Item
1.01 Entry into a Material Definitive Agreement.
Share
Exchange Agreement
On
February 15, 2023, American International Holdings Corp. (the “Company”, “we” and “us”),
entered into a Share Exchange Agreement (the “Exchange Agreement”) with Cycle Energy Corp., a Texas corporation (“Cycle
Energy”), and Marble Trital Inc., the sole shareholder of Cycle Energy (the “Shareholder”). The Shareholder
is beneficially owned and controlled by Mr. Michael McLaren, the Company’s newly appointed Chief Executive Officer.
Pursuant
to the Exchange Agreement, which closed on February 15, 2023 (the “Closing Date”), the Shareholder exchanged (the
“Exchange”) 100% of the ownership of Cycle Energy in consideration for 1,000,000 shares of the Series A Preferred
Stock of the Company (the “New Series A Shares”).
Management’s
intent in entering into the Exchange Agreement was to develop a new business line while maintaining the Company’s existing operations.
Management of the Company believes that by bringing Cycle Energy under the Company’s umbrella, the Company will be able to diversify
its operations and build a portfolio of core assets that can be strategically leveraged in various ways to accelerate the Company’s
overall growth. With the Exchange Agreement, there will come an expanded vision for the Company.
Cycle
Energy is a diversified energy company based in the state of Texas. It operates three vertically integrated businesses.
Cycle
Oil and Gas. This wholly-owned subsidiary focuses on acquiring and optimizing underdeveloped oil and gas assets. It employs both
internally developed and third party-licensed technologies to increase production, optimize performance and reduce costs. Cycle Oil and
Gas currently produces approximately 25 barrels of oil per day from 16 leases on approximately 2,000 acers. The company currently has
125 wells on lease to reactivate.
Cycle
Energy Services. This wholly-owned subsidiary supports Cycle Energy’s overall exploration and production efforts with “well
services” and “end of life reclamation.” Cycle Energy Services owns and operates a combination of customized service-wireline
rigs and HydroVac units. This cutting-edge equipment allows for faster “rig in” and “rig out” times. Overall,
Cycle Energy Services equipment and experience combination reduces the amount of time and fuel burned to complete an abandonment or workover.
Cycle
Energy Technologies. This wholly-owned subsidiary provides both R&D and existing technology to enable increased production
in the field. Cycle Energy’s flagship intellectual property is its mobile Gas To Liquid system. This is used to convert natural
gas and other gaseous hydrocarbons into longer-chain hydrocarbons, such as gasoline or diesel fuel.
Each
of Cycle Energy’s three vertically integrated businesses discussed above, operate in tandem to help Cycle Energy Corp. capture
unique opportunities that often go untapped by the company’s competitors.
Conditions
to closing the Exchange included that the Company must have entered into the Cohen Exchange Agreement (defined and discussed below);
terminated the employment agreement of Jacob D. Cohen, the Chief Executive Officer and Chairman of the Company; entered into a consulting
agreement with Mr. Cohen; and entered into an indemnification agreement with Mr. Cohen, all of which occurred, as discussed below.
The
Exchange Agreement requires the Shareholder to assist the Company, at Cycle Energy’s sole cost and expense, with the preparation
of financial statements, pro forma financial information and such other interim financial information as required by Item 2.01
and/or Item 9.01 of Form 8-K and Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”)
in connection with the acquisition.
Additionally,
the Exchange Agreement required the Company to invite two persons to join its Board of Directors at the recommendation of the Shareholder
following the Closing Date, to fill the vacancies created by the resignation of two of the current members of the Company’s Board
of Directors, which change in directors occurred. In addition, the Exchange Agreement required the Company’s then current officers
to resign and new officers of the Company to be appointed at the direction of the Shareholder. Each of which appointments and resignations
were completed as discussed in Item 5.02, below.
The
Exchange Agreement includes representations and warranties, and covenants of the parties customary for a transaction of this nature and
size. The Exchange Agreement also provides for indemnification rights of the parties with respect to, among other things, breaches of
representations, warranties or covenants by the parties; and pre (Shareholder)-and-post (Company) closing operations of Cycle Energy,
subject to a $10,000 threshold in certain cases.
Series
A Preferred Stock
The
New Series A Shares has the following rights:
Dividend
Rights. The New Series A Shares do not accrue dividends.
Liquidation
Preference. The New Series A Shares have no liquidation preference.
Conversion
Rights. Each holder of New Series A Shares may, at its option, convert its shares of Series A Preferred Stock (each a “Series
A Conversion”) into that number of shares of common stock equal to the holder’s pro rata share of all Series A Preferred
Stock then issued and outstanding, multiplied by (i) 60%, minus the aggregate percentage of the Company’s outstanding common stock
previously converted by holders of the Series A Preferred Stock, through such applicable date (for example, if prior to the applicable
date of determination, shares of Series A Preferred Stock have been converted into 3% of the outstanding shares of common stock as of
such date of determination, the Series A Preferred Stock would, in aggregate, be convertible into 57% of the then outstanding shares
of common stock of the Company), multiplied by (ii) the outstanding shares of our common stock outstanding immediately after such conversion,
divided by (iii) the total number of shares of Series A Preferred Stock then outstanding. No individual conversion by any individual
holder shall be in an amount greater than 9.99% of the outstanding common stock of the Company on the date on which the holder delivers
notice of such conversion to the Company (the “Individual Conversion Limitation”). The result of the above, is that
such Series A Preferred Stock is convertible into 60% of the Company’s outstanding common stock (on a post-conversion basis, i.e.,
150% of the Company’s outstanding common stock on a pre-conversion basis) currently.
Voting
Rights. Each holder of New Series A Shares is entitled to vote its shares of Series A Preferred Stock on an as-converted basis
as to all shareholder matters, without regard to the Individual Conversion Limitation.
Additionally,
so long as Series A Preferred Stock is outstanding, the Company shall not, without the affirmative vote of the holders of at least 66-2/3%
of all outstanding shares of Series A Preferred Stock, voting separately as a class (i) amend, alter or repeal any provision of the Articles
of Incorporation or the Bylaws of the Company so as to adversely affect the designations, preferences, limitations and relative rights
of the Series A Preferred Stock, (ii) effect any reclassification of the Series A Preferred Stock, (iii) designate any additional series
of preferred stock, the designation of which adversely effects the rights, privileges, preferences or limitations of the Series A Preferred
Stock; or (iv) amend, alter or repeal any provision of the Series A Designation (except in connection with certain non-material technical
amendments).
Redemption
Rights. The New Series A Shares have no redemption rights.
Protective
Provisions. Subject to the rights of series of preferred stock which may from time to time come into existence, so long as any
shares of Series A Preferred Stock are outstanding, the Company cannot without first obtaining the approval (by written consent, as provided
by law) of the holders of a majority of the then outstanding shares of Series A Preferred Stock, voting together as a class:
(a)
Issue any additional shares of Series A Preferred Stock after the original issuance of shares of Series A Preferred Stock;
(b)
Increase or decrease the total number of authorized or designated shares of Series A Preferred Stock;
(c)
Effect an exchange, reclassification, or cancellation of all or a part of the Series A Preferred Stock;
(d)
Effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series A Preferred
Stock; or
(e)
Alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares
of such series, including the rights set forth in the Second Amended and Restated Designation.
Transfer
Restrictions. Each holder of New Series A Shares is prohibited from Transferring any shares of Series A Preferred Stock. “Transfer”
means directly or indirectly (a) offering for sale, selling, pledging, hypothecating, transferring, assigning or otherwise disposing
of (or enter into any transaction or device that is designed to, or could be expected to, result in the sale, pledge, hypothecation,
transfer, assignment or other disposition at any time) (including, without limitation, by operation of law); or (b) entering into any
swap or other derivatives transaction that transfers to another, in whole or in part, any of the benefits or risks of ownership of the
applicable securities, whether any such transaction is to be settled by delivery of securities or other securities, in cash or otherwise.
First
Amendment to Share Exchange Agreement
On
March 9, 2023, and effective on February 15, 2023, the date of the Exchange Agreement, the Company, Cycle Energy and the Shareholder,
entered into a First Amendment to Share Exchange Agreement (the “First Amendment”), which amended the Exchange Agreement
to be effective February 15, 2023, instead of December 31, 2022.
Cohen
Exchange Agreement
Also
on February 15, 2023, and as a required condition to the closing of the Exchange Agreement, the Company and Jacob D. Cohen, the then
Chairman and Chief Executive Officer of the Company, entered into an Exchange Agreement (the “Cohen Exchange Agreement”).
Pursuant to the Cohen Exchange Agreement, Mr. Cohen exchanged all 1,000,000 shares of the Series A Preferred Stock of the Company which
he held (the “Cohen Series A Shares”), with the Company (which Cohen Series A Shares were then cancelled, prior to
being reissued to the Seller as New Series A Shares, as discussed above), for (a) all of the issued and outstanding membership interests
held by the Company in Epiq Scripts, LLC, a Texas limited liability company (“Epiq Scripts”)(representing 51% of Epiq
Scripts)(the “Epiq Scripts Interests”); (b) all cash payments paid to the Company in the future as a Royalty Payment
(as defined in the Royalty Agreement (defined below)) pursuant to that certain Royalty Agreement dated June 30, 2022, by and between
Epiq MD, Inc. a Nevada corporation (“Epiq MD”) and the Company (the “Royalty Agreement” and the
“Royalty Payments”); (c) all proceeds that the Company receives from any sale of the equity of ZipDoctor, Inc., a
Texas corporation (the “Zipdoctor Consideration”); and (d) the rights to all debt owed to the Company from Epiq Scripts,
in the amount of approximately $850,000 (the “Epiq Scripts Debt”).
Pursuant
to the Cohen Exchange Agreement, the Company also agreed to pay all Royalty Payments to Mr. Cohen within five days of its receipt thereof
and that any amount of the Royalty Payments not paid when due will accrue interest at the rate of the lesser of (a) 18% per annum; and
(b) the highest rate allowable pursuant to law, until paid in full (as applicable, (a) or (b), the “Default Rate”).
The
Cohen Exchange Agreement requires the Company keep accurate and complete records and books of account concerning all transactions relating
to the Royalty Payments, which are subject to examination, inspection, copying, or audit by Mr. Cohen or his representatives. In the
event any such inspection reveals that Mr. Cohen has been underpaid by more than five percent, the Company is required to reimburse Mr.
Cohen for all costs and expenses incurred in connection with such inspection and the Company is required to promptly pay Mr. Cohen any
amounts due, plus interest at the Default Rate, from the original date due.
The
Company also agreed pursuant to the Cohen Exchange Agreement that without the prior written approval of Mr. Cohen, (a) the Company would
not amend the terms of, agree to amend any of the terms of, the Royalty Agreement; (b) waive any obligation of, Epiq MD, under the Royalty
Agreement; or (c) waive, release or amend the Epiq Scripts Debt.
The
Cohen Exchange Agreement has an effective date of February 15, 2023, and the transactions contemplated by the Cohen Exchange Agreement
closed on February 15, 2023.
The
Cohen Exchange Agreement includes representations and warranties, and covenants of the parties customary for a transaction of this nature
and size.
Cohen
Consulting Agreement
On
February 15, 2023, we and Cycle Energy entered into a Consulting Agreement with Cohen Enterprises, Inc., which is owned by Mr. Cohen
(“Cohen Enterprises”). Pursuant to the Consulting Agreement, Cohen Enterprises agreed to provide consulting and general
business advisory services as reasonably requested by the Company during the term of the agreement, which was for six months, unless
otherwise earlier terminated due to breach of the agreement by either party, and the failure to cure such breach 30 days after written
notice thereof. In consideration for agreeing to provide the services under the agreement, the Company agreed to pay $12,500 per month.
The agreement contains customary confidentiality, non-solicitation provisions and Company indemnification obligations and further limits
Cohen Enterprise’s liability under the agreement to $50,000, except for damages due to fraud, gross negligence or willful misconduct.
*
* * * *
The
foregoing description of the Exchange Agreement, First Amendment, Cohen Exchange Agreement and Consulting Agreement, is only a summary
and is not complete, and is qualified in its entirety by reference to the Exchange Agreement, First Amendment, Cohen Exchange Agreement
and Consulting Agreement, copies of which are attached hereto as Exhibits 2.1, 2.2, 2.3, and 10.1, respectively,
to this Current Report on Form 8-K and incorporated into this Item 1.01 in their entirety by reference.