ended. The financial data and other information
disclosed in these notes to the interim consolidated financial statements related to the period are unaudited.
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
A summary of significant accounting policies of the Company
is presented to assist in understanding the Company’s consolidated financial statements. The accounting policies presented
in these footnotes conform to accounting principles generally accepted in the United States of America (“GAAP”) and
have been consistently applied in the preparation of the accompanying consolidated financial statements. These consolidated financial
statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.
Use of Estimates
The preparation of financial statements in conformity with
GAAP requires management to make estimates, judgments, and assumptions that impact the reported amounts of assets, liabilities,
and expenses, and disclosure of contingent assets and liabilities in the financial statements and accompanying notes. Actual results
could materially differ from those estimates. Management considers many factors in selecting appropriate financial accounting
policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements.
Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected
business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and
whether historical trends are expected to be representative of future trends. The estimation process may yield a range of potentially
reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable
estimates. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake
in the future, actual results may ultimately materially differ from those estimated amounts and assumptions used in the preparation
of the financial statements.
Segment Reporting
Operating segments are identified as components of an enterprise
about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making
decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as
one operating segment.
Cash and Cash Equivalents
The Company considers all highly liquid securities with
original maturities of three months or less at the date of purchase to be cash equivalents. As of June 30, 2015, the Company had
cash of $4,798 and no cash equivalents. The Company may occasionally maintain cash balances in excess of amounts insured by the
Federal Deposit Insurance Corporation (“FDIC”). The amounts are held with major financial institutions and are monitored
by management to mitigate credit risk.
Intangible Assets
Intangible assets are stated at cost and consist of an option
contract. Amortization is computed on the straight-line method over the estimated useful or contractual life of these assets,
whichever is shorter. Intangible assets consist of the following:
| |
June
30, 2015 | |
| |
(Unaudited) | |
Option
Contract | |
$ | 24,375 | |
Accumulated
Amortization | |
| (22,886 | ) |
Option
Contract, Net | |
$ | 1,489 | |
Impairment of Long-Lived Assets
The Company evaluates long-lived assets for impairment whenever
events or changes in circumstances indicate the carrying value may not be recoverable. Factors considered include:
|
• |
Significant changes
in the operational performance or manner of use of acquired assets or the strategy for our overall business, |
|
• |
Significant negative
market conditions or economic trends, and |
|
• |
Significant technological
changes or legal factors which may render the asset obsolete. |
The Company evaluated long-lived assets based upon an estimate
of future undiscounted cash flows. Recoverability of these assets is measured by comparing the carrying value to the future net
undiscounted cash flows expected to be generated by the asset. An impairment loss is recognized when the carrying value exceeds
the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset. Future net undiscounted
cash flows include estimates of future revenues and expenses which are based on projected growth rates. The Company continually
uses judgment when applying these impairment rules to determine the timing of the impairment tests, the undiscounted cash flows
used to assess impairments and the fair value of a potentially impaired asset.
Fair Value Measurements
The fair value of a financial instrument is the amount that
could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair
value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability
of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level
of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three
categories:
- Level 1: Quoted market prices in active markets for identical
assets or liabilities
- Level 2: Observable market-based inputs or inputs that
are corroborated by market data
- Level 3: Unobservable inputs that are not corroborated
by market data
Net Loss per Common Share
Basic net loss per common share is calculated by dividing
the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period,
without consideration for the potentially dilutive effects of converting stock options or restricted stock purchase rights outstanding.
Diluted net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average
number of common shares outstanding during the period and the potential dilutive effects of stock options or restricted stock
purchase rights outstanding during the period determined using the treasury stock method. There are no such anti-dilutive common
share equivalents outstanding as June 30, 2015 which were excluded from the calculation of diluted loss per common share.
Income Taxes
The Company accounts for income taxes under the asset and
liability method, which requires, among other things, that deferred income taxes be provided for temporary differences between
the tax bases of the Company's assets and liabilities and their financial statement reported amounts. Under this method, deferred
tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets
and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of
a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment
date.
A valuation allowance is recorded by the Company when it
is more likely than not that some portion or all of a deferred tax asset will not be realized. In making such a determination,
management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences,
projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation
allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for
income taxes will increase or decrease, respectively, in the period such determination is made.
Additionally, the Company recognizes the tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities based on the technical merits of the position. The tax benefit recognized in the financial statements for a particular
tax position is based on the largest benefit that is more likely than not to be realized upon settlement. Accordingly, the Company
establishes reserves for uncertain tax positions. The Company has not recognized interest or penalties in its statement of operations
and comprehensive loss since inception.
Recent Accounting Pronouncements
The Financial Accounting Standards Board recently issued
Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure
of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management to assess an
entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently
in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an
evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s
plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s
plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment
for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in
this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.
The Financial Accounting Standards Board recently issued
ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment
to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the financial reporting distinction of being
a development stage entity within U.S. generally accepted accounting principles. Accordingly, the ASU eliminates the incremental
requirements for development stage entities to (a) present inception-to-date information in the statements of income, cash flows
and shareholder’s equity, (b) label the financial statements as those of a development stage entity, (c) disclose a description
of the development stage activities in which the entity is engaged and (d) disclose in the first year in which the development
stage entity that in prior years it had been in the development stage. The amendments related to the elimination of inception-to-date
information should be applied retrospectively. For public business entities, those amendments are effective for annual reporting
periods beginning after December 15, 2014, and interim periods therein. Early application of each of these amendments is permitted
for any annual reporting period or interim period for which the entity’s financials statements has not yet been issued.
The Company has elected early application of these amendments in these financial statements.
Management believes recently issued
accounting pronouncements will have no impact on the financial statements of the Company.
NOTE C – GOING CONCERN
The Company's financial statements are prepared using accounting
principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization
of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash
or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow
it to continue as a going concern.
Under the going concern assumption, an entity is ordinarily
viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing
trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded
on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.
The ability of the Company to continue as a going concern
is dependent upon its ability to successfully accomplish the business plan and eventually attain profitable operations. The accompanying
financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.
During the next year, the Company’s foreseeable cash
requirements will relate to continual development of the operations of its business, maintaining its good standing and making
the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with research and development.
The Company may experience a cash shortfall and be required to raise additional capital.
Historically, it has mostly relied upon internally generated
funds and funds from the sale of shares of stock and from acquiring loans to finance its operations and growth. Management may
raise additional capital through future public or private offerings of the Company’s stock or through loans from private
investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do
so could have a material and adverse effect upon it and its shareholders.
In the past year, the Company funded operations by using
cash proceeds received through the issuance of common stock and proceeds from related party debt. For the coming year, the Company
plans to continue to fund the Company through debt and securities sales and issuances until the company generates enough revenues
through the operations as stated above.
NOTE D – TRANSACTIONS WITH RELATED PARTIES
Since inception, the Company accrued $714,120 in amounts
owed to related parties for services performed or reimbursement of costs on behalf of the Company. In addition, the Company has
accrued $595,000 for unpaid officers’ compensation expense in accordance with consulting agreements with our Chief Executive
Officer and President. Under the terms of each consulting agreement, each consultant shall serve as an executive officer to the
Company and receive monthly compensation of $35,000. The consulting agreements may be terminated by either party for breach or
upon thirty days prior written notice.
On February 1, 2015, RMR, IP entered into a management services
agreement with Industrial Management LLC (“IM”), to provide services to RMR, IP and affiliated entities, which include
assistance in operational and administrative matters, identifying, analyzing, and structuring growth initiatives, and potential
strategic acquisitions. As compensation for these services, RMR, IP will pay to IM an annual cash management fee in an amount
equal to the greater of 2% of the Company’s annual gross revenues or $1,000,000, and a development fee with respect to any
capital project incurred by RMR IP equal to 2% of total project costs. In addition, IM has the option to be assigned all available
royalties from RMR IP’s mineral holdings, leases or interests greater than 75% of net revenue interests for all mineral
rights or production of minerals. At IM’s sole discretion, it may choose to accept a preferred convertible security with
a 15% dividend accruing quarterly in lieu of cash for some or all of the annual management fee, development fee and royalty assignments.
Such preferred convertible securities shall be convertible into either Class A Common Stock or Class B Common Stock (as applicable)
at a conversion price equal to fifty percent of the market price of the applicable Class B Common Stock on the day prior to the
date of issuance. In addition, these preferred convertible securities are callable for a cash, for a period of six months following
the date of issuance; provided, however, that if called, IM shall have the option to convert the called preferred stock into either
Class A Common Stock or Class B Common Stock (as applicable) at a conversion price equal to sixty-six and two thirds percent of
the market price of the applicable Class B Common Stock on the business day immediately preceding the issuance date of preferred
stock, and will include a blocker provision. In connection with the management services agreement with IM, RMR IP entered into
a registration rights agreement which requires RMR IP to register for resale any securities issued as consideration under the
management services agreement. The registration rights agreements provides for both demand and piggy back registration rights,
and requires that IM not transfer any shares of RMR IP during a 90 day period following the effective date of a registration statement.
The registration rights agreement terminates when the shares held by IM become eligible for resale pursuant to Rule 144.
NOTE E – INTANGIBLE ASSETS
The Company obtained an Option Agreement
(“Option Agreement”) from RMR Holdings, Inc. with the Colorado School of Mines (“CSM”), which grants
the Company an exclusive nine month option period to obtain an exclusive license for any patent rights owned by CSM. On
August 25, 2014, CSM entered into the Option Agreement with the Company for a non-refundable fee of $30,000. Since the
Company was in the process of formation, RMR Holdings, Inc. countersigned the Option Agreement with CSM on behalf of the
Company. On October 15, 2014, the Company was incorporated in Nevada (Note 1) and RMR Holdings, Inc. assigned the Option
Agreement to the Company. RMR Holdings, Inc. recorded amortization expense of $5,625 through October 15, 2014, which
represented the elapsed time of holding the option since it was executed. The Company owed RMR Holdings, Inc. $24,375 which
represented the approximate carrying value of RMR Holdings, Inc. at October 15, 2014, for an exclusive period which was
initially set to expire on May 25, 2015, to evaluate CSM’s existing patent rights, technology and market potential. The
Option Agreement was amended to extend the evaluation period until July 25, 2015. The Company may extend the Option
Agreement for two (2) three month periods in exchange for a $3,000 extension fee per each patent or patent application. The
value of the Option Agreement will be amortized on a straight-line basis over the term of the exclusivity period.
NOTE F – STOCKHOLDERS DEFICIT
Preferred Stock
The Company has authorized 50,000,000 shares of preferred
stock for issuance. At June 30, 2015, no preferred stock was issued and outstanding.
Common Stock
The Company has authorized 4,000,000,000 shares of common
stock for issuance, including 2,000,000,000 shares of Class A Common Stock, 2,000,000,000 shares of Class B Common Stock. At June
30, 2015, the Company had 35,785,858 and 16,144,142 shares issued and outstanding of Class A Common Stock and Class B Common Stock,
respectively.
The holders of Class A Common Stock will have the right
to vote on all matters on which stockholders have the right to vote. The holders of Class B Common Stock will have the right to
vote solely on matters where the vote of such holders is explicitly required under Nevada law. The holders of Class A Common
Stock and Class B Common stock will have equal distribution rights, provided that distributions in securities shall be made in
either identical securities or securities with similar voting characteristics. The holders of Class A Common Stock and Class
B Common Stock will be entitled to receive identical per-share consideration upon a merger, conversion or exchange of the Company
with another entity, and will have equal rights upon dissolutions, liquidation or winding-up.
NOTE G – SUBSEQUENT
EVENT
On July 1, 2015, the Company filed its Form S-1 Registration
Statement to issue new shares of Class B Common Stock.
In October 2015, we received
$1.4 million in shareholder advances for payment of anticipated expenses associated with our offering.
RMR IP, INC.
9595 Wilshire Blvd., Suite 310
Beverly Hills, CA 90212
Report of Independent Registered Public Accounting
Firm and
Audited Financial Statements
As of January 31, 2015 and for the period from
October 15, 2014 (inception) through January 31,
2015
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
RMR IP, Inc.
We have audited the accompanying balance sheet of RMR IP,
Inc. as of January 31, 2015, and the related statements of operations, member’s deficit and cash flows for the period from
October 15, 2014 (date of inception) through January 31, 2015. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required
to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of RMR IP, Inc.as of January 31, 2015, and the results of its
operations and its cash flows for the period from October 15, 2014 (date of inception) through January 31, 2015 in conformity
with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has
suffered losses, a working capital deficit, and has negative cash flows from operations. This raises substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard to these matters also are described in Note 1.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Hein & Associates LLP
Irvine, California
February 27, 2015, except for Note 2 as to which the date is May 8, 2015
RMR
IP INCORPORATED
Balance Sheet
| |
January 31, | |
| |
2015 | |
Assets | |
| | |
Cash | |
$ | 1,767 | |
Current assets | |
| 1,767 | |
| |
| | |
Intangible assets, net | |
| 12,463 | |
Total
assets | |
$ | 14,230 | |
| |
| | |
Liabilities
and stockholders' equity | |
| | |
Accounts payable, related parties | |
$ | 174,984 | |
Accrued liabilities, related
parties | |
| 245,000 | |
Total liabilities | |
| 419,984 | |
| |
| | |
Stockholders' deficit: | |
| | |
Preferred stock, $0.0001 par
value, 50,000,000 shares authorized and none issued and outstanding | |
| | |
Class A common stock, $0.0001
par value, 100,000,000 shares authorized, 35,785,858 shares issued and outstanding | |
| 3,579 | |
Class B common stock, $0.0001
par value, 450,000,000 shares authorized, 8,614,142 shares issued and outstanding | |
| 861 | |
Common stock subscribed, not issued | |
| (3,031 | ) |
Additional paid in capital | |
| 358 | |
Accumulated deficit | |
| (407,521 | ) |
Total stockholders'
deficit | |
| (405,754 | ) |
Total
liabilities and stockholders' deficit | |
$ | 14,230 | |
The accompanying notes are an integral
part of these financial statements.
RMR
IP, INCORPORATED
Statement of Operations and Comprehensive
Loss
| |
Period
from October 15, 2014 (inception) through January
31, 2015 | |
Operating expenses: | |
| | |
Selling, general,
and administrative | |
$ | 407,521 | |
Loss from operations | |
| (407,521 | ) |
Other income and expense | |
| — | |
Loss before income tax provision | |
| (407,521 | ) |
Income tax provision | |
| — | |
Net loss and comprehensive
loss | |
$ | (407,521 | ) |
| |
| | |
Net loss per share, basic
and diluted | |
$ | (0.50 | ) |
Basic and diluted weighted average shares outstanding | |
| 822,222 | |
The accompanying notes are an integral
part of these financial statements.
RMR IP, INCORPORATED
Statement of Stockholders’
Equity
| |
Common Stock | | |
Common Stock | | |
Additional | | |
| | |
| | |
| |
| |
Class
A | | |
Class
B | | |
Paid-in | | |
Common Stock | | |
Accumulated | | |
| |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Subscribed | | |
Deficit | | |
Total | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance, October 15, 2014 | |
| - | | |
$ | - | | |
| - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock through subscription | |
| 35,785,858 | | |
| 3,579 | | |
| 8,614,142 | | |
| 861 | | |
| 358 | | |
| (3,031 | ) | |
| - | | |
| 1,767 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss for the period ended January 31, 2015 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (407,521 | ) | |
| (407,521 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, January 31, 2015 | |
| 35,785,858 | | |
$ | 3,579 | | |
| 8,614,142 | | |
$ | 861 | | |
$ | 358 | | |
$ | (3,031 | ) | |
$ | (407,521 | ) | |
$ | (405,754 | ) |
See accompanying notes to financial
statements.
RMR IP, INCORPORATED
Statement of Cash Flows
| |
Period from October 15, 2014 (inception) through January 31,
2015 | |
| |
| |
Cash flows from operating activities: | |
| | |
Net loss | |
$ | (407,521 | ) |
Amortization expense | |
| 11,912 | |
Adjustments to reconcile net loss to net cash provided
by operating activities: | |
| | |
Accounts payable, related parties | |
| 150,609 | |
Accrued liabilities, related
parties | |
| 245,000 | |
Net cash provided by operating
activities | |
| — | |
| |
| | |
Proceeds from issuance of common
stock | |
| 1,767 | |
Net cash
provided by financing activities | |
| 1,767 | |
| |
| | |
Net increase in cash | |
| 1,767 | |
Cash at beginning of period | |
| — | |
Cash at end of period | |
$ | 1,767 | |
| |
| | |
Supplemental disclosures of cash flow information: | |
| | |
Cash paid for interest | |
$ | — | |
Cash paid for income taxes | |
$ | — | |
Supplemental disclosure of non-cash transactions:
During the period ended January 31, 2015, the Company issued
26,286,201 shares of Class A and 1,390,000 shares of Class B common stock under subscription agreements valued at $3,031.
During the period ended January 31, 2015, the Company acquired
an intangible asset from a related party, which has been accrued in accounts payable, related parties valued at $24,375
The accompanying notes are an integral
part of these financial statements.
1.
Organization and Basis of Presentation
RMR IP (the “Company”)
was incorporated on October 15, 2014 as a Nevada corporation. RMR IP was formed to acquire and consolidate complimentary industrial
commodity assets through capitalizing on the volatile oil market, down cycles in commodity markets, and other ancillary opportunities.
Typically these assets are the core manufacturer and supplier of specific bulk commodity minerals, chemicals and petrochemicals
distributed to the global manufacturing industry. The Company’s consolidation strategy is to assemble a portfolio of mature
and value-add industrial commodities businesses to generate scalable enterprises with a large portfolio of products and services
addressing a common and stable customer base. The Company is focused on managing the supply chain in order to offer a large and
diverse set of products and services.
The cash flows generated by the businesses
that we will operate will provide us with the ability to pursue further acquisitions in order to build on our existing segments,
or to establish a new business platform for future growth. We plan to employ a disciplined approach to identify and evaluate potential
acquisitions, only pursuing those that meet our financial and strategic criteria. We believe our discipline throughout the acquisition
process will maximize the chances of long-term success. At January 31, 2015, the Company had cash of $1,767, and a working capital
deficit of $418,217. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues
adequate to support the Company’s cost structure.
The Company’s net loss and working
capital deficit raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial
statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The financial statements for the period from October 15, 2014 (inception) through January 31,
2015 do not include any adjustments to reflect the possible future effects of the recoverability and classification of assets
or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue
as a going concern. The Company may never become profitable, or if it does, it may not be able to sustain profitability on a recurring
basis.
2. Restatement
The Company has restated its previously
issued Statement of Cash Flows for the period from October 15, 2014 (inception) through January 31, 2015 to correct for an error
in its presentation of a non-cash acquisition of an intangible asset. The Company restated its acquisition of an intangible asset
of $24,375 as a non-cash transaction with a related party. The effect of the correction resulted in a reduction in cash flows
provided by operating activities and removal of cash used in investing activities. The change in presentation had no effect on
the Balance Sheet, Statement of Operations and Comprehensive Loss or Statement of Shareholders’ Equity.
3. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying combined financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or
GAAP.
Use of Estimates
The preparation of financial statements
in conformity with GAAP requires management to make estimates, judgments, and assumptions that impact the reported amounts of
assets, liabilities, and expenses, and disclosure of contingent assets and liabilities in the financial statements and accompanying
notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate
financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of
these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect
estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used
in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process
may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that
falls within that range of reasonable estimates. Although these estimates are based on the Company’s knowledge of current
events and actions it may undertake in the future, actual results may ultimately materially differ from those estimated amounts
and assumptions used in the preparation of the financial statements.
Segment Reporting
Operating segments are identified as
components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating
decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and
manages its business as one operating segment.
Cash and Cash Equivalents
The Company considers all highly liquid
securities with original maturities of three months or less at the date of purchase to be cash equivalents. As of January 31,
2015, the Company had cash of $1,767 and no cash equivalents. The Company occasionally maintains cash balances in excess of amounts
insured by the Federal Deposit Insurance Corporation (“FDIC”). The amounts are held with major financial institutions
and are monitored by management to mitigate credit risk.
Intangible Assets
Intangible assets are stated at cost
and consist of an option contract. Amortization is computed on the straight-line method over the estimated useful or contractual
life of these assets, whichever is shorter. Intangible assets consist of the following :
| |
January
31,
2015 | |
| |
| |
Option
Contract | |
$ | 24,375 | |
Accumulated
Amortization | |
| (11,912 | ) |
| |
| | |
Option
Contract, Net | |
$ | 12,463 | |
Impairment of Long-Lived Assets
The Company evaluates long-lived assets
for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Factors considered
include:
|
• |
Significant changes
in the operational performance or manner of use of acquired assets or the strategy for our overall business, |
|
|
|
|
• |
Significant negative market conditions
or economic trends, and |
|
|
|
|
• |
Significant technological changes
or legal factors which may render the asset obsolete. |
The Company evaluated long-lived assets
based upon an estimate of future undiscounted cash flows. Recoverability of these assets is measured by comparing the carrying
value to the future net undiscounted cash flows expected to be generated by the asset. An impairment loss is recognized when the
carrying value exceeds the undiscounted future cash flows estimated to result from the use and eventual disposition of the asset.
Future net undiscounted cash flows include estimates of future revenues and expenses which are based on projected growth rates.
The Company continually uses judgment when applying these impairment rules to determine the timing of the impairment tests, the
undiscounted cash flows used to assess impairments and the fair value of a potentially impaired asset.
Fair Value Measurements
The fair value of a financial instrument
is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked
to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize
the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy
is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined
into the following three categories:
- Level 1: Quoted market prices in active markets for identical
assets or liabilities
- Level 2: Observable market-based inputs or inputs that
are corroborated by market data
- Level 3: Unobservable inputs that are not corroborated
by market data
Net Loss per Common Share
Basic net loss per common share is
calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding
during the period, without consideration for the potentially dilutive effects of converting stock options or restricted stock
purchase rights outstanding. Diluted net loss per common share is calculated by dividing the net loss attributable to common stockholders
by the weighted average number of common shares outstanding during the period and the potential dilutive effects of stock options
or restricted stock purchase rights outstanding during the period determined using the treasury stock method. There are no such
anti-dilutive common share equivalents outstanding as January 31, 2015 which were excluded from the calculation of diluted loss
per common share.
Income Taxes
The Company accounts for income taxes
under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporary
differences between the tax bases of the Company's assets and liabilities and their financial statement reported amounts. Under
this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements
and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that
includes the enactment date.
A valuation allowance is recorded
by the Company when it is more likely than not that some portion or all of a deferred tax asset will not be realized. In making
such a determination, management considers all available positive and negative evidence, including future reversals of existing
taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing
the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax
assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.
Additionally, the Company recognizes
the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities based on the technical merits of the position. The tax benefit recognized in the financial statements
for a particular tax position is based on the largest benefit that is more likely than not to be realized upon settlement. Accordingly,
the Company establishes reserves for uncertain tax positions. The Company has not recognized interest or penalties in its statement
of operations and comprehensive loss since inception.
Recent Accounting Pronouncements
The Financial Accounting Standards Board
recently issued Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40):
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments require management
to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that
are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt,
(2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating
effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration
of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated,
and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to
be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods
and interim periods thereafter.
The Financial Accounting Standards Board
recently issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements,
Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the financial reporting
distinction of being a development stage entity within U.S. generally accepted accounting principles. Accordingly, the ASU eliminates
the incremental requirements for development stage entities to (a) present inception-to-date information in the statements of
income, cash flows and shareholder’s equity, (b) label the financial statements as those of a development stage entity,
(c) disclose a description of the development stage activities in which the entity is engaged and (d) disclose in the first year
in which the development stage entity that in prior years it had been in the development stage. The amendments related to the
elimination of inception-to-date information should be applied retrospectively. For public business entities, those amendments
are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early application of
each of these amendments is permitted for any annual reporting period or interim period for which the entity’s financials
statements has not yet been issued. The Company has elected early application of these amendments in these financial statements.
Management believes
recently issued accounting pronouncements will have no impact on the financial statements of the Company.
4. Transactions with Related Parties
Since inception,
the Company accrued $174,984 in amounts owed to related parties for services performed or reimbursement of costs on behalf of
the Company. In addition, the Company has accrued $245,000 for unpaid officers’ compensation expense in accordance with
consulting agreements with our Chief Executive Officer and President. Under the terms of each consulting agreement, each consultant
shall serve as an executive officer to the Company and receive monthly compensation of $35,000. The consulting agreements may
be terminated by either party for breach or upon thirty days prior written notice.
5. Intangible Assets
The Company obtained an Option Agreement
(“Option Agreement”) from RMR Holdings, Inc. with the Colorado School of Mines (“CSM”), which grants the
Company an exclusive nine month option period to obtain an exclusive license for any patent rights owned by CSM. On August 25,
2014, CSM entered into the Option Agreement with the Company for a non-refundable fee of $30,000. Since the Company was in the
process of formation, RMR Holdings, Inc. countersigned the Option Agreement with CSM on behalf of the Company. On October 15,
2014, the Company was incorporated in Nevada (Note 1) and was prepared to accept the Option Agreement. RMR Holdings, Inc. recorded
amortization expense of $5,625 through October 15, 2014, which represented the elapsed time of holding the option since it was
executed. The Company owed RMR Holdings, Inc. $24,375 which represented the approximate carrying value of RMR Holdings, Inc. at
October 15, 2014, for an exclusive period which expires on May 25, 2015, to evaluate CSM’s existing patent rights, technology
and market potential. The Company may extend the Option Agreement for two (2) three month periods in exchange for a $3,000 extension
fee per each patent or patent application. The value of the Option Agreement will be amortized on a straight-line basis over the
term of the exclusivity period.
6. Stockholders' Deficit
Preferred Stock
The Company has authorized 50,000,000
shares of preferred stock for issuance. At January 31, 2015, no preferred stock was issued and outstanding.
Common Stock
The Company has authorized 600,000,000
shares of capital stock for issuance, including 100,000,000 shares of Class A Common Stock, 450,000,000 shares of Class B Common
Stock and 50,000,000 shares of Preferred Stock. At January 31, 2015, the Company had 35,785,858 and 8,612,142 shares issued and
outstanding of Class A Common Stock and Class B Common Stock, respectively.
The holders of Class A Common Stock
will have the right to vote on all matters on which stockholders have the right to vote. The holders of Class B Common Stock will
have the right to vote solely on matters where the vote of such holders is explicitly required under Nevada law. The holders
of Class A Common Stock and Class B Common stock will have equal distribution rights, provided that distributions in securities
shall be made in either identical securities or securities with similar voting characteristics. The holders of Class A Common
Stock and Class B Common Stock will be entitled to receive identical per-share consideration upon a merger, conversion or exchange
of the Company with another entity, and will have equal rights upon dissolutions, liquidation or winding-up.
Common Stock Subscription
During the period ended January 31,
2015, the Company issued 27,676,201 shares for stock subscriptions receivable of $3,030 in accordance with subscription agreements
executed prior to January 31, 2015. As of the date of this report, the subscriptions receivable had not been satisfied through
the receipt of cash for shares issued.
7. Income Taxes
There is no provision for income taxes
because the Company has incurred operating losses since inception. At January 31, 2015, the Company has concluded that it
is more likely than not that the Company may not realize the benefit of its deferred tax assets due to losses generated and uncertainties
surrounding its ability to generate future taxable income. Accordingly, the net deferred tax assets have been fully reserved.
Net deferred tax assets consist of the
following components:
| |
January
31, 2015 | |
Deferred tax asset: | |
| | |
Net operating loss carryforwards | |
$ | (142,632 | ) |
Valuation allowance | |
| 142,632 | |
Net deferred tax asset | |
$ | - | |
The income tax provision differs from
the amount of income tax determined by applying the U.S. federal and state income statutory tax rates to pretax income (loss)
from continuing operations as follows:
| |
January
31, 2015 | |
| |
| |
Tax benefit at statutory rates | |
$ | (142,632 | ) |
Change in valuation allowance | |
| 142,632 | |
Net provision for income
taxes | |
$ | - | |
The Company has accumulated net operating
loss carryovers of approximately $407,521 as of January 31, 2015 which are available to reduce future taxable income. Due
to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax
reporting purposes may be subject to annual limitations. A change in ownership may limit the utilization of the net operating
loss carry forwards in future years. The tax losses begin to expire in 2033.
8. Subsequent Events
On February 1, 2015, RMR, IP entered
into a management services agreement with Industrial Management LLC (“IM”), to provide services to RMR, IP and affiliated
entities, which include assistance in operational and administrative matters, identifying, analyzing, and structuring growth initiatives,
and potential strategic acquisitions. As compensation for these services, RMR, IP will pay to IM an annual cash management fee
in an amount equal to the greater of 2% of the Company’s annual gross revenues or $1,000,000, and a development fee with
respect to any capital project incurred by RMR IP equal to 2% of total project costs. In addition, IM has the option to be assigned
all available royalties from RMR IP’s mineral holdings, leases or interests greater than 75% of net revenue interests for
all mineral rights or production of minerals. At IM’s sole discretion, it may choose to accept a preferred convertible security
with a 15% dividend accruing quarterly in lieu of cash for some or all of the annual management fee, development fee and royalty
assignments. Such preferred convertible securities shall be convertible into either Class A Common Stock or Class B Common Stock
(as applicable) at a conversion price equal to fifty percent of the market price of the applicable Class B Common Stock on the
day prior to the date of issuance. In addition, these preferred convertible securities are callable for a cash, for a period of
six months following the date of issuance; provided, however, that if called, IM shall have the option to convert the called preferred
stock into either Class A Common Stock or Class B Common Stock (as applicable) at a conversion price equal to sixty-six and two
thirds percent of the market price of the applicable Class B Common Stock on the business day immediately preceding the issuance
date of preferred stock, and will include a blocker provision. In connection with the management services agreement with IM, RMR
IP entered into a registration rights agreement which requires RMR IP to register for resale any securities issued as consideration
under the management services agreement.
On February 27, 2015 (the “Closing
Date”), the Company RMR Industrials, Inc. (“RMRI”), a Nevada corporation, entered into and consummated a merger
transaction pursuant to an Agreement and Plan of Merger dated February 27, 2015 (the “Merger Agreement”) by and among
the Company, RMR Industrials, Inc. (“RMRI”), a Nevada corporation and OLYB Acquisition Corporation, a Nevada corporation
and wholly owned subsidiary of RMRI (“Merger Sub”). In accordance with the terms of Merger Agreement, on the Closing
Date, Merger Sub merged with and into the Company (the “Merger”), with the Company surviving the Merger as our wholly
owned subsidiary. The Merger Agreement is among entities under common control and includes customary representations, warranties
and covenants made by the Company, Merger Sub and RMR IP as of specific dates. For financial reporting purposes, the Merger represents
a “reverse merger” rather than a business combination and the Company is deemed to be the accounting acquirer in the
transaction.
On February 26, 2015, the Company’s
2015 Equity Incentive Plan (the “Plan”) has been approved and adopted by the Company.
700,000 Units
PROSPECTUS
October 30, 2015
RMR Industrials (PK) (USOTC:RMRI)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
RMR Industrials (PK) (USOTC:RMRI)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024