Enterprise Informatics Executes Term Sheet Providing for $1,500,000 of New Debt Financing, a Reverse Stock Split and Deregistration
Wednesday January 16, 8:00 am ET
SAN DIEGO, CA--(MARKET WIRE)--Jan 16, 2008 -- Enterprise Informatics, Inc. (OTC BB:EPRS.OB - News), a leading provider of enterprise information management solutions, today announced that it has entered into a term sheet for a financing transaction with ERP2 Holdings, LLC ("ERP2"), its majority shareholder. The term sheet provides that ERP2 will loan $1,500,000 to the Company. The loan will be secured by substantially all the assets of the Company, have a maturity date two years from the date of issuance and bear interest at a rate of 10% per annum. The term sheet requires the Company to effect a 1000-to-1 reverse split of its common stock and the deregistration of its common stock under the Securities Exchange Act of 1934 by April 30, 2008.
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Of the $1,500,000 to be loaned by ERP2, an initial disbursement in the amount of $300,000 is to be loaned upon finalization and execution of definitive transaction documents. A second disbursement of $1,200,000 is conditioned upon completion of the 1000-to-1 reverse split and deregistration of the Company's common stock.
Upon execution of the term sheet, the Company issued to ERP2 a warrant with a per share exercise price of $0.08 and a 10-year term for the purchase of 17,175,971 shares of common stock. The term sheet provides that, upon the second disbursement of $1,200,000, the Company will issue to ERP2 warrants, each having a per share exercise price of $0.08 and a 10-year term, for the purchase of the aggregate number of shares of common stock equal to the greater of 26,735,508 shares of common stock and 20% of the fully diluted outstanding common stock as of the issuance date.
In addition, as required by the term sheet, the Company declared a dividend payable to ERP2 in the amount of 20,827,268 shares of common stock, in satisfaction of the entire amount of accrued and unpaid dividends (together with interest) on the shares of the Company's Series F Convertible Preferred Stock held by ERP2.
ERP2, which also holds secured demand notes, under which the aggregate amount payable by the Company including interest, as of December 31, 2007 was $693,000, has agreed to extend the maturity of such notes until the second anniversary of the date of issuance of the new notes.
Under the term sheet, so long as the new notes or the extended demand notes are outstanding, the Company is obligated to procure certain advisory and other services from ERP2 for aggregate compensation not to exceed $60,000 in any quarter. The term sheet also provides for the payment by the Company to ERP2 of a $75,000 closing fee and certain fees and expenses associated with the notes.
In the event the reverse stock split contemplated by the term sheet is completed, each shareholder will be entitled to receive the number of post-split common shares calculated by dividing their pre-split common share holdings by 1,000 and rounding down to the nearest whole number. If the total number of pre-split common shares that a shareholder holds is not evenly divisible by 1,000, the shareholder will receive cash equal to the fraction of a post-split common share that the shareholder otherwise would have been entitled to receive, multiplied by a value determined by the Company's board of directors to represent the approximate market value of 1,000 common shares prior to consummation of the split. Consummation of the reverse split would require the approval of the Company's shareholders. The Company anticipates that ERP2 will have sufficient voting power to assure that such shareholder approval will be obtained.
The Company anticipates that completion of the reverse split would reduce the number of holders of its common stock below 300, thereby allowing the Company to effect the deregistration of its common stock under the Securities Exchange Act of 1934 as required by the term sheet. If the Company's common stock is deregistered, the Company will no longer be subject to public reporting requirements under the Securities Exchange Act of 1934, including any requirements to file annual reports on Form 10-K and quarterly reports on Form 10-Q.
Although the Company's common stock would no longer be quoted on the OTC Bulletin Board if deregistration occurs, the Company anticipates that its common stock would be quoted on the Pink Sheets immediately following any deregistration.
"This financing provides the Company with the necessary working capital to invest in our sales and marketing capabilities and explore new market opportunities with a view to accelerating conversion of our current pipeline of sales opportunities and building a strong pipeline for the future," stated Alan Kiraly, Chief Executive Officer. "The financing combined with extending the due date for the current demand notes to 2010 significantly strengthens our balance sheet. We estimate that as a result of the reverse stock split the Company will realize annual savings of approximately $500,000 by eliminating the legal, accounting, and other expenses associated with its public filings. We intend to deploy these savings by further investment in sales and marketing in an effort to expand our market footprint and accelerate revenue growth. We look forward to a successful and exciting fiscal 2008."
