Sollensys Corp was formerly a development stage company, incorporated in Nevada
on September 29, 2010, under the name Health Directory, Inc. Sollensys' initial
plans included organization and incorporation, target market identification,
marketing plans, and capital formation. A substantial portion of Sollensys'
efforts involved developing a business plan and establishing contacts and
visibility in the marketplace. Sollensys did not, however, generate any revenues
from these efforts.
Effective July 30, 2012, the holder of 3,000,000 shares, or approximately 79.8%
of Sollensys' then outstanding voting securities, executed a written consent in
accordance with Section 78.320 of the Nevada Revised Statutes approving an
amendment to the Articles of Incorporation to change Sollensys' name to
Sollensys, increase the number of authorized shares of Common Stock to
1,500,000,000, increase the number of authorized preferred shares of Sollensys,
par value $0.001 (the "Preferred Stock") to 25,000,000, and to split each
outstanding share of Common Stock into 131.69 shares of Common Stock.
Subsequently, beginning September 30, 2012, Sollensys went dormant.
On December 27, 2019, the Eighth Judicial District Court of Clark County, Nevada
(the "Court"), pursuant to Case number A-19-805633-B appointed Custodian
Ventures, LLC ("Custodian Ventures") as the custodian of Sollensys David Lazar,
who controls Custodian Ventures was subsequently named the only interim officer
and director of Sollensys.
On June 16, 2020, Custodian Ventures filed a motion with the Court asking the
Court to enter an order concluding and terminating the custodianship of
Sollensys. On July 20, 2020, the Court entered an order terminating
custodianship and barring non-asserted claims against Sollensys.
Effective August 5, 2020, David Lazar, the interim Chief Executive Officer,
President, Secretary, Treasurer, and sole director of Sollensys and the
beneficial owner, through his ownership of Custodian Ventures of 19,000,000
shares of Series A Preferred Stock, representing 100% of Sollensys' issued and
outstanding shares of preferred stock, entered into a Stock Purchase Agreement
by and among Eagle Lake, Sollensys, and Custodian Ventures. The Stock Purchase
Agreement is referred to herein as the "SPA." Pursuant to the terms of the SPA,
Eagle Lake agreed to purchase, and Custodian Ventures agreed to sell, 19,000,000
shares of Sollensys' Series A Preferred Stock in exchange for payment by Eagle
Lake to Custodian Ventures of $230,000 (collectively with the other transactions
in the SPA, the "Stock Purchase"). The Stock Purchase closed on August 5, 2020.
The shares of Series A Preferred Stock, par value $0.001 per share, of Sollensys
are convertible into shares of Common Stock of Sollensys at a rate of 50 shares
of Common Stock per share of Series A Preferred Stock, and has voting power on
an as-converted basis (voting with the Common Stock as one class) and thus
represents 65.4% of the voting power of all shares of stock of Sollensys.
In connection with the closing of the Stock Purchase, on August 5, 2020, Mr.
Lazar, the then-sole member of the Board of Directors (the "Board") of
Sollensys, pursuant to the power granted to the Board in Sollensys' bylaws,
increased the size of Sollensys' Board to two members. Simultaneously, Mr.
Lazar, as the sole Board member, appointed Donald Beavers as a director to fill
the newly created Board vacancy. At the same time, Mr. Lazar appointed Donald
Beavers as Chief Executive Officer and Secretary of Sollensys.
Also on August 5, 2020, following the above officer and director appointments
and effective on the closing of the Stock Purchase, Mr. Lazar resigned from any
and all officer and director positions with Sollensys. Mr. Lazar's resignation
is not the result of a disagreement with Sollensys on any matter relating to
Sollensys' operations, policies, or practices.
On November 30, 2020, pursuant to the Closing of the Share Exchange Agreement,
Sollensys acquired Eagle Lake, and Eagle Lake thereafter became a wholly owned
subsidiary of Sollensys, and the business of Eagle Lake became the business of
the Company going forward. At the time of the Closing, Eagle Lake had 10,011,667
shares of its common stock issued and outstanding, which is 11,667 shares in
excess of the number of shares of common stock authorized pursuant to Eagle
Lake's Articles of Incorporation. Such over-issued shares are void under Florida
law and are not entitled to any rights of a stockholder of Eagle Lake. As such,
the 10,000,000 shares of Eagle Lake common stock that the Company acquired from
the Eagle Lake Shareholders, represented 100% of the issued and outstanding
capital stock of Eagle Lake of the presence of over-issued shares.
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Eagle Lake Laboratories, Inc. was incorporated in the State of Florida on May 8,
2020. Eagle Lake offers advanced technology products for cybersecurity that
ensure a clients' data integrity through collection, storage, and transmission.
Results of Operations Nine Months ended December 31, 2020 compared to the Twelve
Months Ended March 31, 2020
Revenue
Revenue for the period ended December 31, 2020 was $180,000 compared to zero for
the period ended March 31, 2020. The revenue of $135,000 was recorded from the
sale of three Blockchain Archive Servers. Additionally, in December 2020, we
entered into Regional Service Center contracts representing an aggregate of
$2.25 million in potential gross sales over the term of the five year contract.
In connection with these contracts, we recorded an aggregate of $45,000 in
revenue in December 2020.
Gross Profit
The Company's gross profit on revenue was $150,000 for the period ended December
31, 2020 compared to $-0- due to no revenue, for the period ended March 31,
2020.
Operating Expenses
Operating expenses for the period ended December 31, 2020 were $3,063,903
compared to $26,100 during the same period ended March 31, 2020. Operating
expenses in the December 31, 2020 period include a one-time non-cash charge of
$1,900,000 for stock-based compensation relating to the issuance of preferred
stock. Excluding this charge operating expenses were $1,163,903 for the period
ended December 31, 2020. The primary component of operating expenses for the
period ended December 31, 2020 are approximately, $70,000 in marketing and
advertising expense, $49,000 in insurance costs, $430,000 in legal and
professional services, $286,000 in salaries and wages, $67,000 in rent expense
and $20,000 for software licensing fees.
Net Loss
As a result of the foregoing, the Company had net losses of $2,828,132 and
$26,100 for the periods ended December 31, 2020 and March 31, 2020 respectively.
Liquidity and Capital Resources
As of December 31, 2020 we had $129,624 cash and cash equivalents. Net cash used
in operating activities was $910,926 for the period ended December 31, 2020
compared to $26,100 for the period ended March 31, 2020.
Net cash from financing activities was $1,040,550 for the period ended December
31, 2020 This was primarily attributable to the sale of 646,167 shares of Eagle
Lake's common stock for $945,550 in proceeds pursuant to an offering pursuant to
506(b) of Regulation D conducted by Eagle Lake that commenced in March 2020, and
$94,500 from sale of 27,000 shares of common stock.
We may have ongoing needs for working capital to fund operations and to continue
to expand our operations. To that end, we would be required to raise additional
funds through equity or debt financing. However, there can be no assurance that
we will be successful in securing additional capital on favorable terms, if at
all. Our inability to raise capital could require us to significantly curtail or
terminate our operations altogether.
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