Item
1.01. Entry Into A Material Definitive Agreement.
On
May 23, 2022 (the “Effective Date”), Descrypto Holdings, Inc. (the “Company”) entered into a share exchange agreement
(the “Share Exchange Agreement”) by and among (i) the Company, (ii) OpenLocker Inc. (“OpenLocker”), (iii) all
of the stockholders of OpenLocker (collectively with the Additional Stockholders (as hereinafter defined), the “OpenLocker Stockholders”),
and (iii) Brian Klatsky, as the representative of the OpenLocker Stockholders.
Pursuant
to the terms of the Share Exchange Agreement, following the Effective Date, OpenLocker may issue additional shares of OpenLocker common
stock to (i) persons who are not parties to the Share Exchange Agreement as of the Effective Date, and (ii) persons who, as of the Effective
Date, hold certain simple agreements for future equity (“SAFEs”) of OpenLocker, which SAFEs will be exercised or otherwise
converted or exchanged for shares of OpenLocker common stock prior to the closing (the “Closing”) of the Exchange (as hereinafter
defined). Upon the issuance of any shares of OpenLocker common stock or conversion or exercise of the SAFEs, each share recipient
will execute a joinder to the Share Exchange Agreement. Each person who signs such a joinder is referred to herein as an “Additional Stockholder.”
Pursuant
to the terms of, and subject to the conditions set forth in, the Share Exchange Agreement, at the Closing, all of the outstanding shares
of OpenLocker common stock will be exchanged for an aggregate of 12,500,000 shares of Company common stock, which shares will be apportioned
among the OpenLocker Stockholders pro rata based on the number of shares of OpenLocker common stock held by such OpenLocker Stockholders
(the “Exchange”). As a result, following the Closing, the Company will own 100% of OpenLocker’s issued and outstanding
capital stock and OpenLocker will become a wholly owned subsidiary of the Company.
In
addition, the Company agreed to the following pursuant to the terms of the Share Exchange Agreement:
|
(i) |
Following
the Closing, the Company will reserve 750,000 shares of Company common stock for issuance to OpenLocker employees as options, restricted
stock or similar incentive compensation, on terms to be determined by the Company’s Board of Directors (the “Board”); |
|
(ii) |
At
the Closing, the Company will contribute $300,000 to the operations of OpenLocker, which funds will generally be used for working
capital uses and for the payment of OpenLocker payables and costs and expenses incurred by OpenLocker in connection with the Exchange
and related transactions, and not for executive salaries, cash bonuses, etc.; |
|
(iii) |
Following
the Closing and prior to September 1, 2022, the Company will fund at least an additional $250,000 to the operations of OpenLocker,
which will generally be used for working capital uses and not for executive salaries, cash bonuses, etc.; |
|
(iv) |
At
the Closing, Mr. Klatsky will be named as a member of the Board; and |
|
(v) |
At
the Closing, American Capital Ventures, Inc. (“ACV”), Leone Capital Group LLC (“Leone”) and Mr. Klatsky will
enter into a voting agreement pursuant to which, subject to the terms and conditions therein, Leone and ACV will agree to vote for
Mr. Klatsky as a director of the Company. |
Each
of ACV and Leone is a significant stockholder of the Company. Howard Gostfrand, the Company’s Chief Executive Officer, Principal
Financial Officer and a member of the Board, is the sole owner of ACV. Laura Anthony, the Company’s President and a member of the
Board, is the sole owner of Leone.
It
is expected that the business of OpenLocker will become one of the core businesses of the Company following the Closing. OpenLocker
is a leading innovator in utilizing blockchain technology to provide digital ownership of NFTs for college athletes and thoroughbred
racing stars.
The
Share Exchange Agreement includes customary representations, warranties, and covenants by the respective parties and closing conditions,
including that all SAFEs shall have been converted or exercised. Consummation of the transactions contemplated under the Share Exchange
Agreement is not subject to a financing condition.
Subject
to the conditions set forth in the Share Exchange agreement, the Company expects that the Closing will occur on or prior to May 31,
2022.
The
foregoing description of the Share Exchange Agreement does not purport to be complete and is qualified in its entirety by reference to
the Share Exchange Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report and is incorporated herein by reference.