SQI Diagnostics Inc. announced that the Company’s board of directors has received a notice of intention to enforce security issued by its senior secured creditor, Pivot Financial I Limited Partnership, under Section 244 of the Bankruptcy and Insolvency Act.
TORONTO, June 16, 2023 /PRNewswire/ - SQI Diagnostics Inc. (“SQI” or the “Company”) (TSXV: SQD) (OTCQB: SQIDF) today announced that the Company’s board of directors (the “Board”) has received a notice of intention (the “Notice”) to enforce security issued by its senior secured creditor, Pivot Financial I Limited Partnership (“Pivot”), under Section 244(1) of the Bankruptcy and Insolvency Act (the “Act”).
As previously announced, there has been significant doubt about the Company’s ability to continue as a going concern for several months. As at the date of this news release, the Company does not currently have sufficient cash to repay its Indebtedness (as defined below) owing to Pivot under the terms of the credit agreement (the “Credit Agreement”) entered into between Pivot and the Company dated February 11, 2022, as amended, and the Board does not expect to be able to raise sufficient capital in the short term to repay the Indebtedness by the deadline noted in the Notice. Further, the Board believes that it has exhausted all feasible options to continue the Company as a going concern and/or repay the Indebtedness and that it is now in the best interest of the Company and its stakeholders to work cooperatively with Pivot. As such, while the enforcement of the Notice is subject to a 10-day notice period, the Board has made the decision to consent to the early enforcement of security by Pivot. As a result of providing such consent, the Board has also received a foreclosure notice from Pivot under Section 65(2) of the Personal Property Security Act (Ontario) in connection with the enforcement of Pivot’s security under the Credit Agreement. The Company will proceed with a voluntary assignment in bankruptcy pursuant to the provisions of the Act and upon completion of the filing will announce that such filing is complete and that a trustee has been formally retained.
In connection with the anticipated filing under the Act, the remaining members of the Board, including each of Gerald Connor, Clive Beddoe, Wilmot Matthews, Claude Ricks and Eric Zwisler, and the Company’s sole remaining executive officer, Morlan Reddock, CFO, will tender their resignations as directors or officers of the Company effective immediately upon completion of the filing.
As at the date of the Notice, the Company has approximately $8,790,000 owing to Pivot, inclusive of $8 million of principal and accrued and unpaid interest, fees, legal expenses and disbursements (collectively, the “Indebtedness”) under the terms of the Credit Agreement. Of the Indebtedness, an aggregate of approximately $3.75 million of principal (the “Insider Indebtedness”), excluding accrued and unpaid interest, is owing to the three insider directors of the Company, who are also control persons of the Company, who participated in the Credit Facility under the terms of certain participation agreements (collectively, the “Participation Agreements”) dated February 11, 2022, as amended. The decision to issue the Notice was made solely by Pivot, as the Insider Indebtedness is subordinate to Pivot’s interest in the Indebtedness and Pivot retained all decision-making authority pursuant to the terms of the Participation Agreements.
The Company also confirms that it has been in discussions with the TSX Venture Exchange (the “Exchange”) in connection with its proposed filing under the Act and that it expects its common shares to continue to be halted from trading on the Exchange following this announcement and ultimately suspended and delisted following completion of the filing.
Contact:
Chief Financial Officer
Morlan Reddock
437-235-6563
mreddock@sqidiagnostics.com
FORWARD-LOOKING INFORMATION
This press release contains certain words and statements, which may constitute “forward-looking statements” within the meaning of applicable securities laws relating to future events or future performance and reflect the current expectations and assumptions of the Company regarding its growth, results of operations, performance, business prospects and opportunities. These statements generally can be identified by use of forward-looking words such as “may”, “would”, “could”, “will”, “should”, “expect”, “plan”, “estimate”, “anticipate”, “intends”, “believe”, “potential”, or “continue” or the negative thereof or similar variations. The Company’s actual results and performance discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, the effect of the global pandemic and consequent economic disruption, and the factors detailed in the Company’s ongoing filings with the securities regulatory authorities, available at www.sedar.com. Although the forward-looking statements contained herein are based on what we consider to be reasonable assumptions based on information currently available to us, there can be no assurance that actual events, performance or results will be consistent with these forward looking statements, and our assumptions may prove to be incorrect. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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SOURCE SQI Diagnostics Inc.
Company Codes: OTC-QB:SQIDF, TorontoVE:SQD, OTC-BB:SQIDF
