Let's look at this clause of the SPA together:
Section 3.05 Financing Contingency. The transactions contemplated by this Agreement shall be contingent upon and subject to successful completion of the Buyer’s anticipated public offering, resulting in gross proceeds to the Buyer of at least $40,000,000 (the “Financing”) by or before December 31, 2022 (the “Financing Condition”). If the Buyer is unable to obtain the Financing, the Buyer may provide written notice to ULHL stating that the Buyer has been unable to obtain the Financing and notify ULHL that the Buyer has elected to either (i) waive the Financing Condition as set forth in this Section 3.05, in which event this Agreement will continue as if the Financing had been obtained or (ii) terminate this Agreement. In the event the contemplated financing is frustrated due to reasons outside of the Buyer’s control and through no fault of the Buyer, then Buyer may elect to terminate this Agreement and the Buyer and ULHL shall be released from all further obligations under this Agreement (except those in relation to confidentiality obligations) or the Buyer may elect to proceed to Closing.
I understand this to mean quite clearly that IF (when) UNQL does not come up with the $40m capital raise and included $21m financing payment by December 31, 2022, THEN the company has two options. 1) waive the financing condition and proceed as if financing "had been obtained" or 2) terminate the purchase agreement.
Option 2 is obvious. Option 1, to me, means after EOY, everyone "pretends" financing WAS obtained and the parties go forward with the nuts and bolts of this agreement with some NEW extended closing date to allow UNQL to find some OTHER way to find $21m to pay the Asian sellers OR come up (out of the blue) with some AHA EUREKA plan to.....wait for it.....give those Asian sellers the equivalent of UNQL common shares to "pay" that $21m plus some HUGE amount of new preferred shares to ensure those Asian sellers maintain over 50% ownership on a fully diluted basis. I know many folks do not understand the impact of fully diluted ownership, but I do. There are 5m preferred shares authorized already. Only 1m plus 192 plus 195 have been issued. The writing is on the wall on how this will all go down.
Insiders currently own over 95% of this company. Since a $21m purchase price for 65% of the Asian offices is more than 50% of the $13m book value/shareholder equity/market value of the US offices, YES, the Asian "sellers" will want to own more than 50% of public UNQL if the merger ever closes. Business 101. If you don't give me the actual money, you better give me equivalent ownership in the WHOLE public company (your 100% US and my 65% Asia) post-merger. This is not rocket science.
I welcome your thoughts. Can you share some business analysis instead of name-calling because that would be nice.
