UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): December 30, 2019 (December 20, 2019)

 

Pensare Acquisition Corp.
(Exact Name of Registrant as Specified in Charter)

 

Delaware
(State or other jurisdiction
of incorporation) 		001-38167
(Commission File Number) 		81-2402421
(I.R.S. Employer
Identification Number)

 

1720 Peachtree Street, Suite 629
Atlanta, GA
(Address of principal executive offices) 		30309
(Zip code)

 

(404) 234-3098
(Registrant’s telephone number, including area code)

 

Not Applicable
(Former name or former address, if changed since last report)  

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

 

¨       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

x       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2).

 

Emerging growth company  x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Units, each consisting of one share of Common Stock, one Right and one Warrant   WRLSU   The Nasdaq Stock Market LLC
Common Stock, par value $0.001 per share   WRLS   The Nasdaq Stock Market LLC
Rights, exchangeable into one-tenth of one share of Common Stock   WRLSR   The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50   WRLSW   The Nasdaq Stock Market LLC

 

 

 

 

 

Item 1.01. Entry into a Material Definitive Agreement

 

Merger Agreement Amendment

 

On December 20, 2019, Pensare Acquisition Corp., a Delaware corporation (“Pensare”), entered into Amendment No. 1 (the “Amendment”) to the Business Combination Agreement, dated July 24, 2019 (the “Agreement”), by and among Pensare, Tango Merger Sub Corp., a Delaware corporation (“Merger Sub”), Stratos Management Systems Holdings, LLC, a Delaware limited liability company (“Holdings”), and Stratos Management Systems, Inc., a Delaware corporation (the “Company”), pursuant to which the Company will merge with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly owned subsidiary of Pensare. Capitalized terms used in this Current Report on Form 8-K but not otherwise defined herein have the meanings given to them in the Agreement.

 

The Amendment amends the Agreement to, among other things, (i) reduce the aggregate merger consideration payable from $65 million to $60 million, (ii) change the allocation of the Consideration Amount so that it is payable as follows: (a) an amount in cash equal to two-thirds of the cash raised by Pensare in the Private Placement less $5 million, subject to a cap of $20 million, (b) $5 million of any securities, other than shares of Pensare’s common stock, sold in the Private Placement (the “PIPE Securities”), and (c) the balance of the Consideration Amount in shares of the company’s common stock, (iii) provide for the optional redemption of some or all of the PIPE Securities following the Closing, to the extent that Pensare raises additional funds in private placements following the Closing, (iv) adjust a condition to the closing of the Merger to require that Pensare shall have at least an aggregate of $35 million of cash held either in or outside of the Trust Account at the Effective Time (reduced from $150 million); and (v) adjust the Outside Date by which the Closing must occur from December 31, 2019 to April 1, 2020.

 

The Amendment is attached hereto as Exhibit 2.2 and incorporated herein by reference. The foregoing description of the Amendment is qualified in its entirety by reference to the full text of the Amendment filed with this Current Report on Form 8-K. For a detailed discussion of the Agreement, see the Company’s Current Report on Form 8-K, filed with the SEC on July 30, 2019 (the “July 8-K”). For the full text of the Agreement, see Exhibit 2.1 to the July 8-K, which is incorporated by reference as Exhibit 2.1 hereto.

 

Additional Information

 

In connection with the proposed Merger, Pensare filed a preliminary proxy statement with the U.S. Securities and Exchange Commission (the “SEC”) relating to the Merger on October 8, 2019. Pensare subsequently filed Amendment No. 1 to the preliminary proxy statement with the SEC on December 26, 2019. Stockholders of Pensare and other interested persons are advised to read the preliminary proxy statement, and amendments thereto, and, when available, the definitive proxy statement in connection with Pensare’s solicitation of proxies for the special meeting to be held to approve the Merger because these proxy statements will contain important information about Pensare, the Company, and the Merger. The definitive proxy statement will be mailed to stockholders of Pensare as of the record date for voting on the proposed Merger. Stockholders will also be able to obtain a copy of the proxy statement, without charge, by directing a request to: Pensare Acquisition Corp., 1720 Peachtree Street, Suite 629, Atlanta, GA 30309. Each of the preliminary and definitive proxy statement, once available, can also be obtained, without charge, at the SEC’s website (www.sec.gov).

 

Participants in the Solicitation

 

Pensare, the Company and their respective directors and executive officers may be considered participants in the solicitation of proxies with respect to the proposed Merger described in this current report on Form 8-K under the rules of the SEC. Information about the directors and executive officers of Pensare is set forth in Pensare’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019, which was filed with the SEC on June 14, 2019, and is also contained in the preliminary proxy statement for the Merger.

 

Information regarding the interests of the directors and executive officers of Pensare is also contained in such preliminary proxy statement, and will be contained in the definitive proxy statement for the Merger, when available. Information regarding the Company’s directors and executive officers is contained in the preliminary proxy statement for the Merger, and will be contained in the definitive proxy statement, when available. These documents can be obtained free of charge from the sources indicated above.

 

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Non-Solicitation

 

This current report on Form 8-K is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the proposed Merger and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of Pensare or the Company, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction. No offer of securities shall be made except by means of a definitive document.

 

Forward-looking Statements

 

This Current Report on Form 8-K includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding projections, estimates and forecasts of revenue and other financial and performance metrics and projections of market opportunity and expectations, and the closing of the proposed Merger, any private placement and Pensare’s ability to enter into definitive agreements or consummate a transaction with a potential second target company. These statements are based on various assumptions and on the current expectations of Pensare and the Company management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Pensare and the Company. These forward-looking statements are subject to a number of risks and uncertainties, including changes in the Company’s clients’ preferences, prospects and the competitive conditions prevailing in the industries in which the Company operates; the inability of the parties to successfully or timely consummate the proposed Merger, including the risk that the approval of the stockholders of Pensare for the proposed Merger is not obtained; failure to realize the anticipated benefits of the proposed Merger, including as a result of a delay in consummating the proposed Merger or a delay or difficulty in integrating the businesses of Pensare and the Company; the amount of redemption requests made by Pensare’s stockholders; Pensare’s ability to enter into definitive agreements or consummate a transaction with a second potential target company; those factors discussed in Pensare’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019 under the heading “Risk Factors,” and other documents of Pensare filed, or to be filed, with the SEC. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that neither Pensare nor the Company presently know or that Pensare and the Company currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Pensare’s and the Company’s expectations, plans or forecasts of future events and views as of the date of this Current Report on Form 8-K. Pensare and the Company anticipate that subsequent events and developments will cause Pensare’s and the Company’s assessments to change. However, while Pensare and the Company may elect to update these forward-looking statements at some point in the future, Pensare and the Company specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing Pensare’s and the Company’s assessments as of any date subsequent to the date of this Current Report on Form 8-K. Accordingly, undue reliance should not be placed upon the forward-looking statements.

 

3

 

 

Item 9.01. Financial Statements and Exhibits.

 

(d)       Exhibits.

 

Exhibit No.   Exhibit
2.1   Business Combination Agreement, dated as of July 24, 2019, by and among Pensare, Merger Sub, Holdings, and the Company (incorporated by reference to Exhibit 2.1 to Pensare’s Current Report on Form 8-K filed July 30, 2019).
     
2.2   Amendment No. 1 to the Business Combination Agreement, dated as of December 20, 2019, by and among Pensare, Merger Sub, Holdings, and the Company.

 

4

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

Dated: December 30, 2019

 

  Pensare Acquisition Corp.
   
  By: /s/ Darrell J. Mays
    Name: Darrell J. Mays
    Title: Chief Executive Officer    

 

5

 

 

Exhibit 2.2

 

AMENDMENT NO. 1, dated as of December 20, 2019 (this “Amendment”), to the BUSINESS COMBINATION Agreement, dated as of July 24, 2019 (the “Agreement”), by and among Pensare Acquisition Corp., a Delaware corporation, Tango Merger Sub Corp., a Delaware corporation, Stratos Management Systems Holdings, LLC, a Delaware limited liability company, and Stratos Management Systems, Inc., a Delaware corporation.

 

WITNESSETH:

 

WHEREAS, the parties have entered into the Agreement; and

 

WHEREAS, pursuant to and in accordance with Section 10.04 of the Agreement, the parties wish to amend the Agreement as set forth in this Amendment.

 

NOW, THEREFORE, in consideration of the rights and obligations contained herein, and for other good and valuable consideration, the adequacy of which is hereby acknowledged, the parties agree as follows:

 

Section 1.             Amendments to the Agreement.

 

(i)             Section 1.01 of the Agreement is hereby amended as follows:

 

(A)  The following defined terms are hereby added to Section 1.01 of the Agreement in the appropriate alphabetical order:

 

“Cash Closing Calculation Amount” means an amount equal to the product of (a) the amount of cash raised by Pensare in the Private Placement less $5 million multiplied by (b) 0.67, provided that the Cash Closing Calculation Amount shall not be greater than $20.0 million.

 

“Cash Percentage” means Cash Closing Calculation Amount divided by Consideration Amount.

 

“Stock Closing Calculation Amount” the Consideration Amount minus the Cash Closing Calculation Amount.

 

“Stock Percentage” means Stock Closing Calculation Amount divided by Consideration Amount.

 

(B)   The definition of “Closing Calculation Amount” is hereby deleted in its entirety.

 

(C)   The definition of “Consideration Amount” is hereby deleted in its entirety and replaced with the following:

 

““Consideration Amount” means $60,000,000 minus the Estimated Closing Company Net Debt minus the amount by which the Estimated Closing Net Working Capital is less than the Closing Net Working Capital Target plus the amount by which the Estimated Closing Net Working Capital is greater than the Closing Net Working Capital Target. By way of example, if the Estimated Closing Company Net Debt is $20,000,000, and the Estimated Closing Net Working Capital is negative two million dollars (-$2,000,000), then Estimated Closing Net Working Capital would be greater than the Closing Net Working Capital Target, and the Consideration Amount would be $42,300,000.”

 

 

 

 

(ii)            Section 3.02(a) of the Agreement is hereby deleted in its entirety and replaced with the following:

 

“(a) At the Closing, Pensare shall deliver or cause to be delivered to Holdings (i) such number of shares of Pensare Common Stock as shall be equal to the Stock Closing Calculation Amount divided by the Per Share Price (the “Stock Consideration”), (ii) the Cash Closing Calculation Amount in cash (the “Cash Consideration,”) and (iii) such number of shares of PIPE Securities of the same type as the PIPE Securities issued to investors in the Private Placement, other than Pensare Common Stock, as shall be equal to $5,000,000 divided by the applicable lowest price per unit paid by investors for the applicable PIPE Securities in the Private Placement (with appropriate adjustments being made to the requirements under Section 3.02 to reflect such change)(the “PIPE Consideration”, and collectively with the Stock Consideration and Cash Consideration, the “Merger Consideration”); provided that, for the avoidance of doubt, in no event shall the value of the Stock Consideration on the Closing Date constitute less than 40% of the aggregate value of the Merger Consideration.”

 

(iii)           Section 3.02(c) of the Agreement is hereby deleted in its entirety and replaced with the following:

 

“(c) To the extent not already reflected in the Per Share Price or the applicable lowest price per unit paid by investors for the applicable PIPE Securities in the Private Placement, the Stock Consideration and/or the PIPE Consideration, as applicable, shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Pensare Common Stock or PIPE Securities (or any other Pensare Securities) occurring on or after the date hereof and prior to the Effective Time.”

 

(iv)          Section 3.03(d)(iv) of the Agreement is hereby deleted in its entirety and replaced with the following:

 

“(iv) Holdings shall pay back such owed amounts: (i) in cash, equal to the owed amount multiplied by the Cash Percentage, in immediately available funds (to an account designated by Pensare) and (ii) in shares of Pensare Common Stock and/or PIPE Securities, equal to the owed amount multiplied by the Stock Percentage, (by returning shares of Pensare Common Stock and/or PIPE Securities, issued to Holdings pursuant to Section 3.02(a) to Pensare). For purposes of this Section 3.03(d)(iv): (i) each share of Pensare Common Stock shall have a value equal to the Per Share Price and (ii) each share or unit of PIPE Securities shall have a value equal to applicable lowest price per unit paid by investors for the applicable PIPE Securities in the Private Placement.”

 

 

 

 

(v)           A new Section 3.04 is hereby added as follows:

 

“Section 3.04      Optional Redemption of PIPE Securities. In the event that PIPE Securities were issued as Stock Consideration pursuant to Section 3.02(a), if Pensare consummates any private placement or placements for any equity securities of Pensare, including preferred or common equity securities, units, rights, warrants, options, convertible securities or any other securities convertible into, or exchangeable or exercisable for equity securities, within 120 days after the Closing, then Holdings or any holder thereof shall have the right to elect to have an aggregate number of PIPE Securities, other than Pensare Common Stock, redeemed by Pensare ( “Redeemable Securities”) equal to: (i) half the amount of gross cash proceeds raised by Pensare in such private placement or placements, divided by (ii) the applicable lowest price per unit paid by investors for the applicable PIPE Securities in the Private Placement, provided that the amount of Redeemable Securities shall not be greater than the amount of PIPE Securities. Redeemable Securities shall be redeemed by Pensare for a price per Redeemable Security equal to the applicable lowest price per unit paid by investors for the applicable PIPE Securities in the Private Placement (with appropriate adjustments being made to the requirements under Section 3.02 to reflect such change) (the “Redemption Amount”). Any such redemption under this Section 3.03 shall occur within ten (10) days after Pensare receives a notice from Holdings or any holder thereof electing to have the Redeemable Securities redeemed (“Redemption Notice”). If any Redeemable Securities is not redeemed by Pensare within ten (10) days after the Redemption Notice by paying Holdings or any holder thereof the Redemption Amount, until such Redemption Securities are fully redeemed and the aggregate Redemption Amount is paid in full (a) all of the unredeemed Redeemable Securities shall remain outstanding and continue to have the rights, preferences, and privileges entitled to such Redeemable Securities, and (b) Holdings or any holder thereof of unredeemed Redemption Securities shall have the remedies entitled under any other contract or agreement and any other rights such holder may have pursuant to applicable law.”

 

(vi)          A new Section 6.03(g) is hereby added as follows:

 

“(g) The PIPE Securities being delivered by Pensare hereunder shall be duly authorized for issuance by the Company and, when duly executed, authenticated, issued and delivered, will constitute valid and binding obligations of the Company, enforceable against Pensare in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles. Upon conversion of the PIPE Securities into shares of Pensare Common stock (the “Converted Shares”), such Converted Shares shall be duly and validly issued, fully paid and nonassessable, and each Converted Share shall be issued free and clear of preemptive rights and all Liens, other than restrictions under applicable securities law and the Pensare Organizational Documents. The Converted Shares will be issued in compliance with all applicable securities Laws and other applicable Laws and without contravention of any other person’s rights therein or with respect thereto.”

 

 

 

 

(vii)         Section 9.01(c) of the Agreement is hereby deleted in its entirety and replaced with the following:

 

“(c) Available Cash. After giving effect to (i) the exercise of the Redemption Rights and payments related thereto and (ii) the sale and issuance by Pensare of Pensare Common Stock or other PIPE Securities of Pensare, if any, between the date of this Agreement and the Effective Time, Pensare shall have at least an aggregate of $35 million of cash held either in or outside of the Trust Account.”

 

(viii)        Section 10.01(b) of the Agreement is hereby deleted in its entirety and replaced with the following:

 

“(b) by either Pensare or Holdings if the Effective Time shall not have occurred prior to April 1, 2020 (the “Outside Date”); provided, however, that this Agreement may not be terminated under this Section 10.01(b) by or on behalf of any party that either directly or indirectly through its affiliates is in breach or violation of any representation, warranty, covenant, agreement or obligation contained herein and such breach or violation is the principal cause of the failure of a condition set forth in Article IX on or prior to the Outside Date; or”

 

Section 2.             Entire Agreement. This Amendment and the Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. Except as amended by this Amendment, the Agreement shall continue in full force and effect.

 

Section 3.             Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State

 

Section 4.             Counterparts. This Amendment may be executed and delivered (including by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF the parties have hereunto caused this Amendment to be duly executed as of the date first set forth above.

 

PENSARE ACQUISITION CORP.
   
   
By /s/ Darrell J. Mays
Name: Darrell J. Mays
Title: Chief Executive Officer
   
   
TANGO MERGER SUB CORP.
   
   
By /s/ Darrell J. Mays
Name: Darrell J. Mays
Title: Chief Executive Officer
   
   
Stratos Management Systems Holdings, LLC
   
   
By /s/ Sam Haffar
Name: Sam Haffar
Title: Vice President
   
   
Stratos Management Systems, Inc.
   
   
By /s/ Sam Haffar
Name: Sam Haffar
Title: President and Chief Executive Officer

 

[Signature Page to Amendment No. 1 to Business Combination Agreement]