SOLLENSYS CORP.

(FORMERLY KNOWN AS HEALTH DIRECTORY, INC.)

(A Development Stage Company)

Condensed StatementConsolidated Statements of Cash Flows

(Unaudited)(unaudited)

SeeThe accompanying notes toare an integral part of the consolidated financial statements.

SOLLENSYS CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SOLLENSYS CORP.

(Formerly known as Health Directory, Inc.)NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

(A Development Stage Company)

December 31, 2012

Notes to the Condensed Financial Statements

(Unaudited)

Note 1 - Organization and Operations

Sollensys Corp. (fka Health Directory, Inc.Corp (“Sollensys” or the “Company”), was formerly a development stage company, was incorporated in Nevada on September 29, 2010, under the lawsname Health Directory, Inc.

Eagle Lake Laboratories, Inc (“Eagle Lake”) is a Florida-based science, technology, and engineering solutions corporation offering products that ensure their clients’ data integrity through the collection, storage, and transmission. The Company expects to generate revenue with Eagle’s innovative flagship product, the Blockchain Archive Server™ that can be utilized to protect client data from ransomware. Blockchain technology is a leading-edge tool for data security, providing an added layer of security against data loss due to malware.

On October 15, 2021, the Company entered into a Membership Interest Exchange Agreement (the “Agreement”), dated as of October 15, 2021, by and among (i) the Company; (ii) Abstract Media, LLC (“Abstract Media”), (iii) each of the Statemembers of Nevada. Initial operations have included organizationAbstract Media (collectively, the “Abstract Media Members”); and incorporation, target market identification, marketing plans, and capital formation. A substantial portion(iv) Andrew Baker as the representative of the Company’s activities has involved developingAbstract Media Members (the “Members’ Representative”). The Acquisition closed on December 6, 2021.

Abstract Media is a business plan and establishing contacts and visibilityTexas limited liability company formed in October 2011, with the marketplace.goal of improving user engagement using visualization tools. The Company has not generated any revenues since inception.evolved into an interactive media and software development company to optimize effective corporate learning, operational workflow and communication using technology in the augmented reality or virtual reality space. Abstract Media conducts its operations from its office location in Houston, Texas.

Effective July 30, 2012,

Management’s Representation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared by the holderCompany without audit pursuant to the rules and regulations of 3,000,000 shares, or approximately 79.8% of Sollensys Corporation, (the “Company”the Securities and Exchange Commission (“SEC”) then outstanding voting securities, executed a written consent. The Company uses the same accounting policies in preparing quarterly and annual financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with Section 78.320accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements include all of the NRS, approvingadjustments, which in the amendmentopinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature.

Basis of Presentation

In the opinion of Sollensys, the accompanying unaudited consolidated financial statements contain all adjustments and reclassifications, which are of a normal recurring nature, necessary to present fairly its financial position as of March 31, 2022, the results of its operations for the three months ended March 31, 2022 and 2021 and its cash flows for the three months ended March 31, 2022 and 2021. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2021 and the notes thereto included in the Form 10-K for such period. The results of operations for the three months ended March 31, 2022 and 2021 are not necessarily indicative of the results to be expected for the full fiscal year.

The consolidated financial statements of Sollensys include its wholly-owned subsidiaries, Eagle Lake, and Abstract Media. All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Celerit Merger

On October 26, 2021, the Company entered into a Merger Agreement (“Merger Agreement”) by and among (i) the Company; (ii) S-CC Merger Sub, Inc., a wholly owned subsidiary of the Company (“S-CC Merger Sub”); (iii) S-Solutions Merger Sub, Inc., a wholly owned subsidiary of the Company (“S-Solutions Merger Sub”); (iv) Celerit Corporation (“Celerit”); (v) Celerit Solutions Corporation (“Celerit Solutions”); and (vi) Terry Rothwell (collectively, (i)-(v), the “Merger Parties”).

On the terms and subject to the conditions set forth in the Merger Agreement, as subsequently amended, and subject further to acceptance of Articles of IncorporationMerger filed on the Closing Date with the Secretary of State of Arkansas (“SOS AR”), on April 7, 2022 (the “Closing Date”): (i) Celerit merged with and into S-CC Merger Sub (the “Celerit Merger”), and the separate corporate existence of S-CC Merger Sub ceased, with Celerit as the surviving corporation (the “Celerit Surviving Corporation”); and (ii) Celerit Solutions merged with and into S-Solutions Merger Sub (the “Celerit Solutions Merger”), and the separate corporate existence of S-Solutions Merger Sub ceased, with Celerit Solutions as the surviving corporation (the “Celerit Solutions Surviving Corporation”) (the Celerit Merger and Celerit Solutions Merger together, the “Mergers”). On the Closing Date, SS-Merger Sub and S-Solutions Merger Sub filed Articles of Merger with the SOS AR, which are currently pending.

By virtue of, and simultaneously with, the Celerit Merger and without any further action (other than the acceptance by the SOS AR of the applicable Articles of Merger or as otherwise required pursuant to changeapplicable law) on the part of the Merger Parties, at the effective time of the Mergers (the “Effective Time”), the Celerit Merger was completed and the Celerit Solutions Merger was completed.

Aggregate consideration for the Mergers consisted of (i) $2,695,000, subject to certain adjustments set forth in the Merger Agreement, as amended (the “Cash Consideration”), and (ii) 4,000,000 shares of Sollensys common stock (the “Sollensys Shares”). The Cash Consideration was paid to Terry Rothwell via the issuance to Terry Rothwell at the closing of a promissory note of Sollensys (the “Rothwell Note”). Additional consideration of $10,000 was paid to Terry Rothwell. The Rothwell Note has a principal amount of $2,695,000, bears simple interest at a rate of 0.0001% to the maturity date, June 30, 2022, and, if not paid at maturity, the Rothwell Note accrues simple interest at 6% per year until paid. There is no penalty or premium for prepayment. In the event of a default, Sollensys has agreed to pay Terry Rothwell’s reasonable legal fees and costs of collection.

Real Estate Agreement

Terry Rothwell and George Rothwell are the members of CRE Holdings, LLC (“CRE”), the owner of two office buildings, a vacant commercial lot and a condominium. The office buildings are leased by Celerit. The Merger Parties expect that, shortly after the Effective Time, Sollensys, CRE, Terry Rothwell and George Rothwell shall enter into an agreement (the “CRE Agreement”) related to the purchase by Sollensys of the two office buildings, a vacant commercial lot and a condominium, as well as other assets owned by CRE, Terry Rothwell and George Rothwell (the “CRE Transactions”). The purchase price for the CRE properties is $3,295,000. The closing of the CRE Transactions shall occur on a mutually agreeable date and time in accordance with the terms and conditions of the CRE Agreement. If the closing does not occur on or before June 30, 2022, Sollensys will be obligated to pay an monthly rent of $50,000 in addition to the then-existing lease obligations. The CRE Agreement and the CRE real estate transactions operate independently of the Merger Agreement, as amended, and the other transactions contemplated therein.

Director Appointments

Effective as of the Closing Date, (i) the Sollensys Board of Directors was expanded by one person, and Terry Rothwell was named as a director; (ii) Celerit Surviving Corporation’s board of directors expanded the size of Celerit Surviving Corporation’s board of directors by two persons, and named Messrs. Anthony Nolte and Donald Beavers as directors on the Celerit Surviving Corporation board of directors, while retaining Terry Rothwell as a director; and (iii) Celerit Solutions Surviving Corporation’s board of directors expanded the size of the Celerit Solutions Surviving Corporation Board by two persons, and named Messrs. Nolte and Beavers as directors.

Executive Employment Agreements

Also as of the Closing Date, Sollensys entered into (i) an employment agreement with Terry Rothwell pursuant to which Terry Rothwell was appointed as the Chief Executive Officer of each of Celerit Surviving Corporation and Celerit Solutions Surviving Corporation (the “Rothwell Employment Agreement”), and (ii) an employment agreement with Ron Harmon pursuant to which he was appointed as the Chief Operating Officer of each of Celerit Surviving Corporation and Celerit Solutions Surviving Corporation (the “Harmon Employment Agreement” and, together with the Rothwell Employment Agreement, the “Employment Agreements”).

Rothwell Server Agreement

On April 7, 2022, Sollensys entered into the Rothwell Sollensys Blockchain Archive Server Distribution Data Center Agreement (2 Units) with Terry Rothwell and George Rothwell (the “Server Agreement”). The Rothwells together own two units of the Sollensys Blockchain Archive Server Distributive Data Center, each loaded with Sollensys application software (R4 Enterprise) (the “Equipment”). Pursuant to the terms and conditions of the Server Agreement, Sollensys may use the Equipment in exchange for level monthly payments of $100,000 ($50,000 per server) from the servers’ revenue to the Rothwells, payable until both Rothwells are deceased.

NOTE 2 – GOING CONCERN

Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date of these consolidated financial statements. The Company has incurred significant operating losses since its inception. As of March 31, 2022, the Company had a working capital deficit of $3,396,247 and an accumulated deficit of $(9,372,674).

The Company expects to generate operating cash flows that will be sufficient to fund presently anticipated operations although there can be no assurance. This raises substantial doubt about the Company’s nameability to Sollensys Corp.continue as a going concern. Therefore, the Company will need to raise additional funds and increaseis currently exploring alternative sources of financing to supplement expected cash flow. Historically, the common shares authorizedCompany has raised capital through private placements, as an interim measure to 1,500,000,000finance working capital needs and increasemay continue to raise additional capital through the preferred shares authorized to 25,000,000, and to split each outstanding sharesale of common stock into 131.69 sharesor other securities and obtaining some short-term loans. The Company will be required to continue to do so until its revenues support its operations.

The Company may attempt to raise capital in the near future through the sale of common stock. All share and per share amounts have been restated to give effectequity or debt financing; however, there can be assurances the Company will be successful in doing so. There can be no assurance that such additional financing will be available to the stock split. The Company’s name was changed in anticipation of merging with Sollensys Corporation - a South Korean corporation.Company on acceptable terms or at all.

Note 2 - Summary of Significant Accounting PoliciesNOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented.  Interim results are not necessarily indicative of the results for the full year. The Balance Sheet at March 31, 2012 has been derived from the audited financial statements. These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended March 31, 2012 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on June 28, 2012.

Development Stage Company

The Company is a development stage company as defined by section 915-10-20 of the FASB Accounting Standards Codification. The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reporting amountsreported amount of revenues and expenses during the reporting period.

SOLLENSYS CORP.

(Formerly known as Health Directory, Inc.)

(A Development Stage Company)

December 31, 2012

Notes to the Condensed Financial Statements

(Unaudited)

The Company’smost significant estimates relate to income taxes, right of use assets and assumptions include the fair value of financial instrumentsliabilities, and the assumption that thecontingencies. The Company will be a going concern.  Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management bases its estimates on historical experience, known or expected trends, and on various other assumptions that are believed to be reasonable in relation togiven the quality of information available as of the date of these consolidated financial statements taken as a whole under the circumstances, thestatements. The results of which formthese assumptions provide the basis for making judgmentsestimates about the carrying valuesamounts of assets and liabilities that are not readily apparent from other sources.

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.  

Actual results could differ from thosethese estimates.

Fair Value of Financial Instruments

Deferred Revenue

The Company follows paragraph 825-10-50-10

Under the terms of the FASBCompany’s regional service center contracts, the Company requires a substantial deposit in advance of the support work required to be performed by the Company. All deposits that have not been deemed earned by the Company following the guidelines of Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”)(ASC) 606 are considered to measure the fair value of its financial instruments.  Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets orbe contract liabilities and are classified as deferred revenue on the lowest priority to unobservable inputs.  The three (3) levelsCompany’s consolidated balance sheets. As of fair value hierarchy defined by paragraph 820-10-35-37March 31, 2022, the current balance of the FASB Accounting Standards Codification are described below: