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): March 31, 2022
| SOLLENSYS CORP |
| (Exact name of registrant as specified in its charter) |
| Nevada | 333-174581 | 80-0651816 | ||
| (State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(IRS Employer Identification No.) |
2475 Palm Bay Rd. NE, Suite 120
Palm Bay, FL 32905
(Address of principal executive offices)
(866) 438-7657
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | 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)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
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 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
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. ☐
Item 1.01. Entry into Material Definitive Agreement.
As previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on October 29, 2021 by Sollensys Corp (the “Company”), on October 26, 2021, the Company entered into a Merger Agreement (“Merger Agreement”) by and among (i) the Company; (ii) S-CC Merger Sub, Inc., a wholly owned subsidiary of the Company (“S-CC Merger Sub”); (iii) S-Solutions Merger Sub, Inc., a wholly owned subsidiary of the Company (“S-Solutions Merger Sub”); (iv) Celerit Corporation (“Celerit”); (v) Celerit Solutions Corporation (“Celerit Solutions”); and (vi) Terry Rothwell.
Pursuant to the terms of the Merger Agreement, if the Merger did not close by January 31, 2022, the Merger Agreement would terminate.
As previously disclosed in a Current Report on Form 8-K filed with the SEC on February 3, 2022 by the Company, on January 28, 2022, the parties to the Merger Agreement entered into an Amendment to Merger Agreement, dated as of January 28, 2022, pursuant to which the parties agreed to extend the closing deadline to March 31, 2022.
On March 31, 2022, the parties to the Merger Agreement, as amended, entered into the Second Amendment to Merger Agreement, dated as of March 31, 2022 (the “Second Amendment”), pursuant to which the parties agreed to extend the closing deadline to April 7, 2022. In addition, the parties agreed that the following changes to the terms and conditions of the Merger Agreement, as amended, have been agreed to in principal and that between March 31, 2022 and April 7, 2022, the parties would reasonably cooperate to agree on amendments to the Merger Agreement, as amended, to reflect the same; provided, however, that the parties agreed that the following provisions would not be binding on the parties unless and until a formal amendment of the Merger Agreement, as amended, reflecting such provisions is executed by the parties:
| (a) | The Merger Consideration (as such term is defined in the Merger Agreement, as amended) shall be (i) 4,000,000 shares of Company common stock issued to Terry Rothwell on April 7, 2022, (ii) $2,705,000 in cash, of which $10,000 shall be paid on the execution of the definitive amendment of the Merger Agreement reflecting the terms herein, and (iii) one Sollensys Blockchain Server Distributive Data Center loaded with Sollensys Application Software (R4 Enterprise) (currently 32 Dell units) or equivalent. |
| (b) | The remaining $2,695,000 of the cash Merger Consideration will be paid via a promissory note between the Company and Terry Rothwell, which shall be due and payable on or before June 30, 2022, and if not repaid at that time will bear interest thereafter at the rate of 6% annually. |
| (c) | The closing of the CRE Transactions (as such term is defined in the Merger Agreement, as amended) and the repayment of the note will occur when the Company has obtained the $6,000,000 in financing from one or more of its sources, and the CRE Transactions will be subject to a separate agreement (“CRE Agreement”) to be entered into by the applicable parties. The purchase price for the real estate in the CRE Transactions will be $3,295,000. |
| (d) | In the event that the CRE Transactions do not close on or before June 30, 2022, rent on the facilities to be acquired in the CRE Transactions will increase by $50,000 per month and continue as provided in the CRE Agreement. |
| (e) | At the closing, the Company will enter into an agreement with Terry Rothwell and George Benjamin Rothwell for the use of two Sollensys Server Centers owned by the Rothwells for total payments of $100,000 per month until the second to die of Terry Rothwell and George Benjamin Rothwell, with no costs or obligations for either Terry Rothwell or George Benjamin Rothwell. |
| (f) | Immediately upon closing, the Company will assign to Celerit exclusive rights and responsibility for sales, support and service of all Company products and services offered to banks and financial institutions (collectively, the “Banking Industry”). Any Company contracts, agreements or arrangements of any nature that involve Company sales or services to the Banking Industry will, immediately upon closing, be assigned to Celerit for administration and performance. |
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| (g) | At the closing, Terry Rothwell will join the Company’s Board of Directors and Anthony Nolte and Donald Beavers will join the Celerit Board of Directors and the Celerit Solutions Board of Directors. All current Celerit and Celerit Solutions officers will remain in place unless otherwise agreement, and all Celerit and Celerit Solutions employees shall initially remain employed. |
| (h) | Once the amendment to the Merger Agreement reflecting the above terms has been executed, the parties will commence completion of the audit of Celerit and Celerit Solutions for 2021, and the Company will pay for the costs of such audit. |
Except as set forth above, all other terms of the Merger Agreement, as amended, remain in full force and effect.
The foregoing description of the Second Amendment is qualified in its entirety by reference to the Second Amendment, filed as Exhibit 10.3 hereto, which is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On April 5, 2022, the Company issued a press release announcing extension of the merger closing deadline and agreement in principle to certain amendments to the Merger Agreement, as amended.
The information included in this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth under this Item 7.01 shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 9.01 Financial Statement and Exhibits.
(d) Exhibits
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SIGNATURES
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.
| SOLLENSYS CORP | ||
| Dated: April 5, 2022 | By: | /s/ Donald Beavers |
| Donald Beavers Chief Executive Officer | ||
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Exhibit 10.3
Second Amendment to Merger Agreement
This Second Amendment to Merger Agreement, (the “Amendment”) is entered into as of the 31st day of March 2022, by and among (i) Sollensys Corp., a Nevada corporation (“Sollensys”); (ii) S-CC Merger Sub, Inc., an Arkansas corporation and a wholly owned subsidiary of Sollensys (“S-CC Merger Sub”); (iii) S-Solutions Merger Sub, Inc., an Arkansas corporation and a wholly owned subsidiary of Sollensys (“S-Solutions Merger Sub”); (iv) Celerit Corporation, an Arkansas corporation (the “Celerit”); (v) Celerit Solutions Corporation, an Arkansas corporation (“Celerit Solutions”); and (iv) Terry Rothwell (“Shareholder”). Each of Celerit and Celerit Solutions may be referred to herein individually as a “Company” and collectively as the “Companies”. Each of Sollensys, S-CC Merger Sub and S-Solutions Merger Sub may be referred to individually as a “Sollensys Party” and collectively as the “Sollensys Parties”. Each Sollensys Party, each Company and the Shareholder may be referred to herein collectively as the “Parties” and separately as a “Party.”
WHEREAS,
| A. | The Parties are all of the parties to a Merger Agreement dated October 26, 2021, and the Amendment thereto dated January 28, 2022 (collectively, the “Merger Agreement”). |
| B. | Section 2.09 of the Merger Agreement, as amended, prescribes the manner in which the closing date will be determined, and Section 8.01(e) of the Merger Agreement, as amended, provides that the Parties may terminate the Merger Agreement if it is not closed by March 31, 2022 (the “Closing Deadline”). |
| C. | The Parties are moving toward closing the Merger Agreement, and the Parties have agreed in principal as to certain modifications to the terms and conditions of the Merger Agreement and the transactions as set forth therein, and are in the process of preparing additional amendments to the Merger Agreement to reflect the same, but such amendments are not expected to be completed prior to the Closing Deadline of March 31, 2022. |
| D. | The Parties desire to extend the Closing Deadline to April 7, 2022 so as to provide the Parties with time to prepare the formal amendments to the Merger Agreement to reflect such revised terms. |
| E. | Section 10.11 of the Merger Agreement provides that the Parties may amend the Merger Agreement in writing. |
NOW, THEREFORE, in consideration of the premises herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:
| 1. | Defined terms used herein without definition shall have the meanings given in the Merger Agreement. |
| 2. | Section 8.01(e) of the Merger Agreement is hereby amended to replace the date of March 31, 2022, with April 7, 2022. |
| 3. | The Parties acknowledge and agree that the following changes to the terms and conditions of the Merger Agreement have been agreed in principal, and between the date hereof and April 7, 2022, the Parties shall reasonably cooperate to agree on amendments to the Merger Agreement to reflect the same, provided, for the avoidance of doubt, the Parties agree that the following provisions shall not be binding on the Parties unless and until a formal amendment of the Merger Agreement reflecting such provisions is agreed to and is executed by the Parties: |
| (a) | The Merger Consideration shall be (i) 4,000,000 shares of Sollensys Common Stock issued in the name of and delivered to Terry Rothwell April 7, 2022 (ii) $2,705,000 in cash, of which $10,000 shall be paid on the execution of the definitive amendment of the Merger Agreement reflecting the terms herein, and (iii) one (1) Sollensys Blockchain Server Distributive Data Center loaded with Sollensys Application Software (R4 Enterprise) (currently 32 Dell units) or equivalent (the “Sollensys Server Center”). |
| (b) | The remaining $2,695,000 of the cash Merger Consideration will be paid via a promissory note (the “Note”) between Sollensys and Terry Rothwell, which shall be due and payable on or before June 30, 2022, and if not repaid at that time will bear interest thereafter at the rate of 6% annually. |
| (c) | The closing of the CRE Transactions and the repayment of the note will occur when Sollensys has obtained the $6,000,000 in financing from one or more of its sources, and the CRE Transactions will be subject to a separate agreement (“CRE Agreement”) to be entered into by the applicable parties. The purchase price for the real estate in the CRE Transactions will be $3,295,000. |
| (d) | In the event that the CRE Transactions do not close on or before June 30, 2022,, rent on the facilities to be acquired in the CRE Transactions will increase by $50,000 per month and continue as provided in the CRE Agreement. |
| (e) | At the Closing, Sollensys will enter into an agreement with Terry Rothwell and George Benjamin Rothwell for the use of two (2) Sollensys Server Centers owned by the Rothwells for total payments of $100,000.00 per month until the second to die of Terry Rothwell and George Benjamin Rothwell, with no costs or obligations for either Terry Rothwell or George Benjamin Rothwell. |
| (f) | Immediately upon Closing, Sollensys shall assign to Celerit exclusive rights and responsibility for sales, support and service of all Sollensys products and services offered to banks and financial institutions (collectively, the “Banking Industry”). Any Sollensys contracts, agreements or arrangements of any nature that involve Sollensys sales or services to the Banking Industry shall, immediately upon Closing, be assigned to Celerit for administration and performance. |
| (g) | At the Closing, Terry Rothwell will join the Sollensys Board and Anthony Nolte and Donald Beavers will join the Celerit Board and the Celerit Solutions Board. All current Celerit and Celerit Solutions officers will remain in place unless otherwise agreement, and all Celerit and Celerit Solutions employees shall initially remain employed. |
| (h) | Once the amendment to the Merger Agreement to reflecting the above terms has been executed, the Parties will commence completion of the audit of Celerit and Celerit Solutions for 2021, and Sollensys will pay for the costs of such audit. |
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| 4. | Other than as amended herein, the Merger Agreement remains in full force and effect as amended herein. |
| 5. | This Amendment shall be governed by, enforced, and construed under and in accordance with the Laws of Nevada, without giving effect to principles of conflicts of law thereunder. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. A signed copy of this Amendment delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Amendment. |
[Signature Pages Follow]
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IN WITNESS WHEREOF, the Parties hereto have executed this Amendment as of the date first above written.
| Sollensys Corp. | ||
| By: | /s/ Donald Beavers | |
| Name: | Donald Beavers | |
| Title: | President | |
| S-CC Merger Sub, Inc. | ||
| By: | /s/ Anthony Nolte | |
| Name: | Anthony Nolte | |
| Title: | Chief Executive Officer | |
| S-Solutions Merger Sub, Inc. | ||
| By: | /s/ Anthony Nolte | |
| Name: | Anthony Nolte | |
| Title: | Chief Executive Officer | |
| Celerit Corporation | ||
| By: | /s/ Terry Rothwell | |
| Name: | Terry Rothwell | |
| Title: | Chief Executive Officer | |
| Celerit Solutions Corporation | ||
| By: | /s/ Terry Rothwell | |
| Name: | Terry Rothwell | |
| Title: | Chief Executive Officer | |
| Shareholder: | ||
| Terry Rothwell | ||
| By: | /s/ Terry Rothwell | |
| Name: | Terry Rothwell | |
Exhibit 99.1
Sollensys
and Celerit Amend Merger
Agreement and Extend Closing Deadline
PALM BAY, FL / ACCESSWIRE / April 5, 2022 / Sollensys Corp (OTCQB:SOLS), one of the first major cybersecurity companies specializing in ransomware recovery built on blockchain technology, announced today that it has extended the closing deadline of the Celerit merger to April 7, 2022. The parties also agreed in principle to certain amendments to the merger agreement between Sollensys and Celerit, a 37 year-old company engaged in information technology services and products. Celerit’s team of over 80 employees, contractors and consultants offers customized solutions to meet the technology needs of the banking and financial service industry clients.
The merger is expected to close on April 7, 2022. Following the closing, Celerit is expected to operate as a wholly owned subsidiary of Sollensys. Celerit’s management and employees will remain in place following the merger.
The purchase price is approximately $22,000,000 to be paid in stock and cash.
“We believe that this proposed transaction fits into Sollensys’ strategy to put an end to cybercrimes. By offering our blockchain product to Celerit’s existing account base, we believe we will add value to both companies,” said Don Beavers, Sollensys’ CEO. “Following the closing, Sollensys will acquire Celerit’s team, IP and assets, enabling us to deeply penetrate an important market that is in desperate need of protection from cybercriminals.”
Celerit is based in Little Rock, Arkansas, known as the birthplace of fintech. Celerit is nationally recognized by financial institutions and large software vendors as providing expertise in resource management, outsourcing & operations, and managed network services to the banking and financial industry, including some of America’s top 100 banks.
“I am proud of how far we have been able to grow Celerit, and I cannot wait to see where we go from here,” said Terry Rothwell, Celerit’s CEO. “Being a part of Sollensys will allow us to confidentially safeguard our customers’ mission-critical data, creating not only insights and efficiencies but competitive advantages such as digital safe deposit boxes for each of them.”
About Sollensys
Sollensys understands that cybersecurity is one of the biggest threats to our way of life. Destabilization, financial loss, data leaks, and corporate espionage create ripple effects that can be devastating. We are constantly reimagining technology to create a safer, better world to safeguard infrastructure, prevent disruptions to industry, and protect personal health, wealth, and well-being. Sollensys is based in Palm Bay, Florida and is publicly traded under the symbol SOLS. For more information please
visit: https://www.sollensys.com
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Cautionary Statement Regarding Forward-Looking Information
Certain information in this press release contains forward-looking statements. All statements other than statements of historical facts included herein are forward-looking statements. In some cases, forward-looking statements can be identified by words such as “believe,” “expect,” “anticipate,” “plan,” “potential,” “continue” or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties are discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”). You should carefully consider these factors, risks and uncertainties described in, and other information contained in, the reports we file with or furnish to the SEC before making any investment decision with respect to our securities. Readers should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond the Company’s control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. The Company is under no obligation (and expressly disclaim any such obligation) to publicly update or revise these forward- looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Investor Relations:
Sollensys Corp
866.438.7657
www.sollensys.com
info@sollensys.com
https://www.linkedin.com/company/sollensys-corp/
SOURCE: Sollensys Corp.
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