Data443 Risk Mitigation Inc (ATDS)

[jvgcredit]

Under the terms of the $125K note that Blue Citi is currently converting (paragraph 2(a)(2)), they can only hold 9.99% at any one time. This is a standard term in most convertible notes so that the holder of the note will not be considered an affiliate of the issuer. This clause is to protect the lender not the company, because if they are considered an affiliate they would not be able to take advantage of Rule 144 to obtain free trading shares. This is why you see Blue Citi doing multiple conversions rather than just converting the entire note at once. They convert no more than 9.99% at one time, sell that and then convert another 9.99%.