Data443 Risk Mitigation Inc (ATDS)

[Sean Portman]

Let's look at the results of that increase and why. let's do the math shall we?
https://www.otcmarkets.com/filing/html?id=13500339&guid=oivxUW3a1BBCXyh#EX4-1_HTM
8k filed 6/20
Exhibit 99.1 page ###
RALEIGH, N.C., June 20, 2019 — LandStar, Inc. ( OTCPK: LDSR ) (“LandStar” or the “Company”), the parent company of Data443™ Risk Mitigation, Inc. (“Data443”), a leading data security and privacy company, today announced the completion of joint efforts with finance partners resulting in the favorable new terms on existing debt. Additionally, the Company has received notice of final conversion of the $125,000 legacy convertible note issued by the Company in 2014 and subsequently acquired by Blue Citi LLC (“Blue Citi”).
 
Effective June 19, 2019 the Company and three existing note holders have agreed as follows:
 
 
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Two convertible notes due in July 2019 will have their maturity extended to April 15, 2020, and there will be no conversions until April 15, 2020 – subject to the Company continuing its listing and share reserve obligations.
 
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Any conversion rights available to Blue Citi LLC under note for its investment in the Company will be waived until March 31, 2020– subject to the Company continuing its listing and share reserve obligations.
 
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Reduction in share reserve requirements for the Company to secure the existing debt instruments.
 
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A nominal premium of 10% has been applied to the existing note balances as part of the agreements.
 
Additionally, the Company received a ‘Notice of Final Conversion’ from Blue Citi for the legacy convertible note of $125,000. This eliminates the legacy liability and the subsequent derivative liability for which the Company has had to account.
 
“These agreements represent a significant step forward for the Company toward closing additional funding needed to execute its business plan, as communicated, and removes obstacles identified in our refinancing and capital-raising efforts. Additionally, reserve requirements on the existing debt was severely impacting our equity availability. These changes to our current debt alleviate these issues with our existing and new funding partners,” stated Jason Remillard, CEO of LandStar and founder of Data443.

Below we will be looking at the 3 notes mentioned above with 4.9-4.10 sections being from the 8k filled 6/20 listed above
And note info will be from FORM 10 filed with 10k from 2018
https://content.edgar-online.com/ExternalLink/EDGAR/0001493152-19-000470.html?hash=5380a29be923363f1d8f3138169591e30f933314a96da7cacb1cf95c0297540e&dest=EX10-9_HTM#EX4-3_HTM

https://www.otcmarkets.com/filing/html?id=13357310&guid=8evxUn_AwxR7sZh#FORM10-K_HTM_A_029

Conventions are fluid and never can be exactly calculated.

SME note loan amount $242k
4.9 Conversion Price . The Conversion Price under the Note shall be equal to sixty five percent (65%) of the lesser of the lowest trading price of the Common Stock for (i) the 20-days immediately preceding the Effective Date; or, (ii) the 20-days immediately preceding the date of conversion. So 65% of July 8th closing price of .0008 or .00052 price.
4.10 Share Reserve . As soon as practicable after the Effective Date, LDSR shall issue irrevocable instructions to its transfer agent for the reservation of shares of Common Stock in compliance with the maximum number of shares to be reserved under Section 12 of the Note. This Agreement shall be null and void, and cancelled in all respects in the event this Section 4.10 is not satisfied within 30-days of the Effective Date.
Let's go to note in form 10 filed in the 10k for 2018
(We can find info sooooo much easier since they are fully SEC REPORTING made by a 3rd party auditor. (Required for QB/Nasdaq)
Section 12 of note agreement- The Company shall issue irrevocable transfer agent instructions reserving 50,000,000 shares of its Common Stock when practicable for conversions under this Note (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all costs associated with issuing and delivering the shares. If such amounts are to be paid by the Holder, it may deduct such amounts from the Con version Price. Conversion Notices may be sent to the Company or its transfer agent via electric mail. The Company should at all times reserve a minimum of five times the amount of shares required if the Note would be fully converted. The Holder may reasonably request increases from time to time to reserve such amounts.
O/s is 7.2bil as stated in the pre14c
So 50mil reserved. To fully pay at these prices 242,000x.00052=465mil. As long as they just reserve the 50, they won't be in default and note due date now 4/15/20

AFT note $110k
its basically the same, all the info is there if you wish to calculate it but I'm just gonna make the points
Reserve is 50mil to not default. Calculation is the same
110,000x.00052=~212mil shares to fully pay off. So as long as clause for reserve is met for available shares not in default and due date is now 4/15/20

Now......
Blue citi note $1,083,500
Blueciti-will just start with this
4.8 Conversion Price . The Conversion Price under the Note shall be equal to eighty five percent (85%) of the lesser of the lowest trading price of the Common Stock for (i) the 20-days immediately preceding the Effective Date; or, (ii) the 20-days immediately preceding the date of conversion.
Ok, I guess better than the original 90% in the original agreement in form 10.
4.9 Share Reserve . As soon as practicable after the Effective Date, LDSR shall issue irrevocable instructions to its transfer agent for the reservation of one billion three hundred million (1,300,000,000) shares of Common Stock for conversion under the Note. This Agreement shall be null and void, and cancelled in all respects in the event this Section 4.9 is not satisfied within 30-days of the Effective Date.
Got a problem already
7.2bil+1.3bil+50mil+50mil=~8.6bil out of an a/s of 8.88b. Can't fully finish those other notes. Not to mention employee compensation.
Let's go on
4.10 Increase in Share Reserve . As soon as practicable after the earlier of (i) the effectiveness of a reverse stock split undertaken by LDSR; or, (ii) ninety (90) days from the Effective Date, LDSR shall issue irrevocable instructions to its transfer agent for the reservation of under the Note of that number of shares of Common Stock which is three times the number of shares into which the Note can then be converted.
Wait, what did I just read? 3times....
So 85% of .0008 is .00068
So 1083500/.00068=~1.6bilx3=4.8bil
Um....so now we got 7.2+50+50+4.8=12.1bil. So a/s increase has to happen regardless.

What did all of this do for the company? Well, for one I'm new so I can't tell you everything they did. that loan is listed in the form 10, and mentioned in their presentation and in all the fillings and partnerships and also the new trademark. But let's also look at one more thing mentioned in the 8k. The $125000.

This restructuring of the blueciti note included the integration of the $125,000 into the $1,083,500. Very significant because it had a conversation price of .00005. Remaining is 50000/.00005=1bil shares. At the current price of .0008x1bil=$800,000 of shareholder equity saved. Not to mention another 1bil shares not going to be added to the O/s.
Info on conversion price can be found in the 10Q filed for 3/31 link-goto page 12

https://www.otcmarkets.com/filing/html?id=13430672&guid=SxvxUKfz-6kTNyh
Non-interest bearing convertible note held by Blue Citi LLC (“Blue Citi”) for the original principal of $125,000, payable on demand and convertible at the option of the holder into common shares at the conversion price of $0.00005 per share. The outstanding principal for the convertible note was $50,000 and $125,000 as of March 31, 2019 and March 31, 2018, respectively. During the three months ending March 31, 2019 Blue Citi converted $25,000 of this convertible note into 500,000,000 shares of common stock. The embedded conversion feature in this note created a BCF totaling approximately $2,200,000 as of March 31, 2019.

Let's go on.
Post r/s
O/s-9.7
A/s 60mil.
60-9.7=50 mil as per pre14c
-(12.1-7.2=4.9bil/250=19.6mil)=30mil left of the a/s as available.
I did not include any other restrictions or share reservations for conversion or anything else. On any more current form 10s that would reserve and restrict the a/s more.

And one last side note-
ALL 3 NOTES HAVE THE PREPAYMENT CLAUSE IN THEM AND CAN BE PREPAID WITHOUT DILUTION OF ADDED SHARES TO THE O/S. CEO HAS TIL END OF MARCH 2020.

AND NO DILUTION