Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 29, 2021, TrueNorth Quantum Inc., a Nevada corporation formerly known
as United Royale Holdings Corp. (the "Registrant") closed its acquisition of
TrueNorth Quantum Inc., ("TNQ" or the "TrueNorth") a corporation existing under
the laws of the Province of Alberta, Canada pursuant to the Exchange Agreements,
Support Agreement and Trust Agreement disclosed in the Registrant's Current
Report filed October 13, 2021, which description is incorporated herein by
reference.
As a result of the foregoing, the Registrant directly owns approximately 6.19%
of TrueNorth from the acquisition of TrueNorth shares from non-Canadian
shareholders on a 1:14 basis with such TrueNorth shareholders receiving 14 newly
issued shares of the registrant for every 1 share of TrueNorth exchanged. The
remaining interests in TrueNorth are held by ExchangeCo (as defined in the
October 13th Current Report). TrueNorth Canadian shareholders received 14 newly
issued preferred shares of ExchangeCo ("Exchangeable Shares") for every 1 share
of TrueNorth exchanged. The common shares of Exchanco are wholly owned by Callco
(as defined in the October 13 Current Report) and Callco is wholly owned by the
Registrant. Canadian TrueNorth shareholders now holding Exchangeable Shares may
exchange their Exchangeable Shares in ExchangeCo for common shares in the
Registrant on a 1:1 basis. The registrant has issued approximately 9,053,338
Common Shares to non-Canadian TrueNorth shareholders. Presuming that all
Exchangeable Shares are exchanged for Common Shares of Registrant, registrant
shall have issued approximately 155,030,890 Common Shares, before adjustments
for any stock splits or forwards, in exchange for its Acquisition of TrueNorth.
Pursuant to the Trust Agreement (as defined in the October 13 Current Report),
holders of Exchangeable Shares of ExchangeCo (former TrueNorth Canadian
shareholders) have the beneficial right to vote in matters of the Registrant via
a Series A Preferred Share of the Registrant, par value $0.0001 per share (the
"Super Voting Share"), to be held by TSX Trust Co ("Trustee") in trust until
such time as ExchangeCo's Exchangeable Shares shall have been fully exchanged
for Common Shares of Registrant ("Common Shares"), at which time the Super
Voting Share shall be automatically cancelled. Until such time as the Super
Voting Share is cancelled, it will have the number of votes equal to one (1)
vote plus the number of Exchangeable Shares outstanding as of any given record
date for determining stockholders entitled to vote. Trustee agreed to vote in
accordance with instructions it receives from the TrueNorth Shareholders. The
Super Voting Share is entitled to vote at all meetings of the stockholders of
the Registrant at which the holders of the Registrant's Common Shares are
entitled to vote, and with respect to any written consents sought by the
Registrant from the holders of such Common Shares. The Super Voting Share is not
convertible nor entitled to receive dividends or distributions upon the
liquidation or winding up of the Registrant.
Pursuant to the Support Agreement (defined in the October 13 Current Report),
the Registrant agreed (i) to place certain limitations on its ability to declare
dividends, issue additional securities, reclassify or reorganize its capital
stock, and conduct certain transactions outside the ordinary course of business,
(ii) to reserve sufficient unissued Common Shares to allow for the exchange of
all Exchangeable Shares, and (iii) not to initiate or attempt to cause the
voluntary liquidation, dissolution or winding up of ExchangeCo, until such time
as there are no more Exchangeable Shares not held by the Registrant or its
affiliates outstanding.
As part of the acquisition of TrueNorth, the Registrant has agreed to directly
issue to Trustate International Inc. ("Trustate") 14,000,000 Common Shares of
Registrant in exchange for the compensation due Trustate for its sale of certain
patents to TrueNorth following closing.
It should be noted that the Registrant's Chairman and CEO, Gary Bartholomew, was
an officer and director of TrueNorth until he resigned from such positions in
February 2021. Further, Mr. Bartholomew's 2,383,334 in TrueNorth were cancelled
upon closing of the registrant's acquisition of TrueNorth and he did not receive
any additional shares of Registrant as a result of the acquisition.
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DESCRIPTION OF BUSINESS
Except as otherwise indicated by the context, references in this Report to "we",
"us", "our", or the "Company" are to the consolidated business of Registrant and
its subsidiaries, including TrueNorth.
Prior Operations of TrueNorth Quantum
TrueNorth Quantum Inc., was incorporated October 10, 2018, in the Province of
Alberta, Canada, and on October 30, 2018, acquired 100% of the shares of
TrueNorth CX Inc., a corporation under the laws of the Province of Ontario.
TrueNorth CX Inc. is now a wholly-owned subsidiary of TrueNorth Quantum Inc.
With the acquisition of TrueNorth CX Inc, TrueNorth acquired the source code for
the cryptocurrency exchange and trading platform which will be rewritten to be
compatible with the Company's proprietary platform called the Northern Shield
adding to the existing capability of the platform.
Current Operations of TrueNorth Quantum
History and Organizational Structure
TrueNorth Quantum Inc. was incorporated October 10, 2018, in the Province of
Alberta, Canada, and on October 30, 2018, acquired 100% of the shares of
TrueNorth CX Inc., a corporation under the laws of the Province of Ontario.
TrueNorth CX Inc. is now a wholly-owned subsidiary of TrueNorth Quantum Inc.
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Item 3.02 Unregistered Sales of Equity Securities.
See the disclosures above in Item 2.01 regarding the issuance by ExchangeCo of
Exchange Shares and the issuance by the Company of the Super Voting Share and
Common Shares to non-Canadian TrueNorth shareholders. The foregoing securities
were issued in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended.
Item 5.01 Change in Control of Registrant
See the disclosures above in Item 2.01 regarding the Exchange. As a result of
the Exchange, the TrueNorth Shareholders control approximately 51.73% of the
votes of the Company.
Item 5.06 Change in Shell Company's Status
Prior to the Closing Date, the Company was a shell company, other than a
business combination related shell company, as that term is defined in Rule
12b-2 under the Exchange Act.
Upon completion of the Exchange, the Company will cease to be a shell company.
From and after the Closing Date, the operations of TrueNorth shall be the only
operations of the Company
Item 9.01 Financial Statements and Exhibits
Listed below are the financial statements, pro forma financial information and
exhibits filed as a part of this report.
EXHIBIT
NO. DESCRIPTION
2.1 TrueNorth Canadian Exchange Agreement (3)
2.2 TrueNorth Non-Canadian Exchange Agreement (3)
3.1(a) Articles of Incorporation of the Registrant (1)
3.1(b) 2018 Name Change Amendment (2)
3.1(c) 2021 Name Change and Series A Share Amendment (3)
3.2 Bylaws of the Registrant (2)
3.3 Articles of Incorporation of TrueNorth
9.1 TrueNorth Trust Agreement (3)
10.1 TrueNorth Support Agreement (3)
10.2 Incentive Stock Option Plan (3)
10.3 Deferred Stock Unit Plan (3)
10.4 TruState Patent Agreement
[Any material contracts to be included]
23.1 Consent of Auditor
99.1 Interim Unaudited Financial Statements of TNQ for the nine
months ended July 31, 2021 and 2020
99.2 Audited Financial Statements of TNQ for the fiscal year ended
October 31, 2020 and 2019
99.3 Proforma Financial statements of TNQ
(1) Previously filed as an exhibit to the Registrant's Registration Statement on
Form S-1 (File No. 333-208978) filed with the SEC on January 13, 2016 and
incorporated herein by reference.
Previously filed as an exhibit to the Registrant's Current Report on Form
8-K filed with SEC on February 15, 2018 and incorporated herein by
(2) reference.
Previously filed as an exhibit to the Registrant's Current Report on Form
(3) 8-K filed with SEC on October 13, 2021 and incorporated herein by reference.
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