Item 1.01 Entry into a Material
Definitive Agreement.
On April 10, 2017, the Registrant and Leandro Jose Iglesias
in representation of all of the members of Etelix.Com USA LLC (“Etelix”), and its members entered into
a Transaction Agreement under which the Registrant agreed to acquire 51% of the membership units in Etelix and the members
of Etelix agreement agreed to transfer certain property owned by them (the “Additional Assets”) to Etelix
for $240,000 in cash to be paid to them by the Registrant and the issuance to them of an unspecified number of shares
of Registant’s Pay-in-Kind Convertible Preferred Stock having a value of $1,800,000. The Seller agreed to reinvest in
the Registrant 38.89% of the proceeds of the sale of shares of common stock received upon conversion of the preferred stock,
up to $700,000. The Seller and certain of its members have the the option to convert any part or all of their
remining membership units into stock of the Registrant. The value for the conversion of the stock will be a function of a
conversion factor multiplied by Exelis’ EBITDA during the 12 months immediately prior to the date on which the
conversion is requested. The conversion factor will be determined by dividing $4,000,000 into Etelix’ accumulated
EBITDA for its 2016 fiscal year.
On April 25, 2017, the Transaction Agreement was amended to provide that
the purchase price would remain $240,000, of which $10,000 was to be payable on the Closing Date by check or wire transfer
upon the transfer of 51% of the membership units in Etelix and the Additional Assets to Etelix in accordance with the terms
of the Transaction Agreement and $230,000 of which was to be payable 90 days after the Closing Date and 18,000 shares of the
Registrant’s Series D PIK Convertible Preferred Stock.
The assets to be transferred under the Transaction Agreement do not include
New Life Omega Services, Inc., a company created under the laws of the Republic of Panama; NL Omega Services, LLC, a company
incorporated under the laws of the State of Florida; Etelix Net Communications Services, Corp., a company created under the
laws of the British Virgin Islands; or any of its local and retail businesses including: Future Voyze LLC; Perfect Voyze
LLC; Soluciones Latincom C.A.; Mitelco LLC; Etelix.com Peru; Etelix Group SL; and Etelix.com UK.
With respect to Future Voyze LLC and Perfect Voyze LLC, these companies and
Etelix have entered into an agreement under which Etelix will receive all assets resulting from the liquidation of Future
Voyze LLC and all of those assets are to be transferred from Etelix.com USA LLC to Perfect Voyze LLC once it had been granted
a telecommunications license by the Federal Communications Commission.
Etelix
is a Miami-based, FCC-licensed voice, SMS and data carrier. The company's principal products and services are international voice
wholesale operations and distribution, residential and commercial data and voice services and data hosting services. Etelix is
planning to develop and construct build-to-suit data hosting centers in secondary markets across the United States.
Etelix was founded in
2007 and has been profitable since its inception. Its revenue and net income for 2015 were $1,166,944 and $22,988, respectively,
and increased to $4,067,807 and $56,044, respectively, for 2016. Management believes, but cannot assure, that Etelix’ revenue
will grow to $7-8 million in 2017.
Attached to this Report as Exhibit 99.1 and 99.2 are Etelix’
unaudited financial statements, which were not prepared in accordance with Regulation S-X, for the fiscal years
ended December 31, 20126 and December 31, 2015, respectively.
The management of Etelix
prior to the acquisition will remain.
Further information about
Etelix may be found at its website, www.etelix.com.
