ITEM 1. BUSINESS
Background
Kingfish Holding Corporation (“us,” “our,” “we,” the “Company,” or “Kingfish”) was incorporated in the State of Delaware on April 11, 2006 as Offline Consulting Inc. On May 18, 2007, we entered into a reverse merger transaction pursuant to a Share Exchange Agreement whereby we acquired Kesselring Corporation, a Florida corporation. Following the reverse merger we became Kesselring Holding Corporation (“Kesselring Holding”) on June 8, 2007. A Certificate of Ownership was filed with the Secretary of State of the State of Delaware, effective as of June 8, 2007. On November 25, 2014, we changed our name to Kingfish Holding Corporation. The principal executive offices of the Company are located at 822 62nd Circle East, Unit 105, Bradenton, Florida 34208, and our telephone number is (941) 487-3653.
During the fiscal year ended September 30, 2010, the Company defaulted on its loan agreements with AMI Holdings, Inc., a corporation controlled by James K. Toomey, a shareholder, officer and director of the Company (“Mr. Toomey”), and certain of his relatives (“AMI”), and on May 24, 2010, AMI foreclosed on and took possession of all of the Company’s then-existing operating entities. On September 16, 2011, the Company, having only 69 holders of record and no significant assets, filed a Form 15 with the U.S. Securities and Exchange Commission (the “Commission”) to terminate the registration of its common shares under Section 12 of the Exchange Act and to suspend its reporting obligations under Section 15(d) of the Exchange Act.
In 2014, the Company took the steps necessary to reactivate its reporting obligations that had been suspended since 2011 under Section 15(d) of the Exchange Act (“Reactivation Actions”). The Company completed its Reactivation Actions and commenced its reactivated reporting obligations on December 17, 2014. However, the Company was unsuccessful in its endeavor to identify and engage in a business combination with a potential target company or business following its Reactivation Actions and, as of the fiscal year ended September 30, 2016, the Company had expended substantially all of its available cash and was unable to secure any additional funds to finance its operations. As a result, the Company was dormant from such date through May 2020.
In May 2020, the Company determined that the business environment had sufficiently changed so that identifying a target and completing a business combination may be more likely than was previously the case. As part of this strategy, the Company determined to attempt to seek the financing necessary to prepare and file all of its delinquent periodic reports on Form 10-K under the Exchange Act and to again aggressively pursue an acquisition target. In order for the Company to finance the preparation and filing of such delinquent periodic reports with the Commission, Mr. Toomey loaned the Company funds during the fiscal year ended 2020 and the first quarter of the 2021 fiscal year to finance such activities.
On March 2, 2022, the Company completed its filings with the Commission under the Exchange Act of all its delinquent periodic reports on Form 10-K for the fiscal years ended September 30, 2016 through 2021, as well as Forms 10-Q for the most recently completed fiscal year ended (“Filing Updates”).
Business Operations
Following the completion of the Filing Updates, the Company engaged in the process of pursuing suitable private company candidates for a business combination with the goal of maximizing shareholder value. The Company was not been engaged in any business activities other than seek a business combination transaction.
Prior to completing the Filing Updates, and as reported therein, the Company had entered into preliminary discussions regarding a potential business combination with Renovo Resource Solutions, Inc. (“Renovo”), a Florida corporation located in Manatee County, Florida, and 6, LLC, a Florida limited liability real estate holding company (“6, LLC”) controlled by Renovo which owns the land on which Renovo conducts its business (Renovo and 6 LLC, collectively the “Renovo Group”). However, Company had only commenced preliminary discussions with the Renovo Group as of the date of the Filing Updates and had not entered into a letter of intent or other arrangements with Renovo, and the Company also was analyzing other available alternatives and financing arrangements. The Company undertook due diligence and continued discussions with Renovo through the end of the September 30, 2022 fiscal year.
Renovo, which was formed as a Florida corporation in 2014, is a privately held company engaged in an environmentally friendly scrap yard operation operating out of Manatee County Florida. Renovo has a scrap metal recycling license in the State of Florida and, as part of its business, it accepts certain metals from the public and then resells/recycles them to its customers. Renovo’s operations are located on a ten-acre site at 3324 63rd Avenue East, Bradenton, FL 34203. This location was specifically engineered for its business and includes a new constructed facility for its operations. Acceptable metals include aluminum, radiators, insulated aluminum wire, automotive components (rotors, drums etc. but not major components), insulated copper wire, copper, brass, electric motors, stainless steel, scrap iron, refrigerators, clothing dryers, aluminum cans, zinc, lead, batteries (lead acid), washing machines, and both ferrous and non-ferrous metals. The above is only a brief summary of Renovo’s business operation and does not purport to describe fully its operations. A more detailed description of the business and operations of Renovo will be furnished to stockholders of the Company if a merger transaction with Renovo should be presented to the Company’s stockholders for their approval and, if consummated, such information will be included in a Form 8-K filed by the Company to report the closing of such merger transaction and the impact thereof on the Company’s operations and financial statements.
Mr. Toomey, a director and officer of the Company, and his wife serve on the board of directors of Renovo and he and his family have a one-third equity ownership interest in Renovo.
Recent Developments
Proposed Merger Transaction.
On October 28, 2022, the Company and Renovo entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which (i) Renovo will be merged with and into the Company (the “Merger”) in accordance with the provisions of the Delaware General Corporation Law (the “DGCL”) and the separate corporate existence of Renovo shall thereupon cease, and (ii) the Company shall be the successor or surviving corporation in the Merger (the “Surviving Corporation”).
Under the terms of the Merger Agreement, at the effective time of the Merger (“Effective Time”), each outstanding common share, no par value, of Renovo (“Renovo Stock”) will be converted into and will represent the right to receive 7,200 shares (“Exchange Ratio”) of common stock, par value $0.0001 per share, of the Company (“Company Stock”), after giving effect to the Reverse Stock Split (described below). The Exchange Ratio shall be fixed and no adjustment shall be made under any circumstances other than with respect to certain anti-dilution provision of the Merger Agreement. No fractional share of the Company Stock will be issued pursuant to the Merger. To the extent that a holder of Renovo Stock would otherwise have been entitled to receive a fraction of a share of Company Stock (after taking into account all certificates delivered by such holder), such holder shall receive, in lieu thereof, an additional fraction of a share of the Company Stock rounded up to the nearest whole share of the Company Stock.
The Board of Directors of the Company, having determined that the Merger Agreement and the Merger are fair to, and in the best interests of the Company and its stockholders, approved the Merger Agreement and the transactions contemplated thereby, and resolved to recommend adoption of the Merger Agreement by the Company’s stockholders.
The Company will seek stockholder approval of the Merger Agreement at the upcoming Annual Meeting of Stockholders of the Company (“Annual Meeting”). The Company’s largest stockholder, James K. Toomey and his affiliates, beneficially own a total of 84,835,922 shares of Common Stock, or approximately 70.08% of the outstanding Common Stock entitled to vote at the Annual Meeting, all of which are expected to be voted in favor of the approval of the Merger Agreement. Accordingly, if Mr. Toomey and his affiliates vote in favor of the Merger Agreement, the Merger Agreement will be approved without the need for any further vote of stockholders in favor of any proposals. Mr. Toomey is a director and executive officer of the Company. As a result of the foregoing the Company does not anticipate soliciting proxies for the Annual Meeting. However, the Company does anticipate preparing and disseminating an information statement to its stockholders prior to the Annual Meeting which describes the operations of Renovo and related financial information, the Merger Agreement, and the Merger transaction, as well as all other actions to be taken thereat.
Consummation of the Merger is subject to a number of conditions, including among others, the following: (i) approval of the Merger Agreement by Renovo’s stockholders, (ii) the Company, as the surviving corporation in the Merger, shall have been approved as a Secondary Metals Recycler under Section 538.25 of the Florida Statutes to be effective immediately following the closing of the Merger, (iii) the Company shall have entered into a Registration Rights Agreement, a copy of which is attached as Exhibit A to the Merger Agreement, with each of the Renovo shareholders, (iv) each of the Renovo shareholders shall have entered into an Investment Agreement which is attached as Exhibit B to the Merger Agreement, (v) there shall not have been any material adverse effects on the operations of Renovo, (vi) there shall not have been certain additional adverse legal proceedings commenced against the Company or Renovo which prevents the consummation of the Merger transactions, and (vii) the satisfaction of certain other customary closing conditions.
The closing of the Merger transaction also is conditioned upon the Renovo’s acquisition of 6, LLC prior to the Closing by a merger transaction reasonably approved by the Company. 6, LLC owns the real property used by Renovo in conducting its business.
In addition to the conditions described above, the closing of the Merger transactions also are conditioned upon the approval and prior implementation of a an amendment to the Amended and Restated Certificate of Incorporation of the Company (the “Amended Certificate”) to effect (a) a 1-for 500 reverse stock split, such that every holder of the Company’s Common Stock shall receive one share of the Company’s Common Stock for every 500 shares of the Company’s Common Stock held prior to such reverse stock split, and all fractional shares resulting therefrom will be rounded up to the nearest whole share; and (b) a corresponding reduction of the number of authorized shares of Company’s Common Stock from 200,000,000 to 20,000,000 shares and the number of shares of Company’s Preferred Stock from 20,000,000 to 2,000,000 shares (collectively, the “Reverse Stock Split”).
The Merger Agreement contains customary representations, warranties and covenants made by Renovo, including, among other things, covenants (i) to conduct its business in the ordinary course consistent with past practice during the interim period between the execution of the Merger Agreement and consummation of the Merger and (ii) not to engage in certain kinds of transactions during such period. The Merger Agreement also contains certain termination rights for both the Company and Renovo.
If the Merger Agreement is consummated, the Company has agreed to take the steps necessary at the effective time of the Merger to expand the size of the Board of Directors and to appoint the following shareholder of Renovo to the Company’s board of directors to fill the vacancies created thereby: Randy Moritz, Keri Moritz, Brian Kendzior, and Lori Toomey.
The Merger is expected to close in the first quarter of 2023.
In order to close on the proposed Merger transaction, Renovo and the Company must prepare for filing with the Commission within four business days from the close of such Merger transaction, a Form 8-K that includes certain information relating to the post-Merger combined entities of the Company and Renovo Group as would be required in a Form 10 filed under the Exchange Act, including without limitation, all required disclosures concerning the post-Merger operations and management of the Company and all required consolidated and pro forma financial statements (“Merger Form 8-K”). The ability to prepare the Merger Form 8-K will be largely dependent on the ability of the Renovo Group to furnish the Company with audited financial statements and other information necessary to prepare such Merger Form 8-K. If the Renovo Group is unable to timely furnish such information to the Company, of which there is no assurance, the Merger Agreement may be terminated and the Merger transaction will not be consummated.
Although the parties have executed the Merger Agreement, there is no assurance that the parties will be able to consummate a Merger transaction.
The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Merger Agreement, which is filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on October 31, 2022.
Renovo Loan Transaction
Upon execution of the Merger Agreement, Renovo provided the Company with a loan in principal amount of $200,000 (the “Renovo Loan”), as evidenced by a promissory note (“Renovo Promissory Note”), to provide the funds necessary for the Company to continue operations and consummate the transactions contemplated by the Merger Agreement.
Blank Check and Shell Company Status
To the extent that the Company should engage in the issuance of its stock, the Company may be considered to be a “blank check” company. The rules and regulations of the Commission defines blank check companies as “any development stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Exchange Act and that has no specific business plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies.” Pursuant to Rule 12b-2 promulgated under the Exchange Act, the Company also qualifies as a “shell company,” because it has no or nominal assets (other than cash) and no or nominal operations. Many states have enacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Management does not intend to undertake any efforts to cause a market to develop in our securities, either debt or equity, until we have successfully concluded a business combination transaction.
If the Merger transaction is consummated, the Company should no longer be classified as a shell company under the Commission’s rules and the filing of the Merger Form 8-K should constitute the filing of current “Form 10 Information” under Rule 144(i)(2) and (3) and Instruction B.6. of Form S-3, each as promulgated by the Commission under the Securities Act.
Employees
We presently have no employees apart from our management. Our officers and directors are engaged in outside business activities and are employed on a full-time basis by certain unaffiliated companies. Our officers and directors will be dividing their time among these entities and anticipates that they will devote very limited time to our business until the acquisition of a successful business opportunity has been identified. The specific amount of time that management will devote to the Company may vary from week to week or even day to day, and therefore the specific amount of time that management will devote to the Company on a weekly basis cannot be ascertained with any level of certainty. In all cases, management intends to spend as much time as is necessary to exercise its fiduciary duties as an officer and director of the Company and believes that it will be able to devote the time required to consummate a business combination transaction as necessary. We expect no significant changes in the number of our employees other than such changes, if any, incident to a business combination.