8-K: Formation Minerals, Inc. Finalizes Merger, Appoints New Leadership and Restructures Capital

Formation Minerals, Inc., formerly SensaSure Technologies Inc., completed its merger with Verde Bio Holdings, Inc., appointed Scott A. Cox as CEO, and restructured its capital with new preferred stock designations.

Summary

• SensaSure Technologies Inc. has completed its merger with Verde Bio Holdings, Inc., with Verde becoming a wholly-owned subsidiary and subsequently merging into SensaSure, which then changed its name to Formation Minerals, Inc.
• The merger involved the exchange of Verde common and preferred stock for Formation Minerals common and preferred stock at specified ratios.
• A new Class A Convertible Preferred Stock with 2,000 authorized shares and a Class B Convertible Preferred Stock with 10,000 authorized shares were created.
• Each share of Class A Preferred Stock is convertible into one share of common stock and has 100,000 votes.
• Class B Preferred Stock has a stated value of $1,200 per share, pays a 10% annual cumulative dividend, and is convertible at a price based on the lower of $0.75 or the lowest volume-weighted average price of the common stock during the 15 trading days before conversion.
• Scott A. Cox was appointed as the sole director, President, CEO, CFO, Treasurer, and Secretary of Formation Minerals, Inc., replacing James D. Hiza.
• The company's articles of incorporation were amended to increase authorized capital stock to 2,000,000,000 shares and authorize 150,000,000 shares of blank check preferred stock.
• The company's bylaws were also amended to include provisions for special meetings, reliance on expert opinions, and a Nevada-exclusive forum for legal disputes.

Sentiment

Score: 6

Explanation: The document reflects a significant corporate restructuring and management change, which is generally neutral. The creation of new preferred stock classes and the issuance of shares to advisors and Spartan Capital Securities, LLC could be viewed as both positive and negative depending on the investor's perspective. The document does not contain any explicit positive or negative forward looking statements.

Positives

• The merger with Verde Bio Holdings, Inc. has been successfully completed.
• The appointment of Scott A. Cox brings in an experienced executive with a background in public and private companies.
• The creation of Class A and Class B preferred stock provides flexibility in capital structure and potential for future financing.
• The amended articles of incorporation and bylaws provide a clear framework for corporate governance.
• The company has secured a new warrant agreement with an exercise price of $0.75 per share, expiring on January 27, 2027.

Negatives

• The company has undergone a significant change in management with the departure of James D. Hiza.
• The company has issued a large number of shares to advisors in connection with the merger, potentially diluting existing shareholders.
• The company has assumed all of Verde's obligations under a common stock purchase warrant issued on January 27, 2022.
• The company has issued 5,000,000 shares of common stock to Spartan Capital Securities, LLC for services provided to Verde.

Risks

• The company's reliance on the new CEO and management team introduces execution risk.
• The issuance of a large number of shares to advisors and Spartan Capital Securities, LLC could lead to dilution of existing shareholders.
• The company's ability to manage the obligations assumed from Verde remains to be seen.
• The company's ability to meet the conversion and redemption terms of the new preferred stock could be challenging.
• The company's future performance is subject to market conditions and the success of its business strategy.

Future Outlook

The company is now focused on integrating the operations of Verde Bio Holdings, Inc. and executing its business strategy under new leadership. The company will need to manage its capital structure and meet the obligations of its new preferred stock.

Industry Context

The merger and restructuring of Formation Minerals, Inc. reflect a trend of consolidation and strategic repositioning within the resource and technology sectors. The company's focus on mineral exploration and development aligns with the growing demand for critical minerals and materials.

Comparison to Industry Standards

• The creation of multiple classes of preferred stock is a common strategy for companies seeking to raise capital and manage their capital structure, similar to companies like Lithium Americas Corp. and Piedmont Lithium Inc. in the mining sector.
• The appointment of a new CEO and management team is a typical step following a merger, similar to the changes seen in other companies undergoing significant restructuring, such as the recent merger of Barrick Gold and Randgold Resources.
• The use of warrants and other equity-linked instruments is a common practice in the resource sector, similar to the financing strategies employed by companies like First Majestic Silver Corp. and Pan American Silver Corp.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders will experience changes in ownership structure due to the merger and issuance of new shares.
• Employees will be subject to new management and potential changes in company strategy.
• Customers and suppliers may experience changes in business relationships as a result of the merger.
• Creditors will be subject to the company's new capital structure and financial obligations.

Next Steps

• The company will integrate the operations of Verde Bio Holdings, Inc.
• The company will execute its business strategy under new leadership.
• The company will manage its capital structure and meet the obligations of its new preferred stock.
• The company will need to file future financial reports and comply with SEC regulations.

Key Dates

Keywords

merger, preferred stock, capital structure, corporate governance, management change, Formation Minerals, Verde Bio Holdings, convertible stock, stock issuance, Scott A. Cox