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JPetroInc   Wednesday, 12/30/20 10:18:46 AM
Re: None
Post # of 129758 


Item 4. Purpose of Transaction

The Investment Entity acquired most of the Securities during 2015 and 2016, based on what are believed to be a series of misstatements and over-aggressive representations by the Issuer’s Chief Executive Officer Gerald Commissiong. The Reporting Persons believe that the subsequent decision of the Issuer to suspend its reporting obligations provided the Issuer to undertake a dramatic effort to divert corporate opportunities from the Issuer to other companies in which Mr. Commissiong had an interest, thus depriving the Reporting Persons and other creditors and shareholders the ability to receive value and a return on invested capital in the Issuer.

The Reporting Persons’ analysis shows that years of abysmal oversight by the Issuer’s Board of Directors, permitted management missteps, dismal operating performance, and a series of questionable transactions that have resulted in significant loss of economic and strategic value by the Issuer and a consequent deleterious effect on all investors and creditors of the Issuer.

The Reporting Persons are making this filing to, among other things, remind the Board that directors bear fiduciary responsibility to all shareholders and, in the case of an Issuer within the zone of insolvency or that is insolvent, to creditors of the Issuer. The Investment Entity, along with Anson Investments Master Fund LP (“AIMF”) and Lorient Ventures Ltd (“Lorient”), have signed a Letter Agreement (as defined below) and thus may be deemed to be a group (the “Group”) for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Act”). The Letter Agreement (as defined below) is described in Item 6 of this Schedule 13D and the attached Exhibit 99.1. Each member of the Group will file a separate Schedule 13D pursuant to Rule 13d-1(k)(2) under the Act containing its required information. No member of the Group assumes any responsibility for the information contained in the Schedule 13D filed by another member of the Group. Additionally, in the event that the Group shall be deemed to be the beneficial owners of all of the securities of the Issuer reported in the Schedule 13Ds filed by the members of the Group, neither of the Reporting Persons shall be deemed to be the beneficial owners of the securities of the Issuer reported in the Schedule 13D of any other member of the Group, and each of the Reporting Persons expressly disclaims beneficial ownership of any securities of the Issuer other than those reported in this Schedule 13D.

The Reporting Persons, along with the other members of the Group, may also take other steps to increase shareholder value as well as pursue other plans or proposals that relate to, or would result in, any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D. As an initial matter, the Group intends to send management of the Issuer a letter that details defaults on obligations and undertakings to the members of the Group, as well as breaches of fiduciary duty and taking of corporate opportunities to the Issuer in favor of other interests of Mr. Commissiong and others. For instance, on March 26, 2018, the Issuer and the members of the Group entered into certain tender exchange agreements, pursuant to which the Issuer issued to the Investment Entity a Senior Secured Convertible Note, dated March 26, 2018, in the original principal amount of $2,313,244.00 and an Unsecured Convertible Note, dated March 26, 2018, in the original principal amount of $3,923,235.00 (the “March 2018 Notes”). Despite the Issuer’s obligation to repay the March 2018 Notes by December 26, 2018 (at latest), the Issuer has failed to repay any amounts due under the March 2018 Notes.

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