Pursuant to the terms of the Repayment Agreement, the Company and YA Global have agreed to settle and cancel certain securities previously issued to YA Global, including approximately $2,485,000 in secured convertible debentures and warrants to purchase approximately 2,900,000,000 shares of Company common stock (“Common Stock”). In connection with the settlement, the Company made a one-time cash payment of $550,000 and issued YA Global new warrants to purchase up to 25,000,000 shares of Common Stock at an exercise price of $0.0119. These warrants are set to expire in July of 2014.
By removing the prior debt with YA Global through the settlement, the Company believes it is now better positioned to execute its aggressive sales growth initiatives into 2012 with less concern of such substantial debt and the associated potential dilution which the Company believes could have previously held it back from potential revenue and profitability growth.
“Our strategic initiative to finalize the Settlement Agreement with YA Global and remove over $2.4M in previous debt from our financial statements was a critical step in moving the Company forward, and is in line with our overall business plan, revenue growth, and operating profit objectives into the 2012 to 2015 time frame,” stated Serge Monros, the Company’s CEO. “We believe the removal of this debt now provides the Company much more financial stability, not only in pursuing specific business contracts and goals, but also in allowing us the ability to obtain future funding for regional and national marketing campaigns, financial support for our distribution pipeline, and additional capital for future product development and innovation on terms much more beneficial to the Company. For the Company and our shareholders alike, the short and long-term benefits of this settlement are incalculable. I would like to offer a sincere, heart-felt thank you to those who have faithfully stood by us through this entire process. We have much to look forward to as we move toward 2012 and beyond.”