Clancy Systems International, Inc. (OTCMKTS:CLSI) Files An 8-K Entry into a Material Definitive Agreement

Clancy Systems International, Inc. (OTCMKTS:CLSI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

Stock Purchase Agreement

On March 12, 2020 (the “Closing Date”), Clancy Systems International, Inc. (the “Company”) entered into that certain Stock Purchase Agreement, dated as of March 9, 2020 (the “Stock Purchase Agreement”) by and among the Company, Arke Tech S.A.P.I DE C.V., a Mexican corporation (“Seller”), and Hyperion Digital Group S. DE R.L. DE C.V., a Mexican corporation (“Hyperion”). to the Stock Purchase Agreement, the Company agreed to purchase the outstanding equity stock of Hyperion held by the Seller for (i) $75,000 payable to Seller, (ii) $75,000 payable to a consultant engaged by Seller, and (iii) issuance of a promissory note in the principal amount of $1,350,000 (the “Note”). The Stock Purchase Agreement also provides for the issuance of 2,293,488 shares of common stock having an agreed upon price/value of $0.043 per share, to Seller and 1,194,883 shares of common stock having an agreed upon price/value of $0.043 per share, to Seller’s consultant.

Promissory Note

to the Stock Purchase Agreement, the Company issued Seller the Note, dated as of March 9, 2020, which is payable monthly over three years, beginning ninety days after closing, and bears interest at 4.5% per annum. The monthly payments made be made, at the option of the Company, in shares of the Company common stock. The Note is secured by the shares of Hyperion transferred to the Company to that certain Pledge and Security Agreement between the Company and Seller, dated as of March 9, 2020 (the “Security Agreement”).

Earnout Agreement

In connection with the Stock Purchase Agreement, the Company and Seller entered into that certain Earnout Agreement, dated as of March 9, 2020 (the “Earnout Agreement”). The Earnout Agreement allows the Seller to earn additional shares of common stock of the Company during the three years post-closing upon certain EBITDA milestones. The Seller is eligible for an Earnout payment equal to 250% of the Company’s EBITDA (in US dollars) for the twelve month period following closing, provided that such EBITDA must be at least $500,000. The Seller is eligible for second Earnout payment equal to 250% of the Company’s EBITDA (in US dollars) for the second twelve month period following closing, provided that such EBITDA must be at least $1,500,000. The Seller is eligible for a final Earnout payment equal to 150% of the Company’s EBITDA (in US dollars) for the third twelve month period following closing, provided that such EBITDA must be at least $2,000,000. The Earnout payments will be made in shares of common stock of the Company at a price equal to the average closing price of such securities on the principal trading market during the twenty (20) trading days prior to the last date of each applicable earnout period.

The above description of the Stock Purchase Agreement, Note, Security Agreement, and Earnout Agreement does not purport to be complete and is qualified in its entirety by reference to the Stock Purchase Agreement, Note, Security Agreement and Earnout Agreement, which are attached here to as Exhibits 2.1, 2.2, 2.3 and 2.4 to this Current Report on Form 8-K.

Item 2.01 Completion of Acquisition or Disposition of Assets.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

As a result of the Stock Purchase Agreement and the other transactions contemplated thereunder, Hyperion became a wholly-owned subsidiary of the Company as of March 12, 2020.

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

to the terms of the Stock Purchase Agreement, Note, Security Agreement, and Earnout Agreement, the Company issued 2,293,488 shares of common stock having an agreed upon price/value of $0.43 per share, to Seller and 1,194,883 shares of common stock having an agreed upon price/value of $0.43 per share, to Seller’s consultant, and the Company agreed to issue shares of common stock (i) at the option of the Company, to the Note, and (ii) to the Earnout Agreement. The number of such shares issuable thereunder depends upon the amount of the earnout payment, if any, and/or the then price of the Company’s common stock.

These securities were not registered under the Securities Act of 1933, as amended (the “Securities Act”), but qualified for exemption under Section 4(2) of the Securities Act. The securities were exempt from registration under Section 4(2) of the Securities Act because the issuance of such securities by the Company did not involve a “public offering,” as defined in Section 4(2) of the Securities Act, due to the insubstantial number of persons involved in the transaction, size of the offering, manner of the offering and number of securities offered. The Company did not undertake an offering in which it sold a high number of securities to a high number of investors. In addition, these shareholders had the necessary investment intent as required by Section 4(2) of the Securities Act since they agreed to, and received, share certificates bearing a legend stating that such securities are restricted
CLANCY SYSTEMS INTERNATIONAL INC /CO/ Exhibit
EX-2.1 2 clancy_8k-ex0201.htm FORM OF STOCK PURCHASE AGREEMENT Exhibit 2.1   STOCK PURCHASE AGREEMENT   This is a STOCK PURCHASE AGREEMENT (the “Agreement”),…
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About Clancy Systems International, Inc. (OTCMKTS:CLSI)

Clancy Systems International, Inc. is engaged in developing software for electronic handheld devices from different manufacturers. The Company offers an Android based solution for issuing parking citations. The system provides ticket issuance, data management, noticing, enforcement, payment processing, permitting, and other modules for a ticket administration program. It provides handheld printers, which are Bluetooth paired or wireless fidelity linked to Android based devices. The Company offers services, which include real-time stolen/wanted vehicle alerts, online payments through credit card, automated notice letter mailings, payment processing, dispute resolution, parking operation privatization, online parking permit Website and fulfillment, park by phone complimenting metered parking, event parking, event call-in and collections services. It provides a ticket management Website and a Remote Desktop solution to provide clients with a portal to access the Company’s software.

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