Item 1.01. Entry Into a Material Definitive Agreement.
As previously reported on a Form 8-K that was filed with the Securities and Exchange Commission on December 3, 2018, on November 30, 2018, Digital Locations, Inc., a Nevada corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Plan of Merger”) with EllisLab, Inc., an Oregon corporation (“EllisLab”), Rick Ellis and EllisLab Corp., a newly formed Nevada corporation and wholly owned subsidiary of the Company (“Merger Sub”) pursuant to which EllisLab merged with and into Merger Sub (the “Merger”). Pursuant to the terms of the Plan of Merger, Mr. Ellis received thirty six thousand (36,000) shares of the Company’s newly designated Series C Convertible Preferred Stock (the “Series C Preferred Stock”), with a stated value of $100 per share, in exchange for the cancellation of all of his shares of common stock of EllisLab, which shares represented 100% of the issued and outstanding capital stock of EllisLab.
Pursuant to the Articles of Merger that were filed with the Secretary of State of the State of Nevada and with the Secretary of State of the State of Oregon on November 30, 2018, the separate legal existence of EllisLab ceased, and Merger Sub became the surviving company in the Merger and continued its corporate existence under the laws of the State of Nevada under the name “EllisLab Corp.”
In connection with the Merger, on November 30, 2018, the Company granted Derek Jones a nonstatutory stock option to purchase 100,000,000 shares of the Company’s common stock (the “Option”). Mr. Jones is the secretary of EllisLab.
Agreement for the Purchase and Sale of Capital Stock of EllisLab Corp. and EllisLab, Inc.
On September 30, 2019, the Company, entered into an agreement (the “Agreement”) with Rick Ellis to sell the capital stock of EllisLab Corp., a wholly-owned subsidiary of the Company. Pursuant to the Agreement on September 30, 2019, the Company sold to Rick Ellis all of the issued and outstanding shares of EllisLab for $10,000 (the “Cash Payment”), provided that in lieu of the Cash Payment, Rick Ellis tendered and assigned to the Company 36,000 shares of the Series C Preferred Stock owned by him, which represents all of the issued and outstanding shares of the Series C Preferred Stock. In connection with the Agreement, the Covenant Not to Compete and the Lockup of Stock Consideration described in Sections 2.1 and 2.2 of the Plan of Merger was released.
As of September 30, 2019, Mr. Ellis was serving as the Company’s Chief Executive Officer and was a member of the Company’s Board of Directors. As set forth in Item 5.02 below, as of September 30, 2019, Mr. Ellis resigned from these positions. Mr. Ellis is also the president and treasurer of EllisLab and continues to hold these positions.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement which is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
On September 30, 2019, Derek Jones and the Company entered into an Option Cancellation Agreement pursuant to which the Option was cancelled.