Solaris Power Cells Inc (OTCMKTS:SPCL) was covered by Insider Financial in this article and this other piece. In both articles, we mentioned that the company had signed different merger agreements with various companies operating in very different sectors. Consequently, we stated that the company had become a holding company and the opportunities for the company had multiplied.
“The latest acquisition means that Solaris is now a holding company proper, and that it can start to benefit from the combined resources of its two (a number we expect to grow soon) subs. This is a big step towards executing on its longer term growth strategy, and is the first sign we’ve had in a while that things are panning out as management outlined, since way back in the wake of the initial PixelMags announcement.” Source
Have a look at the chart to understand what the investors think about the new initiatives of the company. The mergers were announced at the end of 2016 and the beginning of 2017.
Background and Recent Developments
For those who don’t know the company, let us review a little the company’s past. Solaris Power Cells, Inc. was founded in 2007. The company has functioned for more than 10 years till now. The company operated in different sectors, as the company started commercializing renewable energy storage devices initially and is doing much different activities at the moment. Doing acquisitions and entering into new markets is one of them. On April 20, 2017, the company noted that it had signed an agreement, under which the company was acquiring migme (ASX:MIG), which is said to be Asia’s fastest growing social media platform. These are the words of the CEO, Neil Kleinman:
“This agreement shows our acquisition strategy is starting to yield positive results. After nearly ten months since acquiring PixelMags, we’re announcing our second acquisition and remain excited about the combined potential. This acquisition will add one of Asia’s fastest growing social platforms. Approximately 110 employees will be added to the Solaris team who will play a pivotal role in the future success of the company.” Source
Additionally, another interesting item in this press release was the growth of the company being acquired. Have a look:
“With a quarterly growth rate of 30%, migme is soon expected to join the ranks of Asia’s largest social media peers like Meitu in China and Hike in India.” Source
If it is true that the social media is growing at a faster pace,the new acquisition may make the company grow at almost the same rate. Thus, the share price will have to reflect this growth. The merger is expected to close on June 15th. Consequently, we believe that around that date, when the company will note the closure of the merger, the share price may increase. We found on ASX Exchange website that the company is paying in the following way:
“Pursuant to the Agreement, Solaris is to acquire 100% of the issued capital of Project Goth, Inc. (Project Goth), a 100% owned subsidiary of migme that owns the Singapore and Taiwan operating companies, including all the Company’s intellectual property, in consideration for the issue of 5,081,210,431 Solaris shares. Solaris’s fully diluted issued capital is currently 11,178,662,949 shares.” Source
Finally, on March 20, 2017, the company announced that it had signed a Memorandum of Understanding with Lithium Exploration Group Inc. to develop together its PESA™ Energy Storage Technology. Thus, SPCL is not only buying, but it is also collaborating with partners and selling the technology. This is great news as it shows SPCL’s reputation. The CEO of Lithium Exploration noted his interest in the technology already developed by SPCL:
“The deal we are working on with the team at SPCL will be beneficial to both companies because once patented, SPCL will receive additional compensation and an ongoing royalty in perpetuity. SPCL has taken the technology as far as it can and we are going to take the baton and continue running to ensure it reaches its full potential.” Source
How will the company finance the acquisition?
SPCL has no problem with this issue. We went to check the last balance sheet reported and saw that the company was able to obtain financing by selling convertible securities. Have a look:
|Liabilities and Stockholders’ Deficit|
|Accounts payable and accrued expenses||$||15,000||$||18,101|
|Convertible notes payable, net of discount||20,098||–|
|Total current liabilities||398,064||244,612|
|Convertible note payable, net of discount||9,535||9,132|
|Total long-term liabilities||9,535||9,132|
How was the company able to do this? Have a look at the following list that we found hidden in this document:
– “The Company entered into a convertible note agreement on September 2, 2014 for $500,000 (interest charge of 12% shall be applied to the principal sum)
– On June 24, 2015, the same lender advanced an additional $50,000 against the note.
– On May 26, 2015, the Company entered into another convertible note agreement for $110,000.
– The Company entered into another convertible note agreement on June 9, 2015 for $250,000 (A one-time Interest charge of 12% shall be applied to the principal sum) “ Source
The company is delivering interesting news about new acquisitions and deals signed with relevant partners. While the deal with migme is dilutive, the deal will greatly boost shareholder value over the long-run. Overall, there’s a lot to look with the moves SPCL management is making. To sum up, the company is going a great job, so try to stay alert. We will be updating our subscribers as soon as we know more. For the latest updates on SPCL, sign up below!
Disclosure: We have no position in SPCL and have not been compensated for this article.