Item 3.03. Material Modification to Rights of Security Holders.
To the extent required by Item 3.03 of Form 8-K, the information regarding the
amendments to the Articles of Incorporation and the Company's Series A Preferred
Stock as contained in Item 5.03 of this Current Report on Form 8-K is
incorporated by reference herein.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
Withdrawal of Prior Reverse Split; Amendment of Authorized Shares and Amendment
of Series A Preferred Stock
As reported in the Form 8-K filed by Sollensys Corp. (the "Company") on August
14, 2020, on August 12, 2020 the Company filed with the Secretary of State of
Nevada a Certificate of Change to its Articles of Incorporation (the
"Amendment") to effect a 1-for-12 reverse stock split (the "Reverse Split") of
the Company's issued and outstanding common stock, par value $0.001 per share
("Common Stock"). Pursuant to the Amendment, effective as of September 18, 2020,
every twelve (12) shares of the issued and outstanding Common Stock were to be
converted into one share of Common Stock, without any change in the par value
per share. The Reverse Split would not be effective, however, until the
Financial Industry Regulatory Authority ("FINRA") completed its review of the
Reverse Split and approved the completion of the Reverse Split. The Company has
received notification from FINRA that FINRA has not approved the Reverse Split,
due to certain information not being available with respect to a certain holder
of the Company's Common Stock which had acquired shares of Common Stock in 2012.
Also as previously reported by the Company, the Company has designated certain
shares of its preferred stock as Series A Preferred Stock of the Company (the
"Series A Stock"), of which 19,000,000 shares were previously owned by Custodian
Ventures, LLC ("Custodian"). All of the shares of Series A Stock were acquired
from Custodian by Eagle Lake Laboratories, Inc. ("Eagle Lake") on August 5,
2020, as reported in the Company's Form 8-K filed on August 11, 2020, the
description of which contained therein is incorporated herein by reference.
Among other rights, the holders of Series A Stock had the right to convert each
share of Series A Stock into 50 shares of Common Stock, and such conversion
ratio did not adjust in the event of a reverse split of the Common Stock.
Therefore, had the Reverse Split as discussed above been completed, and the
Series A Stock had then been converted to Common Stock, Eagle Lake would have
held approximately 95.8% of the Common Stock.
As the Reverse Split was not approved by FINRA, the Company has undertaken, and
is in the process of completing, certain actions to restructure the authorized
and the issued and outstanding shares of the Company such that the reasons for
FINRA's rejection of the Reverse Split will be addressed and the Company's
authorized and issued capitalization may be revised to be more conducive to the
Company's ongoing operations. These actions, as described below, are expected to
result in Eagle Lake holding the same proportion of the Common Stock had the
Reverse Split been approved and completed, and then Eagle Lake had converted its
Series A Stock into Common Stock of the Company.
In furtherance of the above, on October 8, 2020, the Company filed a Certificate
of Correction with the Secretary of State of the State of Nevada. The
Certificate of Correction had the effect of nullifying the Reverse Split, due to
the fact that FINRA had not approved the Reverse Split. The foregoing
description of the Certificate of Correction is qualified in its entirety by
reference to the complete terms and conditions of the Certificate of Correction,
a copy of which is attached to this Current Report on Form 8-K as Exhibit 3.1
and is incorporated by reference into this Item 5.03.
On October 9, 2020, and following the effectiveness of the Certificate of
Correction, the Company filed a Certificate of Amendment with the Secretary of
State of the State of Nevada (the "Certificate of Amendment") to amend the
Articles of Incorporation of the Company to increase the authorized shares of
Common Stock to 12,000,000,000 shares of Common Stock(the "Authorized Shares
Increase"). The foregoing description of the Certificate of Amendment is
qualified in its entirety by reference to the complete terms and conditions of
the Certificate of Amendment, a copy of which is attached to this Current Report
on Form 8-K as Exhibit 3.2 and is incorporated by reference into this Item 5.03.
Also on October 9, 2020, following the effectiveness of the Certificate of
Correction, the Company amended and restated the Certificate of Designations of
the Series A Stock in its entirety, by the filing of a Certificate, Amendment or
Withdrawal of Designation for the Series A Stock (the "Series A Amendment") with
the Secretary of State of the State of Nevada. The Series A Amendment had the
effect of modifying the conversion rights of the Series A Stock such that each
share of Series A Stock is convertible into 600 shares of Common Stock, which
would result in the Series A Stock converting into the same percentage of the
Common Stock had the Reverse Split been completed and then the Series A Stock
converted. The Series A Amendment also removed the liquidation preference for
the Series A Stock which had been included in the prior Certificate of
Designations for the Series A Stock, and made certain other changes to the terms
and conditions therein.
The foregoing description of the Series A Amendment is qualified in its entirety
by reference to the complete terms and conditions of the Series A Amendment, a
copy of which is attached to this Current Report on Form 8-K as Exhibit 3.3 and
is incorporated by reference into this Item 5.03.
At a later date, Eagle Lake intends to convert its 19,000,000 shares of Series A
Stock into shares of Common Stock, which will result in the issuance to Eagle
Lake of 11,400,000,000 shares of Common Stock and result in Eagle Lake holding
approximately 95.8% of the Company's issued and outstanding Common Stock.
Further, the Company intends to effect a 1-for-120 reverse stock split (the "New
Reverse Split") of the Company's issued and outstanding Common Stock, and to
also reduce its authorized shares of Common Stock from 12,000,000,000 shares to
300,000,000 shares following the New Reverse Split.
Item 5.07. Submission of Matters to a Vote of Security Holders
On October 6, 2020, Eagle Lake, as the holder of 19,000,000 shares of Series A
Stock, representing 65.4% of the voting power of the Company, acting by written
consent, approved the Certificate of Correction, the Authorized Shares Increase
and the Authorized Shares Amendment.
On October 6, 2020, Eagle Lake, as the sole holder of the Series A Stock,
representing 100% of the voting power of the Series A Stock, approved the Series
A Amendment.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
3.1 Certificate of Correction of the Company filed with the Secretary of
State of Nevada on October 8, 2020
3.2 Certificate of Amendment of the Company filed with the Secretary of
State of Nevada on October 8, 2020
3.3 Certificate of Designations of the Company filed with the Secretary of
State of Nevada on October 8, 2020
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