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Thursday, April 20, 2023 12:35:11 PM
As previously announced, the Company has been in discussions with its two convertible debenture (“CD”) holders
and a third-party Trillium Partners LP (“Trillium”) to restructure and eventually eliminate convertible debt, plus
accrued interest, that totaled $13,712,779 as of the period ended June 30, 2022. Ultimately, Trillium and the CD
holders entered into an agreement to transfer this debt to Trillium. As part of the Company’s plan, on October 17,
2022, the Company entered into a Settlement Agreement and Stipulation with Trillium (“Settlement Agreement”),
subject to court review and approval, whereby the Company agreed to issue shares of common stock to Trillium
pursuant to the Section 3 (a) 10 exemption at a discount of 35% to the market price (versus a 50% discount that the
Company was contractually obliged with the former Convertible Noteholders). Full satisfaction of the Settlement
Agreement would discharge the Company’s convertible debenture liabilities for $8,486,342 of proceeds to the former
CD holders, which represents a reduction of approximately $5 million (or approximately 37% of the outstanding
obligations) to the original CD holders. The District Court of Maryland conducted a fairness hearing on October 25,
2022 and approved the Settlement Agreement. Elimination of this debt is a top priority for the Company. In 2020
and 2021 alone, the accrued interest on these CDs generated interest expense of $1.9 million. The Settlement
Agreement temporarily caps the CD obligations by staying further interest accrual, and if satisfied in full, the
Settlement Agreement will satisfy the obligations altogether. The Company plans to exercise with care the
satisfaction of the CD obligations, in gradual tranches over time.
To date, Trillium has repaid approximately $500,000 of the balance of the note with shares of common stock of the
Company having been issued or approved in the aggregate amount of 808,595,000.
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