Corp. (OTCMKTS:CCYPQ) Files An 8-K Termination of a Material Definitive Agreement
Item 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT
On June 22, 2021, the Board of Directors of Hammer Fiber Optics Holdings Corp. (“the Company”) held a special meeting of the Board of Directors to discuss the matter of renewal regarding the employment contract of Erik B. Levitt, President and Chief Executive Officer of the Company. The contract is due to expire on September 30th, 2021, with a requirement to provide a notice period of 90 days to Mr. Levitt regarding the Board’s decision to either terminate or extend under the existing terms. The Board unanimously voted not to renew the contract, with Mr. Levitt abstaining from the vote. The context for this decision by the Board of Directors is summarized in Item 8.01 hereunder.
Mr. Levitt’s employment as the Company’s Chief Executive under the agreement will terminate on September 30th, 2021. Mr. Levitt will continue in his role as a Director of the Company, as the Principal Financial Officer and as the CEO of the 1stPoint Communications and Endstream Communications subsidiaries, respectively, as further described in Item 8.01.
Item 8.01 OTHER EVENTS
Over the past 12 months, the management of Hammer Fiber Optics Holdings Corp. has focused on eliminating debt on the balance sheet of the company since the retraction by Verizon of the licensed spectrum within the 28GHz frequency where the Company designed and deployed innovative broadband technology to cater for its wireless broadband initiative. The cancellation of this license led to defaults on long term service contracts entered into that provided the backbone fiber connectivity to the tower infrastructure of the Company and as such, approximately $4M worth of liabilities were recorded on the balance sheet due to the acceleration of these contracts by the relevant service providers. Following intensive negotiation by the Company’s executive management, these liabilities have been settled in full and the associated liabilities have now been wiped off the balance sheet as recorded in the most recent Form 10-Q filings of the Company.
Senior management and the Board of Directors have over the past two years been reevaluating its future wireless broadband strategy and have been making meaningful strides into the rebuilding of its wireless assets and initiatives. The acquisition of the 1stPoint subsidiaries has made this possible and the deployment of wireless broadband services to regions such as Huntsville, Alabama is now well underway. Notwithstanding, the Directors of the Company have actively, over the past two years, researched opportunities that would materially increase shareholder value and as such, have come to the conclusion that the Company would need to implement a diversification strategy into related industry verticals. Since the establishment of the Company’s African broadband initiative which culminated in the incorporation of Hammer Wireless [SL] Ltd, it has become apparent the future success of this initiative would require the full payment for services rendered to broadband customers to be received largely in advance. Consequently, the idea of establishing a method of prepayment of services rendered to local African customers by their family members living abroad [commonly known as remittances] was strongly considered. To cater for this requirement, the Company has explored the idea of developing a FINTECH initiative, consequently providing the group an opportunity to further diversify its strategy.
The Company, being desirous of expanding its product offerings across a broader range of related market sectors, has considered entry into the Remittance market serving Africa as it has become extremely opportunistic, representing a market sector of approximately $58 Billion annually in remittance activity. To this end, The Company has entered into negotiation with various financial institutions and FINTECH product developers to create a product offering that would position the Company as a meaningful participant in this extremely lucrative market sector. The diversification strategy into a broader segment of related industry verticals such as cross border bill payment and money remittances and the on-going negotiations between the Board of the Company and that of International FINTECH developers and financial institutions, requires the restructuring of the role of the current management and Board of Directors.
Accordingly, the board has explored a strategy whereby the role of the Chief Executive Officer would reside within each active subsidiary or business vertical to make way for the addition of new acquisitions to the Company. Each potential acquisition will require the associated Chief Executive Officer to report to the Board of the Company independently and as such the current Chief Executive role at the parent level will be eliminated. To this end, the employment contract of Mr. Erik B. Levitt, the current Chief Executive Officer, will expire at the end of its three-year term as of September 30th, 2021, to enable the Board to prepare for its diversification strategy. Mr. Levitt will remain an active member of the Board of Directors and will participate in the restructuring initiative of the Company.