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The Reporting Person acquired the Shares (described in Item 3 above) in connection with a structured change of control transaction of the Issuer for the express purpose of changing the Issuer’s business operations model from an online music seller specializing in Ukrainian classical and folk music to a precious metals mineral acquisition, exploration and development company. On February 13, 2009 the Issuer caused Articles of Incorporation to be filed with the Nevada Secretary of State to create a wholly-owned subsidiary under the name of American Sierra Gold Corp. (the “Subsidiary”), initially formed to begin investigating the precious metals sector and potential business opportunities. On March 25, 2009 the Reporting Person was appointed as a director, president, secretary and treasurer of the Issuer and on March 26, 2009 Messrs. Hornostai and Ruzhytskiy resigned their positions as directors of the Issuer upon completion of the transactions described in Item 3, thereby causing the Reporting Person to become the sole remaining director and officer of the Issuer.
On April 30, 2009 the Reporting Person caused the Subsidiary to enter into a Property Option Agreement (“Option Agreement”) with Yale Resources Ltd., a Canadian public company listed on the TSX Venture Exchange, in connection with the change of the Issuer’s business model and operations objectives to focus on precious metals industry market opportunities in order to develop the Issuer and enhance stockholder value. The Option Agreement is incorporated herein by reference as Exhibit B.
Proceeding with the Issuer’s new business operations objectives focused on precious metals industry market opportunities, the Reporting Person determined that it was in the best interests of the Issuer to merge the Subsidiary with and into the Issuer, change the Issuer’s corporate name to “American Sierra Gold Corp.,” assume the Option Agreement and all rights and obligations pertaining thereto, and cause the Issuer to effect a 40-for-1 forward stock split for all outstanding Shares (“Stock Split”). By approval of the Reporting Person as the sole director and controlling stockholder of the Issuer, on April 20, 2009 the Issuer and Subsidiary entered into an Agreement and Plan of Merger and caused the same to be filed as an attachment to Articles of Merger filed with the Nevada Secretary of State on April 29, 2009. Also, on April 29, 2009 the Reporting Person caused a Certificate of Change to be filed with the Nevada Secretary of State providing for the terms and conditions of the Issuer’s Stock Split. Effective May 20, 2009, pursuant to the Articles of Merger and Certificate of Change, the Subsidiary was merged with and into the Issuer, with the Issuer surviving under the new corporate name of “American Sierra Gold Corp.,” and the Stock Split was effected. As a result, the separate corporate existence of the Subsidiary was terminated and the rights and obligations of the Option Agreement were assumed by the Issuer and the Issuer commenced its new business and operations in the precious metals industry. Additionally, the provisions of the Issuer’s articles of incorporation and bylaws continued in full force and effect, notwithstanding the change of the Issuer’s name and the Stock Split effected by the Articles of Merger and Certificate of Change, respectively. The Articles of Merger, which include a copy of the Agreement and Plan of Merger, and Certificate of Change are incorporated herein by reference as Exhibits C and D, respectively.
On September 29, 2009, by approval and resolution of the Reporting Person as the sole director of the Issuer, Johannes Petersen was appointed as a director on the Issuer’s Board of Directors and as the Issuer’s new Chief Financial Officer, pursuant to terms and conditions of a Consulting Agreement between the Issuer and Mr. Petersen. Under the terms and conditions of the Consulting Agreement, the Reporting Person approved a restricted stock award grant to Mr. Petersen as compensation for services to the Issuer; however, on October 14, 2009 the Reporting Person personally assumed the Issuer’s obligation to provide such stock compensation component to Mr. Petersen pursuant to the Consulting Agreement and entered into a private transaction with Mr. Petersen and issued him a warrant representing the right to acquire up to 1,000,000 of the Reporting Person’s 52,000,000 Shares (post-Stock Split), at an exercise price of $0.01 per Share (the “Petersen Warrant”). Although the Shares underlying the Petersen Warrant are exercisable at any time until the expiration date, the Reporting Person maintains voting control of such Shares underlying the Petersen Warrant unless and until exercised at the discretion of Mr. Petersen.
Simultaneously with issuing the Petersen Warrant, the Reporting Person also returned 19,000,000 Shares held in his name to the Issuer for cancellation, such that both the Reporting Person’s holdings and the Issuer’s total issued and outstanding share amount were each reduced by 19,000,000 shares, accordingly. The return of 19,000,000 of Reporting Person’s Shares was considered a contribution to the capital of the Issuer. Circumstances and terms regarding the Petersen Warrant and the Reporting Person’s return of 19,000,000 Shares to the Issuer for cancellation were disclosed in the Issuer’s current report on Form 8-K filed with the SEC on October 16, 2009, and is hereby incorporated by reference in its entirety.
Although there is no present intention to change the Issuer’s number of authorized directors, the Reporting Person reserves the right, along with the other director(s), to identify and appoint such qualified candidate(s) to the Issuer’s Board of Directors, as may be deemed appropriate now or in the future. The Issuer’s Board of Directors currently consists of the Reporting Person and Mr. Petersen. The Consulting Agreement for Mr. Petersen as approved by the Reporting Person is incorporated herein by reference as Exhibit E.
The Reporting Person, subject to and depending upon availability of prices he deems favorable, may purchase additional Shares of the Issuer from time to time in the open market or in privately negotiated transactions with third parties. Further, while it is not the present intention of the Reporting Person to do so, he reserves the right to dispose of the Shares held by him in the open market or in privately negotiated transactions with third parties or otherwise, depending upon market conditions and other factors.
Subject to ongoing evaluation, except as otherwise set forth above, the Reporting Person has no current plans or proposals which relate to or would result in any of the following:
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