SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
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): September 29, 2014
SONANT SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Networking Partners, Inc.
(Former name)
Nevada 0-54418 45-0921541
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
2950 W. Cypress Creek Rd., Suite 100, Fort Lauderdale, FL 33309
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (954) 358-4849
857 Sarno Road, Melbourne, Florida 32935
(Former Address)
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 communication pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communication pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.133-4(c))
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EXPLANATORY NOTE
This Form 8-K/A is being filed in connection with the closing of Asset
Purchase Agreement with Chad Steinhart on September 29, 2014, that resulted in
(i) Networking Partners, Inc. ("Company") ceasing to be a "shell company" (as
that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934); (ii)
the Company becoming a multinational network messaging, telecommunication and
software development company; and (iii) to provide clarification of the assets
acquired and that the transaction did not qualify as the purchase of a business.
ITEM 2.01 COMPLETION OF ACQUISITION OF ASSETS.
On April 16, 2014, Networking Partners, Inc. ("Company") entered into a
definitive Asset Purchase Agreement with Mr. Chad Steinhart ("Steinhart"),
pursuant to which the Company agreed to acquire certain assets from Mr.
Steinhart. We closed the Asset Purchase Agreement transaction on September 29,
2014.
Effective September 29, 2014, the Company and Steinhart amended the Asset
Purchase Agreement to add a condition subsequent that read as follows:
"In the event that the Purchaser shall fail to raise a minimum of $125,000
on or before November 30, 2014, pursuant to a private placement memorandum, the
transaction contemplated by the Agreement shall be rescinded and the preferred
stock issued to Seller shall be returned to the Purchaser for cancellation and
the Purchaser shall reconvey the Assets to the Seller, the newly elected Board
members shall resign from their directorships and each of the Parties shall be
restored to their pre-Closing status. The Parties agree that the subscription
proceeds of the offering, the certificate for the preferred stock issued to the
Seller, the Bill of Sale conveying the assets to the Purchaser, will be placed
in escrow with David E. Wise, Attorney at Law, and the proceeds of the offering
shall be used to pay outstanding invoices to David E. Wise, Attorney. The
balance of funds (after paying fees due to Mr. Wise) received as subscriptions
shall be released from such attorney's IOLTA account and turned over to the
Purchaser for general working capital purposes. In addition, until this
condition subsequent is satisfied, Steinhart shall not assign, convey, pledge,
hypothecate or vote the preferred stock. In the event that the Purchaser
receives a minimum of $125,000 in cleared subscription funds on or before
November 30, 2014, the certificate for the preferred stock shall be delivered to
the Seller, the bill of sale for the assets shall be delivered to the
Purchaser." No other changes or amendments were made to the Asset Purchase
Agreement. A copy of the executed Amendment to Asset Purchase Agreement is
attached hereto as Exhibit 10.1 and incorporated herein by reference.
Effective November 13, 2014, the Company and Steinhart amended the Asset
Purchase Agreement to clarify that the assets acquired included all of
Steinhart's vendor relationships and the lists of businesses that have utilized
the technology on a test basis or are currently using the technology on a trial
basis and may be willing to enter into formal agreements to continue using the
technology which will generate monthly residual revenues to the Company. In
addition, effective November 13, 2014, the Company and Steinhart amended Exhibit
"A" (the detailed listing of assets acquired) of the Asset Purchase Agreement to
clarify that the assets acquired included relationships and people or companies
that might use the web development portal created by Steinhart in order to
generate monthly reoccurring revenue for services in the future.
On September 29, 2014, the Company and Steinhart closed on the Asset
Purchase Agreement, resulting in the Company acquiring certain assets from
Steinhart. The assets acquired included, among other things, a proprietary
integration code for web development and software for voice over internet
protocol ("VoIP") integration. This works together to form a total solution
resulting in an internet telephony service provider ("ITSP") platform that
allows hosted private branch exchange ("PBX") in the cloud and other telecom
features. This platform integrates several types of telecommunications carrier
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grade class 4 and class 5 soft-witches from an open source framework by Digium,
Inc. to licensed software and equipment and infrastructure providers, Telinta,
Inc. and PortaOne, Inc. This allows the convergence around a carrier grade
billing platform including soft-switches as media applications for voice and
video calls, conferencing, interactive voice response ("IVR") applications and
unified messaging applications integrated into one simple web portal. This
integration is being purchased and allows the end using businesses that pay for
service to have a robust PBX phone system including phone lines hooked to the
Cloud. The integrations include the code, infrastructure and equipment allowing
the soft-switches and web development to operate in a simple interface that uses
the technology just mentioned and hosts the integration portal on the domains
www.SonantTelecon.com and www.SonantTelecom.net. The Asset Purchase Agreement
includes all the code, web development integrations and an infrastructure to
facilitate being an ITSP. It also includes all of Steinhart's vendor
relationships and the lists of businesses that have utilized the technology on a
test basis or are currently using the technology on a trial basis and may be
willing to enter into formal agreements to continue using the technology which
will generate monthly residual revenues to the Company.
The assets and development acquired are more particularly described on
Exhibit A to the amended Asset Purchase Agreement, an executed copy of which is
included as Exhibit 10.1 to our amended Current Report on Form 8-K.
The Company acquired assets and technology (the assets and technology are
referred to as "Sonant") that are the foundation and structure in the form of
code, website under construction and potential back-end relationships that hold
significant value with the addition of capital, infrastructure, facilities,
management, consultants/personnel and successful marketing efforts to attract
customers given the acquired foundation and structure are now in place to create
a business that offers Hosted VOIP services. We did not acquire a business due
to the fact that the acquired assets and technology are merely the foundation
being used to create a completely new operation that will include marketing,
services, a workforce and products that were not a part of the assets acquired.
The Company's intention is to create a business with operations that include the
marketing and sales of products and services that will expand and grow our
Company. The VOIP industry as a whole is growing leaps and bounds given the
significant cost savings offered to small businesses. Hence, a significant
portion of the value we acquired comes from the fact that Sonant has the
potential to have a firm foothold in an expanding industry. Hosted PBX continues
to be the fastest growing segment in the VOIP industry with VOIP industry itself
exhibiting significant growth. Growth in the hosted PBX segment is particularly
strong in the Small Office and Home Offices (SOHO) segment that continue to take
up hosted PBX services mainly due to cost savings, scalability and flexibility.
Sonant could potentially offer a number of packages to customers and it would be
fairly conservative to assume a monthly per user revenue of $500. Sonant intends
to market its services through the use of regional managers. Our initial plan is
to have one regional manager per each state and each one of them is expected to
yield at least one customer per month, giving a total of 12 customers by year
end, so having 50 reps would give a total of 500 subscribers by year end. Sonant
anticipates monthly revenue of $500 per subscriber. Given Sonant is expected to
have 1000 subscribers by the end of the first year in business, we can expect an
'average' subscriber base of 500 during the first year of operations;
multiplying this number by the average annual revenue per subscriber gives us
first year revenues of $3,000,000. However, we cannot guarantee that we will
achieve these revenue levels.
The purchase consideration paid to Steinhart at the closing was 625,000
shares of Series A Convertible Preferred Stock. Each share of Series A
Convertible Preferred Stock has 100 votes per share and is convertible into 100
shares of the Company's common stock, such conversion right shall be exercisable
on or after the second anniversary of the closing of the asset acquisition
(September 29, 2016).
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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K/A, including any pro forma financial
statements included as an exhibit hereto, contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements refer to future plans, objectives, expectations and intentions
of the Company. Words such as "intend," "anticipate," "believe," "estimate,"
"plan," "expect," "will," "may," "might" and variations of these words, as well
as similar expressions, identify these forward-looking statements. All
statements other than statements of historical facts contained in this Current
Report, including statements regarding the Company's future financial position,
business strategy, budgets, projected costs and plans and objectives of the
Company, are forward-looking statements.
The Company's management expresses its expectations, beliefs and
projections in good faith and believes the expectations reflected in these
forward-looking statements are based on reasonable assumptions; however, the
Company cannot assure prospective investors that these expectations, beliefs and
projections will prove to have been correct. Such forward-looking statements
reflect the current views of the Company's management with respect to the
Company and anticipated future events and are subject to the many risks,
uncertainties, assumptions and factors relating to the Company's proposed
operations. Such factors include, among others, the following: general economic
and business conditions, both national and in the regions in which the Company
will operate, regulatory environment, industry capacity, demographic changes,
challenges to our intellectual property rights, existing laws and government
regulations and changes in, or the failure to comply with, such laws and
regulations, competition, catastrophic weather events such as hurricanes,
technological developments that increase the cost of providing or reduce the
demand for the Company's products or services, changes in business strategy or
development plans, the ability to attract and retain qualified personnel, the
availability and terms of obtaining capital to fund the Company's business and
other factors referenced in this Current Report.
The Company cautions prospective investors that such forward-looking
statements, including, without limitation, those relating to the Company's
future business prospects, demand for the Company's products or services,
revenues, capital needs, expenses, development and operation costs and income,
wherever they occur in this Current Report or in other statements attributable
to the Company, are necessarily estimates reflecting the best, good faith
judgment of the Company's management and involve a number of risks and
uncertainties that could cause actual results to differ materially from those
suggested by the forward-looking statements. Should one or more of these risks
or uncertainties materialize or should the Company's underlying assumptions
prove to be incorrect, the Company's actual results may vary significantly from
those anticipated, believed, estimated, expected, intended or planned. In light
of these risks, uncertainties and assumptions, any favorable forward-looking
events discussed in this Current Report may not occur.
Potential investors should not make an investment decision based solely on
the Company's projections, estimates or expectations.
RISK FACTORS
An investment in our Common Stock involves a high degree of risk.
Prospective investors should carefully consider the following risk factors and
the other information in this Current Report and in our other filings with the
SEC before investing in our Common Stock. Our business and results of operations
could be seriously harmed by any of the following risks. The risks and
uncertainties described below are those that our management currently believes
may significantly affect our Company and our investors. If any of the following
risks actually occurs, our business, financial condition and results of
operations could be harmed and investors in our Common Stock could lose part or
all of their investment in our Common Stock.
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PLEASE CONSIDER THE FOLLOWING RISK FACTORS BEFORE DECIDING TO INVEST IN OUR
COMMON STOCK. The numbers preceding each risk factor below has no bearing on the
importance or materiality of such risk factors, as investors in our Common Stock
should consider all such risk factors when evaluating our Company for investment
purposes.
RISKS RELATED TO OUR BUSINESS
1. WE DO NOT HAVE AN INDEPENDENT AUDIT OR COMPENSATION COMMITTEE. THE ABSENCE
OF WHICH COULD LEAD TO CONFLICTS OF INTEREST OF OUR OFFICERS AND DIRECTORS
AND WORK AS A DETRIMENT TO OUR SHAREHOLDERS.
We do not have an independent audit or compensation committee. The absence
of an independent audit and compensation committee could lead to conflicts of
interest of our officers and directors, which could work as a detriment to our
shareholders.
2. WE HAVE A VERY LIMITED OPERATING HISTORY AND THERE IS NO ASSURANCE THAT OUR
FUTURE OPERATIONS WILL RESULT IN REVENUES OR PROFITS. IF WE CANNOT GENERATE
SUFFICIENT REVENUES TO OPERATE PROFITABLY, THEN WE MAY SUSPEND OR CEASE OUR
OPERATIONS AND YOU COULD EVEN LOSE YOUR ENTIRE INVESTMENT IN OUR COMMON
STOCK.
We were incorporated on November 2, 2010, and have not generated any
revenues to date. We also have very little operating history upon which an
evaluation of our future success or failure can be made, especially in light of
our cessation of prior operations as a social networking company and foray into
the technology sector. The success of our future operations is dependent upon
our ability to carry out our planned marketing and sales activities, fund our
operations and compete effectively with other providers of similar or
competitive services. Based on our current business plan, we expect to incur
operating losses through the remainder of 2014. We cannot guarantee that we will
ever be successful in generating revenues sufficient to cover our operating
costs and overhead or achieve profitability. Our failure to achieve
profitability may cause us to suspend or cease our operations.
3. AS A RESULT OF OUR INTENSELY COMPETITIVE INDUSTRY, WE MAY NOT GAIN ENOUGH
MARKET SHARE TO BE PROFITABLE.
The network messaging, telecommunications and software development business
is intensely competitive. We have numerous competitors in the United States and
abroad, many of whom have greater financial and human resources than we have. If
we are unable to compete effectively and efficiently with our competitors, then
we may not generate sufficient revenues and profits to stay in business, in
which case investors in this Offering could lose part or all of their
investments in the Company.
4. OUR ABILITY TO ACHIEVE ANY SIGNIFICANT REVENUE WILL DEPEND ON OUR ABILITY
TO ESTABLISH EFFECTIVE SALES AND MARKETING CAPABILITIES.
Our success is dependent up our ability to effectively and profitably
market and sell our services. If we fail to establish sufficient marketing and
sales forces, our ability to enter new or existing markets will be impaired. Our
inability to effectively enter these markets would materially and adversely
affect our ability to generate significant revenues.
5. WE DEPEND HEAVILY ON OUR MANAGEMENT TEAM AND CONSULTANTS AND THE LOSS OF
ANY OF OUR EXECUTIVE OFFICERS COULD SIGNIFICANTLY WEAKEN OUR MANAGEMENT
EXPERTISE AND ABILITY TO RUN OUR BUSINESS.
Our business strategy and success is dependent on the skills and knowledge
of our management team and consultants. As of the date of this Private Placement
Memorandum, Chad Steinhart is our President and Chief Executive Officer. We have
a few other executive officers. The loss of services of one or more members of
our management team, especially Mr. Steinhart, could weaken significantly our
management expertise and our ability to efficiently run our business. We do not
maintain key man life insurance policies on any of our officers.
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6. THE MARKETABILITY AND PROFITABILITY OF OUR SERVICES IS SUBJECT TO UNKNOWN
ECONOMIC CONDITIONS, WHICH COULD SIGNIFICANTLY IMPACT OUR BUSINESS,
FINANCIAL CONDITION, THE MARKETABILITY OF OUR FACILITIES AND OUR
PROFITABILITY.
The marketability and profitability of our services may be adversely
affected by local, regional, national and international economic conditions
beyond our control and/or the control of our management, which could
significantly impact our business, financial condition, the marketability of our
services and our ability to earn a profit. Favorable changes may not necessarily
enhance the marketability of our services or our profitability.
7. WE ARE VULNERABLE TO THE CURRENT ECONOMIC CRISIS WHICH MAY NEGATIVELY
AFFECT OUR PROFITABILITY.
The senior residence and assisted living business is generally affected by
a number of factors including general economic conditions, inflation, interest
rates, tax rates, gasoline and other energy costs and consumer confidence,
generally, all of which are beyond our control. We are currently in a severe
worldwide economic recession. Runaway deficit spending by the United States
government and other countries further exacerbates the United States and
worldwide economic climate and may delay or possibly deepen the current
recession. Currently, a lot of economic indicators suggest rising energy costs,
higher inflation, dwindling consumer confidence and substantially higher taxes.
Utilization of senior residence and assisted living facilities tend to decline
during recessionary periods when disposable income and government entitlement
programs are lower and may impact utilization of our facilities. In addition,
sudden disruptions in business conditions as a result of a terrorist attack
similar to the events of September 11, 2001, including further attacks,
retaliation and the threat of further attacks or retaliation, war, adverse
weather conditions or other natural disasters, such as Hurricane Katrina,
pandemic situations or large scale power outages can have a short term or,
sometimes, long term impact on spending.
RISKS RELATED TO AN INVESTMENT IN OUR SECURITIES
8. BECAUSE ONE OF OUR SHAREHOLDERS OWNS 625,000 SHARES OF OUR PREFERRED STOCK
WITH SUPER VOTING RIGHTS, HE CAN EXERT SIGNIFICANT INFLUENCE OVER CORPORATE
DECISIONS THAT MAY BE DISADVANTAGEOUS TO OUR MINORITY SHAREHOLDERS.
Chad Steinhart currently owns 625,000 shares of our Series A Preferred
Stock, which allows him to cast 62,500,000 votes on any and all matters
submitted to our shareholders for a vote, and, even if we sell all 3,333,334
shares in this Offering, Mr. Steinhart will still control the voting on any and
all matters submitted to our shareholders for a vote. As a result of his
ownership position, Mr. Steinhart will be able to elect all of our directors and
control the vote on any matter brought before a meeting of our shareholders.
Such control by Mr. Steinhart could be disadvantageous to our minority
shareholders, who would have little say in the election of our directors and in
any acquisition or merger transaction in which we may become involved.
9. OUR COMMON STOCK IS NOT CURRENTLY TRADED ON ANY STOCK EXCHANGE OR QUOTED ON
THE OVER-THE-COUNTER BULLETIN BOARD OR THE PINK SHEETS. WHEN AND IF TRADED,
OUR COMMON STOCK WILL LIKELY BE CONSIDERED TO BE A "PENNY STOCK" AND, AS
SUCH, THE MARKET FOR OUR COMMON STOCK MAY BE LIMITED BY CERTAIN SEC RULES
APPLICABLE TO PENNY STOCKS.
As long as the price of our common stock remains below $5.00 per share, our
shares of common stock are likely to be subject to certain "penny stock" rules
promulgated by the SEC. Those rules impose certain sales practice requirements
on brokers who sell penny stock to persons other than established customers and
accredited investors (generally, an institution with assets in excess of
$5,000,000 or an individual with a net worth in excess of $1,000,000). For
transactions covered by the penny stock rules, the broker must make a special
suitability determination for the purchaser and receive the purchaser's written
consent to the transaction prior to the sale. Furthermore, the penny stock rules
generally require, among other things, that brokers engaged in secondary trading
of penny stocks provide customers with written disclosure documents, monthly
statements of the market value of penny stocks, disclosure of the bid and asked
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prices of penny stocks and disclosure of the compensation to the brokerage firm
and disclosure of the sales person working for the brokerage firm. These rules
and regulations make it more difficult for brokers to sell shares of our common
stock and limit the liquidity of our shares.
10. WE DO NOT EXPECT TO PAY DIVIDENDS FOR THE FORESEEABLE FUTURE.
We will use any earnings generated from our operations to finance our
business and will not pay any cash dividends to our shareholders in the
foreseeable future.
11. SHAREHOLDERS MAY BE DILUTED SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN
FINANCING AND SATISFY OBLIGATIONS THROUGH ISSUANCE OF ADDITIONAL SHARES OF
OUR COMMON STOCK.
We have no committed source of financing. Wherever possible, our board of
directors will attempt to use non-cash consideration to satisfy obligations. In
many instances, we believe that the non-cash consideration will consist of
restricted shares of our common stock. Our board of directors has authority,
without action or vote of the shareholders, to issue all or part of the
74,554,516 authorized, but unissued, shares of our common stock. Future
issuances of shares of our common stock will result in dilution of the ownership
interests of existing shareholders, may further dilute common stock book value
and that dilution may be material. In addition, Mr. Steinhart may convert his
preferred stock into 62,500,000 shares of our common stock at any time beginning
September 29, 2016, which will severely dilute the ownership interests of our
shareholders.
12. THE ASSET PURCHASE AGREEMENT, AS AMENDED, WITH CHAD STEINHART COULD BE
RESCINDED AND INVESTORS COULD END UP WITH AN INVESTMENT IN NETWORKING
PARTNERS, INC., WHICH, ABSENT THE STEINHART ASSETS, WOULD HAVE NO OR
NOMINAL ASSETS OR OPERATIONS AND INVESTORS COULD LOSE PART OR ALL OF THEIR
INVESTMENTS IN THE COMPANY.
In the event that the Company fails to raise a minimum dollar amount of
subscriptions of at least $125,000 on or before November 30, 2014 (unless such
date is extended by Enzo Taddei, a Director of the Company), the Asset Purchase
Agreement with Mr. Steinhart may be rescinded, in which case (i) the Series A
Preferred Stock issued in the name of Chad Steinhart and held in escrow by David
E. Wise, Attorney, shall be returned to the Company's transfer agency for
cancellation; (ii) the Bill of Sale conveying the assets covered by the Asset
Purchase Agreement with Chad Steinhart and held in escrow by David E. Wise,
Attorney, shall be returned to Chad Steinhart; (iii) the parties to the Asset
Purchase Agreement shall be restored to their pre-closing statuses; and (iv)
those persons who have invested in this Offering will not receive a return of
their subscriptions and, instead, will be investors in Networking Partners,
Inc., without the Steinhart assets, which we would be a shell company, and
investors could lose part or all of their investments in the Company.
13. THERE ARE RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS
This Private Placement Memorandum contains certain forward-looking
statements regarding management's plans and objectives for future operations
including plans and objectives relating to our planned marketing efforts and
future economic performance. The forward-looking statements and associated risks
set forth in this Private Placement Memorandum include or relate to, among other
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things, (a) our projected sales and profitability, (b) our growth strategies,
(c) anticipated trends in our industry, (d) our ability to obtain and retain
sufficient capital for future operations and (e) our anticipated needs for
working capital. These statements may be found throughout this Private Placement
Memorandum. Actual events or results may differ materially from those discussed
in forward-looking statements as a result of various factors, including, without
limitation, the risks outlined under "Risk Factors" and matters described
generally herein. In light of these risks, there can be no assurance that the
forward-looking statements contained in this Private Placement Memorandum will,
in fact, occur.
FOR ALL OF THE FOREGOING REASONS AND OTHER REASONS SET FORTH HEREIN, AN
INVESTMENT IN OUR SECURITIES IN ANY MARKET THAT MAY DEVELOP IN THE FUTURE WILL
INVOLVE A HIGH DEGREE OF RISK.
DESCRIPTION OF BUSINESS
CORPORATE BACKGROUND
We were incorporated in the State of Nevada on November 2, 2010, under the
name "Networking Partners, Inc." for the purpose of acquiring two social
networking websites from Anne's Diary, Inc. We discontinued our operations
related to the two social networking websites in 2013. On September 29, 2014, we
acquired certain assets from Chad Steinhart and changed the nature of our
business to that of being a multinational network messaging, telecommunications
and software development company that acts as a Voice Over Internet Protocol
("VOIP") Internet Telecommunications Service Provider ("ITSP"). In accordance
with the Asset Purchase Agreement with Mr. Steinhart, we agreed to change, and
have in fact, changed our name to "Sonant Systems, Inc." We have had limited
operations and no revenues since our incorporation.
As a result of the Asset Acquisition described below, we are a network
messaging, telecommunication and software development company whose primary core
business centers on providing telecommunications and software development around
Voice Over Internet Protocol ("VoIP") technology. Our core revenues will be
developed from acting as a VoIP Internet Telecommunications Service Provider
("ITSP"). We will also provide Unified Communications. We will offer services
specially designed for small to mid-sized businesses providing software that is
basically a programmable telephone system PBX hosted in the cloud. These
services can easily be integrated with software installed on a customer's
desktop, laptop, smartphone or IP telephone SIP enabled device. Our core
business will provide VOIP Telecommunications, allowing clients to use their
service as a normal telephone would function, and will also provide additional
features to enable customer to use the phone to call anywhere, to anyone and to
any VoIP or regular number, fast and hassle-free.
We will rely heavily on selling this cloud based hosted PBX (similar to
legacy telephone PBX, but hosted in the cloud) and communications systems
services utilizing VoIP technology to transport voice calling and or
conversations through the internet instead of normal phone lines, i.e., the
public telephone network. Our platform integrates several types of
telecommunication carrier grade class 4 and 5 soft-switches from an open source
framework by Digium, Inc. to licensed software and equipment infrastructure
providers Telinta, Inc. and PortaOne, Inc. This combination of our software
allows convergence around a carrier grade billing platform including
soft-switches as media applications to allow Sonant to sell services linked to
voice and video calls, conferencing, interactive voice response ("IVR")
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applications and unified messaging applications. Our system then integrates
everything into one simple web portal for our customers to log into and manage
their accounts, allowing the end using business that pays for service to have a
robust PBX phone system including phone lines hooked to the cloud.
COMPETITION
The specialty telecommunications business is intensely competitive. The
majority of our competitors have vastly greater financial and human resources
than us.
PROPERTIES
We do not currently own or lease any real property. However, during the
next few months, we intend to sublease our corporate offices and plan to pay
approximately $1,000 per month for such space. Our board of directors must
approve any rental arrangement and ensure that it is fair to the Company.
EMPLOYEES
The Company currently have one full-time employee. In the next few months,
we will likely need to hire several outsourced, on-call technical assistants to
help support our recently acquired telecommunication switching equipment, which
will be available a 24/7 basis. Currently, we do not have any employment
agreements with any of our officers, directors or employees. We do not
anticipate any of our employees being union members.
OUR INTELLECTUAL PROPERTY
We have no patents or trademarks. Our trade secrets, copyrights and our
other intellectual property rights are important assets for us. We enter into
confidentiality agreements with our employees and consultants and we generally
control access to and distribution of proprietary information. These agreements
generally provide that any confidential information developed by us or on our
behalf be kept confidential. Further, we require all employees to execute
written agreements assigning to us all rights in all inventions, developments,
technologies and other intellectual property created by our employees.
There are events that are outside of our control that pose a threat to our
intellectual property rights. For example, effective intellectual property
protection may not be available in every country in which our services are made
available through the Internet. Also, the efforts we have taken to protect our
propriety rights may not be sufficient or effective. Any significant impairment
of our intellectual property rights could harm our business or our ability to
compete. Also, protecting our intellectual property rights could be expensive
and time consuming.
SUBSIDIARIES
We have no active subsidiaries.
LEGAL PROCEEDINGS
We are not subject to any legal proceedings and are not aware of any
threatened legal proceedings.
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DIRECTORS AND EXECUTIVE OFFICERS
Our executive officers are elected by the board of directors and serve at
the discretion of the board. The following table sets forth certain information
regarding our current directors and executive officers:
Director
Name Position Since
---- -------- -----
Daniel C. Lancer 53 Chief Executive Officer, Director of
Operations, Treasurer and Director 2014
Chad G. Steinhart 45 Chief Technical Officer, Director of
Marketing and Operations and Director 2014
Colm J. King 56 Chief Financial Officer and Director 2014
Enzo Taddei 42 Director 2010
Certain biographical information of our directors and officers is set forth
below.
DANIEL C. LANCER, CHIEF EXECUTIVE OFFICER, DIRECTOR OF OPERATIONS, TREASURER AND
DIRECTOR
Mr. Lancer worked in the Securities Industry from 1994 to 2007, as a
registered representative in the beginning years and gradually moved into a
supervisory capacity, as well as compliance after he secured additional
licensing. From 1986 until 1993, Mr. Lancer started and operated a
transportation company in New York City where he utilized his business
management skills learned while at College in Nassau, N.Y. to build and grow the
company before selling it to an investment group. In 2008, Mr. Lancer decided to
go into consulting for small private companies looking to grow and expand. With
his knowledge of business management, he provided corporate and executive
consulting, as well as business development services. He started Corporate
Consulting Group LLC in 2009, with a large network of business associates,
consisting of attorneys, accountants and various other professionals and
investors.
CHAD G. STEINHART, CHIEF TECHNICAL OFFICER, DIRECTOR OF MARKETING AND OPERATIONS
AND DIRECTOR
Since 2008, Mr. Steinhart has been the Chief Executive Officer for a
consulting company called Atlantic Coast Capital Partners, LLC, which Mr.
Steinhart uses to consult in the marketing and telecommunications fields. This
put him at the forefront of emerging technologies and allowed him to fully work
in the fields of telecommunications, audio, marketing and with his passion
computers. In 2005, Mr. Steinhart started piecing small bits of code together
and educating himself more and more on Voice Over Internet Protocol (VOIP), to
see how it could augment his interest in high fidelity audio and how it could
enhance the call center environment. During this period from 2005 until 2014, he
formally established the assets he sold to the Company on September 26, 2014.
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COLM J. KING, CHIEF FINANCIAL OFFICER AND DIRECTOR
Since 2008, Mr. King has provided financial, executive and corporate
regulatory compliance services to numerous private and public entities. He has
served as the Chief Executive Officer of Oasis Communities, Inc. (U.S. Private
Developer of Residential Community in Central America) since March 2013. He has
served as the Chief Financial Officer of Bio-Nucleonics, Inc. (U.S. Private
Development and Commercialization of Radiopharmaceuticals Company) since
February 2011. Previously, Mr. King served as the President and Chief Executive
Officer of Cavit Sciences, Inc. (U.S. Public Biotech Development Company) from
April 2006 until November 2008; served as the President and Chief Executive
Officer of Hard to Treat Diseases, Inc. (U.S. Public Biotech Development
Company) from October 2003 to April 2006; worked at Berkovits, Lago & Company,
LLP, a public accounting firm, where he provided audit compliance and consulting
services to the firm's publicly held clients from January 2003 until October
2003; served as the Controller and Chief Financial Officer for Peregrine
Industries, Inc. (U.S. Public Pool Heater Manufacturing Company) from March 2002
through November 2002; served as the Controller and Chief Financial Officer of
NetGain Development, Inc. (U.S. Public Internet Development Company) from
November 2000 until March 2002 and worked at BDO Seidman, LLP in New York City,
where he provided audit compliance and consulting services to the firm's
publicly held clients from 1998 until 2000. Mr. King received a B.S. in Business
Administration from St. Thomas Acquinas College, became licensed for practice as
a Certified Public Accountant in New York State in November 1987 (currently
inactive and not registered) and is a member of the American Institute of
Certified Public Accountants and the Florida Institute of Certified Public
Accountants.
ENZO TADDEI, DIRECTOR
Mr. Taddei had been our Chief Financial Officer and a member of our Board
of Directors from November 2, 2010 until his resignation from his positions as
Chief Financial Officer and a Director of the Company, effective December 8,
2011. Effective November 12, 2012, the Board of Directors appointed Mr. Taddei
as the Company's Chief Executive Officer and sole Director. From 2010 to date,
Mr. Taddei has been an officer and director of Global Equity International Inc.
From May 2009 until April 2011, Mr. Taddei has served as Chief Executive Officer
and Chief Financial Officer of E3B Consulting (a firm engaged in accounting).
From March 2007 until May 2009, Mr. Taddei served as Chief Financial Officer of
Dolphin Digital Media (a company engaged in social networking). From August 2006
until March 2007, Mr. Taddei served as Chief Financial Officer of Plays on the
Net PLC (an E Commerce firm). From July 1999 until August 2006, Mr. Taddei
served as Chief Executive Officer and Chief Financial Officer of Adesso Res
Asesores (an accounting firm). In addition to being an accountant and tax
consultant by profession, Mr. Taddei is proficient in three languages: English,
Spanish and Italian. He obtained a Degree in Economics from the University of
Malaga (Spain) and also a Bachelor in Business Administration (BBA) from the
University of Wales. He also holds a Master's Degree in Spanish and
International Taxation granted to him by the University of Malaga (Spain).
COMMITTEES OF THE BOARD OF DIRECTORS
We do not currently have an audit committee or a compensation committee.
COMPENSATION OF DIRECTORS
Our directors do not receive any direct compensation for their service on
our board of directors. Any future director compensation will be determined by
our compensation committee, once it is chartered.
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DIRECTORSHIPS
The only Director of the Company or person nominated or chosen to become a
Director who held any other directorship in any company with a class of
securities registered pursuant to Section 12 of the 1934 Act or subject to the
requirements of Section 15(d) of such Act or any other company registered as an
investment company under the Investment Company Act of 1940, was Enzo Taddei,
who is a Director of Global Equity International, Inc.
FAMILY RELATIONSHIPS
No family relationship exists between or among any of our officers and
directors.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past ten years, no present director, executive officer or
person nominated to become a director or an executive officer of the Company:
1. had a petition under the federal bankruptcy laws or any state
insolvency law filed by or against, or a receiver, fiscal agent or
similar officer appointed by a court for the business or property of
such person, or any partnership in which he was a general partner at
or within two years before the time of such filing, or any corporation
or business association of which he was an executive officer at or
within two years before the time of such filing except Dan Lancer who
filed Chapter 7 bankruptcy in 2008 and Chapter 13 bankruptcy in 2011;
2. was convicted in a criminal proceeding or subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
3. was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or
otherwise limiting his involvement in any of the following activities:
(i) Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of
any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and
loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such
activity;
(ii) Engaging in any type of business practice; or
(iii)Engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation
of federal or state securities laws or federal commodities laws;
or
4. was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of an federal or state authority
barring, suspending or otherwise limiting for more than 60 days the
right of such person to engage in any activity described in paragraph
(3) (i), above, or to be associated with persons engaged in any such
activity; or
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5. was found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and for which the judgment has not been reversed,
suspended or vacated;
6. was found by a court of competent jurisdiction in a civil action or by
the Commodity Futures Trading Commission to have violated any Federal
commodities law, ad the judgment in such civil action or finding by
the Commodity Futures Trading Commission has not been subsequently
reversed, suspended or vacated;
7. was the subject of, or a party to, any Federal or State judicial or
administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to any alleged violation of:
(i) Any Federal or State securities or commodities law or regulation;
or
(ii) Any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order,
or removal or prohibition order; or
(iii)Any law or regulation prohibiting mail or wire fraud or fraud in
connection with any business entity; or
8. was the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15
U.S.C. 78c(a)(26)), and registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act (7 U.S.C.1(a)(29)), or any
equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a
member.
AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has not created a separately-designated standing
audit committee or a committee performing similar functions. Accordingly, our
Board of Directors acts as our audit committee. Due to our limited operations,
our Board of Directors concluded that the benefits of retaining an individual
who qualifies as an "audit committee financial expert," as that term is defined
in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities Act,
would be outweighed by the costs of retaining such a person. As a result, we do
not have a Director who is an "audit committee financial expert."
EXECUTIVE COMPENSATION
We are not currently paying or accruing salaries for our officer or
directors. We did not pay any salaries or benefits to anyone during 2013 or
2012.
EMPLOYMENT CONTRACTS
We do not have any employment agreements with our employees or officers.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 30, 2014, information with
respect to the securities holdings of all persons that we have reason to
believe, pursuant to filings with the SEC, may be deemed the beneficial owner of
more than 5% of our outstanding common stock. The following table also sets
forth the beneficial ownership of our common stock by all executive officers and
directors, individually and as a group. The stockholders listed below have
direct ownership of their shares and possess sole voting and dispositive power
with respect to the shares, except for Omron Holdings plc., over whose shares
Enzo Taddei, one of our Directors, has sole voting and investment power over
such shares.
The beneficial owners and amount of securities beneficially owned have been
determined in accordance with Rule 13d-3 under the Exchange Act and, in
accordance therewith, includes all shares of our common stock that may be
acquired by such beneficial owners within 60 days upon the exercise or
conversion of any options, warrants or other convertible securities. Unless
otherwise indicated, each person or entity named below has sole voting and
investment power with respect to all common stock beneficially owned by that
person or entity, subject to the matters set forth in the footnotes to the table
below.
Number of Percentage of
Name and Address of Beneficial Owner Shares (1) Ownership (1)
------------------------------------ ---------- -------------
Dan C. Lancer, Chief Executive Officer, 1,000,000 4.89%
Director of Operations, (2)
Treasurer and Director
2950 W. Cypress Creek Rd., Suite 100
Fort Lauderdale, Florida 33309
Chad Steinhart, Chief Technical Officer, 62,500,000 5.35%
Director of Marketing and Operations and Director (3)
2950 W. Cypress Creek Rd., Suite 100
Fort Lauderdale, Florida 33309
Colm J. King, Chief Financial Officer and Director 1,000,000 4.89%
2950 W. Cypress Creek Rd., Suite 100
Fort Lauderdale, Florida 33309
Enzo Taddei, Director (4)(5) 500,000 2.45%
Avenida Marques del Duero 67
Edificio Bahia 2A
29670 San Pedro de Alcantara
Malaga, Spain
Omron Holdings Plc. (5) 7,579,684 37.06%
Avenida Marques del Duero 67
Edificio Bahia 2A
29670 San Pedro de Alcantara
Malaga, Spain
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----------
(1) The numbers and percentages set forth in these columns are based on
20,445,484 shares of common stock outstanding. The number and percentage of
shares beneficially owned is determined in accordance with Rule 13d-3 of
the Securities Exchange Act of 1934, and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such rule,
beneficial ownership includes any shares as to which the selling security
holder has sole or shared voting power or investment power and also any
shares, which the selling security holder has the right to acquire within
60 days.
(2) These shares are registered in the name of Corporate Consulting Group, LLC.
Such shares are beneficially owned by Mr. Lancer, who has sole investment
and voting power of these shares.
(3) Mr. Steinhart owns 625,000 shares of our Series A Preferred Stock, each of
which is entitled to 100 votes per share. Thus, Mr. Steinhart has the right
to convert the Series A Preferred Stock into an aggregate of 62,500,000
shares of common stock on or after September 29, 2016.
(4) This person is a founder of our Company, within the meaning of such terms
under the Securities Act of 1933, as amended, by virtue of their direct
stock holdings.
(5) Mr. Enzo Taddei is the beneficial owner of Omron Holdings Plc.'s shares.
FUTURE SALES BY EXISTING STOCKHOLDERS
A total of 20,445,484 shares of common stock are held by our present
shareholders, all of which are "restricted securities," as defined in Rule 144
promulgated under the Securities Act of 1933.
Rule 144 is not currently available for the resale of our restricted
securities and will not be available until such time as the Company is in
compliance with the provisions of Rule 144(i)(2) of the Securities Act of 1933,
as amended.
INDEMNIFICATION
In so far as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to Nevada law or otherwise, we have been advised that, in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Although we have not adopted formal procedures for the review, approval or
ratification of transactions with related persons, we adhere to a general policy
that such transactions should only be entered into if they are on terms that, on
the whole, are no more favorable, or no less favorable, than those available
from unaffiliated third parties and their approval is in accordance with
applicable law. Such transactions require the approval of our board of
directors.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
ISSUANCES OF COMMON STOCK
In September 2014, the Company issued the following shares of common stock
to the persons names below:
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Name Shares Consideration
---- ------ -------------
Colm King 1,000,000 Services Valued at $1,000
Corporate Consulting Group, LLC 1,000,000 Services Valued at $1,000
Virtual Force Holdings, LLC 1,000,000 Services Valued at $1,000
Tempest Holdings Ltd. 1,000,000 Services Valued at $1,000
David E. Wise 1,000,000 Services Valued at $1,000
ISSUANCE OF PREFERRED STOCK
The disclosure set forth in Item 2.01 of this amended Current Report under
the heading "Completion of Acquisition of Assets" is hereby incorporated herein
by reference. When we acquired the assets from Chad Steinhart on September 29,
2014, we issued an aggregate of 625,000 shares of Series A Preferred Stock to
Mr. Steinhart.
Management believes the above shares of Common Stock and Preferred Stock
were issued pursuant to an exemption from registration under Section 4(a)(2) of
the Securities Act of 1933, as amended. The certificates representing such
shares bear the standard 1933 Act restrictive legend and the investors have
executed documents representing that the shares were being acquired for
investment purposes only and not with a view he distribution thereof. No broker
or underwriter was involved in any of the above transactions.
ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT.
At the closing the Asset Purchase Agreement with Chad Steinhart, Mr.
Steinhart was elected/appointed as Chief Technical Officer, Director of
Operations and as a Director of the Company. Messrs. Daniel C. Lancer and Colm
J. King were also elected to our Board of Directors.
As explained more fully in Item 3.02 of this amended Current Report, upon
closing of the Asset Purchase Agreement with Mr. Steinhart, the Company issued
625,000 shares of Series A Preferred Stock to Mr. Steinhart. Each share of
Series A Preferred Stock has the right to 100 votes per share on all matters
submitted to the Company's shareholders for a vote. Since Mr. Steinhart is
entitled to cast 62,500,000 votes on matters submitted to a vote of
shareholders, including, but not limited to, the election of Directors, Mr.
Steinhart controls over 75% of the total voting rights related to the Company's
outstanding shares of Common and Preferred Stock and is a control person.
ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS.
The disclosures set forth in Item 2.01 of this amended Current Report under
the heading "Directors and Executive Officers" and in Item 5.01 of this amended
Current Report under the heading "Changes in Control of Registrant" are
incorporated herein by reference. The current incumbent Directors and Executive
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Officers of the Company are named identified in this amended Current Report
under the heading "Directors and Executive Officers."
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR.
Our shareholders have approved an amendment to our Articles of
Incorporation to change our name to Sonant Systems, Inc. This name change will
be effected on or about October 20, 2014.
ITEM 5.06 CHANGE IN SHELL COMPANY STATUS.
Prior to the acquisition of the assets from Chad Steinhart on September 29,
2014, the Company was a "shell company" (as such term is defined Section 12b-2
under the Securities Exchange Act of 1934). As a result of the Asset Purchase
Agreement, we became a multinational network messaging, telecommunication and
software development company; hence, the Company is no longer a "shell company."
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
Exhibit 10.1 Amendment to Asset Purchase Agreement and amended
Exhibit "A", effective November 13, 2014, by and between
Sonant Systems, Inc. and Chad Steinhart
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: November 14, 2014
SONANT SYSTEMS, INC
By: /s/ Daniel C. Lancer
--------------------------------------
Daniel C. Lancer
Chief Executive Officer
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EXHIBITS INDEX
Exhibit No. Description of Exhibit
----------- ----------------------
Exhibit 10.1 Amendment to Asset Purchase Agreement and amended
Exhibit "A", effective November 13, 2014, by and between
Sonant Systems, Inc. and Chad Steinhart
