Item 1.02 Termination of a Material Definitive Agreement
On December 31, 2021, Registrant entered into a Management Operating Agreement
with CareClix Holdings, Inc. ("SOLI") which enabled Registrant to complete a
provisional closing (the "Interim Closing") of the acquisition of four operating
subsidiaries of SOLI, with the final closing of the transaction to occur when a
Form S-4 registration statement to register the consideration shares to be
issued by Registrant, was filed by Registrant with and declared effective by the
SEC, but by no later than May 31, 2022. As part of the Interim Closing, Charles
Scott and Dr. John Korangy were appointed to Registrant's Board of Directors. If
the registration statement was not declared effective by May 31, 2022, then the
transaction failed, the Interim Closing became void, the CareClix subsidiaries
again became subsidiaries of SOLI, and the mutual release in the event of
termination of the proposed transaction became effective. In April 2022, as a
result of disagreements between management of the CareClix subsidiaries and the
now former management of Registrant (Mahmood Khan, John C. Romagosa, Robert
Gunther and Fernando Leonzo (collectively the "Former Management")) ,and the
multiple defaults by Registrant in meeting the terms and conditions of the Stock
Purchase Agreement of December 17, 2021 and the Management Operating Agreement
as set forth in part in the Form 10-Q for the quarter ended February 28, 2022 as
filed with the SEC, SOLI formally offered the option to Former Management to
rescind and terminate the Interim Closing on multiple occasions. Former
Management refused these offers but continued to refuse to cure the defaults by
Registrant.
To undertake to cure the continuing defaults and also to initiate the audits of
the CareClix subsidiaries by Registrant as required by the Management Operating
Agreement, on April 26, 2022, acting as majority voting shareholder of
Registrant, Charles O. Scott voted to remove Fernando Leonzo and John C.
Romagosa as directors and officers of Registrant. On April 29, 2022, again
acting as majority voting shareholder of Registrant, Charles O. Scott voted to
remove Mahmood Kahn and Robert Gunther as directors and officers of Registrant.
The removals were done in compliance with Section 141(k) of the Delaware General
Corporation Law. These removals left Charles Scott and Dr. John Korangy as the
remaining members of the Registrant's Board of Directors.:
On May 2, 2022, the Board of Directors of Registrant approved an Amended
Management Operating Agreement, removing all further conditions to the Final
Closing except the obligation by Registrant to register and issue the balance of
the common share consideration, and removing the automatic termination provision
in the event that certain conditions were not met by May 31, 2022. The share
consideration, a total of 300 million shares of Registrant's common stock, were
reserved for issuance as soon as the shares are registered on Form S-4, and the
remainder of the 4,000,000 shares of Registrant's Series A Preferred stock,
which votes with the common stock at 60 votes per Series A Preferred share, were
issued to Charles O. Scott, former control shareholder of SOLI, and 1,200,000
shares of Series A Preferred previously held by Former Management, were
cancelled and reissued to Mr. Scott, as agreed.
On September 9, 2022, Former Management of Registrant filed a purported
derivative action against Registrant and its purported Board of Directors, in
the Court of Chancery of the State of Delaware, seeking:
1. A declaration that their removal as directors and officers was not valid;
2. Unspecified damages for "intentional mismanagement" by declaring the Interim
Closing of the CareClix acquisition as the Final Closing and seeking to
rescind the acquisition transaction.
Immediately on learning of the action filed by Former Management, Registrant's
Board of Directors immediately rescinded the Board action on May 2, 2022
approving the Amended Management Operating Agreement, resulting in a default of
the Interim Closing of the proposed acquisition of the CareClix companies for
failure of consideration and failure by Registrant to register the common share
consideration by May 31, 2022. Consequently,
ownership of the CareClix companies reverted to SOLI effective May 31, 2022,
Registrant and SOLI have severed all remaining connection except for a
promissory note by Registrant in favor of CareClix for $128,432 in funds
voluntarily advanced to or for Registrant for payment of Registrant operating
expenses from December 1, 2021 through September, 2022, and the mutual release
of claims contained in the Share Purchase Agreement became effective. The Share
Purchase Agreement did not contain any early or other termination penalty on any
party and an arbitration provision in both the Share Purchase Agreement and the
Management Operating Agreement survived termination and controls any future
issues between the parties.
Item 5.01 Changes in Control of Registrant.
As a result of the default by Registrant in the acquisition transaction
referenced in Item 1.02, Charles O. Scott remained as the majority voting
shareholder of Registrant, holding 5,200,000 shares of Series A Preferred stock,
with 312,000,000 total votes, resulting in voting control as follows:
Issued Vote Percent
Common 71,822,753 71,822,753 18.7
Preferred A 5,200,000 312,000,000 81.3
Preferred B 100,000 0 0
Preferred C 2,613,375 0 0
Preferred D 16,236 0 0
Since the shares of Series A Preferred stock held by Mr. Scott were part of the
consideration for the proposed acquisition of the CareClix companies by
Registrant, which transaction has failed, Mr. Scott conveyed the Series A
Preferred stock to Registrant for cancellation. The Series A shares all have
been cancelled and currently there are no Series A shares issued or outstanding.
As a result, the current voting control of Registrant will be based solely on
the common stock, as to which no shareholder or group holds voting control of
Registrant. The current major common shareholders are:
Amount of
Name of beneficial owner beneficial ownership Percent of class
Fernando Leonzo, Former Director &
Officer 4,517,726 6.29
Robert Gunther, Former Director &
Officer 3,513,458 4.89
John Romagosa, Former Director & Officer 6,318,738 8.80
Mahmood Khan, Former Director & Officer 9,476,490 13.19
Shircoo, Inc. 14,084,334 19.61
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective with the filing of this Current Report on Form 8-K with the SEC,
Charles Scott and Dr. John Korangy have submitted their resignations as
directors and officers of Registrant and Jeffry Hollis has submitted his
resignation as Controller of Registrant. The resignations are the result of the
action filed by the Former Management seeking to recover their former positions
with Registrant and to terminate the pending acquisition of the CareClix
companies. Mr. Scott and Dr. Korangy have not appointed one or more successor
directors or officers as they have no equity or other interest in Registrant,
the Former Management is currently suing Registrant, and there are concerns
regarding the conduct of Former Management before their termination, all of
which indicate that new directors should appropriately be elected by the common
shareholders at a Special Meeting of Shareholders.
None of Mr. Scott, Dr. Korangy or Mr. Hollis, and no other person or consultant
affiliated with the CareClix companies, is a shareholder of Registrant, or has
earned, received, or been entitled to any compensation from Registrant. All of
the resigning directors and officers have been furnished with a copy of this
disclosure by Registrant and all have expressed no need to respond to these
disclosures.
Item 8.01 Other Events.
As noted in Item 1.02 above, on September 9, 2022, Registrant's Former
Management filed an action against Registrant, Charles Scott and Dr. John
Korangy as directors of Registrant, and against an independent consultant
erroneously alleged to be a director of Registrant, seeking to rescind the
acquisition of the CareClix companies by Registrant. Registrant's fiscal year
ended May 31, 2022 and an Annual Report on Form 10-K was required to be filed in
90 days, or on or before August 29, 2022. Following termination of the Former
Management on April 26 and April 29, 2022, Registrant's remaining directors, Mr.
Scott and Dr. Korangy, initiated for the first time, the audit of the books of
Registrant and the preparation of the Annual Report on Form 10-K, but were
hampered in their efforts by the failure and refusal of Former Management to
turn over corporate records, documents and information needed for the audit and
Annual Report, despite requests to do so. On August 29, 2022, Registrant filed a
Notice of Late Filing with the SEC, indicating the Annual Report would be filed
within 15 days of the due date, or by September 13, 2022. The Form 10-K and
audited financial statements to be included in the Form 10-K were prepared by
Registrant on the basis of a completed Final Closing of the CareClix acquisition
as of May 2, 2022 and included discussion of management plans and analysis of
Registrant's operations with the CareClix companies included. As a result of the
lawsuit filed by Former Management against Registrant and its directors on
September 9, 2022, and the rescission and cancellation of
the Amended Management Operating Agreement, the CareClix acquisition terminated
as of May 31, 2021, and it was no longer appropriate to file the Annual Report
on Form 10-K including, as it did, references and details of the CareClix
companies as the basis for Registrant to continue as a going concern.
Accordingly, Registrant revised the Form 10-K to remove all references to the
CareClix companies as part of the on-going consolidated operations of Registrant
and engaged an independent audit firm to restate the audit to include only
Registrant. Registrant owes the independent audit firm $25,000 for prior work
unrelated to the current Annual Report and will owe additional amounts, to be
determined, for the audit to be included in the current Annual Report and has
had difficulty contacting the independent audit firm. Given the current
resignations of Registrant's directors and officers, filing of the revised Form
10-K including only Registrant, which has been ready for filing except for the
final audit opinion letter, has been postponed pending, election of directors by
the common shareholders of Registrant and appointment by them of new officers. A
copy of the revised unaudited Form 10-K in final EDGAR format is attached as
Exhibit 13
9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
The Final Closing of the acquisition of the CareClix subsidiaries was terminated
effective May 31, 2022. Required audited financial statements of the CareClix
subsidiaries accordingly will notnot be filed by an amendment to the Form 8-K
Current Report filed May 6, 2022 and are not attached as an Exhibit to this
Report.
(b) Pro forma financial information
(c) Shell company transactions
(d) Exhibits)
Exhibit No. Description
1 0 Mutual Release
Unaudited Annual Report on Form 10-K for year ended May 31,
13 2022 (draft, not filed)
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